Massachusetts Democrats release long-awaited tax break package
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.
- But a changing economy and unexpected tax rebates last year delayed action.
Between the lines: Healey promised tax breaks during her campaign last year.
- This year, House Democrats went all-in with a fresh $654 million proposal, but the Senate wanted a more progressive and cautious package.
- That impasse lasted until last week when Spilka and Mariano announced they had reached a deal.
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.
- House and Senate Democrats had a deal in place, but backed off when the state took in so much tax revenue that it triggered $2.9 billion in automatic rebates.
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