Sep 26, 2023 - Politics

Massachusetts Democrats release long-awaited tax break package

Photo illustration of Massachusetts Senate President Karen Spilka and House Speaker Ron Mariano with lines radiating from them.

Spilka and Mariano. Photo illustration: Brendan Lynch/Axios. Photo: Pat Greenhouse and Carlin Stiehl/The Boston Globe via Getty Images

Thousands of Massachusetts residents will catch a break in their annual state income taxes in the coming years thanks to a long-awaited tax relief package from state leaders.

Why it matters: Massachusetts has one of the highest costs of living in the country, with residents slammed by childcare, education and housing bills.

Driving the news: After 20 months of internal debate amid a changing fiscal climate, Democratic legislative leaders announced an agreement on a wide array of tax breaks on Tuesday.

  • Since Democratic leaders are already in agreement, both chambers will push the bill through to Gov. Maura Healey's desk this week.

Details: Senate President Karen Spilka and House Speaker Ron Mariano said that the state tax credit for dependent children, disabled adults and seniors will increase from $180 to $310 in 2023 and to $440 in 2024.

  • In a win for wealthier residents, the tax on short-term capital gains will go from 12% to 8.5%.

Plus: The earned income tax credit, which assists low-earners, will rise from 30% to 40% of the federal credit.

  • The estate tax will apply only to assets valued over $2 million, up from $1 million.
  • A tax credit for seniors who own their homes will double to $2,400.
  • Renters can deduct $4,000 of their housing costs, up from $3,000.

Of note: Lawmakers also approved Healey's request for more alcoholic ciders and wines to be taxed at a lower rate, to boost the state's industry.

Context: Democrats have for nearly two years wanted to lower the tax burden on the state's working families, seniors and poorest residents to mitigate these costs amid recent inflation.

Between the lines: Healey promised tax breaks during her campaign last year.

What they're saying: "A lot of the tax credits here will go directly to the pocketbooks of every taxpayers in Massachusetts," Mariano said Tuesday at a State House press conference.

Catch up fast: Former Gov. Charlie Baker had initially proposed tax cuts for all income levels in a January 2022 plan.


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