MASS INCOME TAX: Definition and Rates

MASS INCOME TAX
Reason Magazine

Massachusetts provides tax deductions and credits to lower your tax payment, such as a rent and commuter deduction and tax credits for income tax paid to another state. Massachusetts’ income tax rate is 5.00%. Also, this rate applies to all taxable income. In this article, we talk more about the mass income tax rate, how to pay the tax online through Mass Tax Connect, and its tax refund for 2022.

Read Also: MARYLAND INCOME TAX: Maryland Income Tax Rates & Refund

Overview

Massachusetts does not have a standard deduction, although it does allow many of the same itemized deductions as the federal government, as well as a few more. Child care expenses, college tuition (if it exceeds 25% of Massachusetts adjusted gross income), certain commuter costs, rental payments (50% of rent up to $3,000), and student loan interest payments, for example, are all deductible to taxpayers.

Massachusetts significantly relies on personal income tax to finance annual operating expenses, accounting for around 55% of all tax collections.  Meanwhile, the rate was reduced to 5% for the tax year beginning on or after January 1, 2020. Mass income has a flat tax, which means that all income of the same type must be taxed at the same rate, but other categories of income might be taxed differently. Certain short-term capital gains, for example, are taxed at 12%.

It also offers a variety of credits (dollar-for-dollar tax offsets), including an earned income tax credit, a circuit breaker credit, and a solar, wind, and energy tax credit. Income, particularly from capital gains, can be a volatile source of revenue because it is so directly linked to economic performance. The state income tax is levied at a fixed rate of 5%. However, the sales tax is levied at 6.25%.

Aside from these deductions, taxpayers can also claim a personal exemption to reduce their taxable income. However, Massachusetts levies a flat 5% tax on federal adjusted gross income. (Note: Massachusetts voters will determine whether to impose an additional 4% tax on taxable income exceeding $1 million beginning in 2023 on November 8, 2022.)

Mass Income Tax Rate

Massachusetts imposes a 5% personal income tax on anybody earning more than $8,000 in 2022, regardless of filing or residency status. You do not have to submit a Massachusetts tax return if you earned less than $8,000 in the fiscal year 2021. However, if you want to claim some tax credits, such as the Earned Income Tax Credit, you may choose to do so.

Individual income taxes in Massachusetts are levied at a fixed rate of 5.00%. Massachusetts has a 5.00% flat income tax rate and a 6.25% flat statewide sales tax rate. The state’s income tax rate is one of just a few that has a flat rate. Massachusetts also levies a corporate income tax of 8%. Massachusetts also has a state sales tax of 6.25 percent and no local sales taxes. In the 2022 State Business Tax Climate Index, Massachusetts’ tax regime ranks 34th nationwide.

The tax code of each state is a complex system with numerous moving pieces, and Massachusetts is no exception. Massachusetts imposes a 5.0% tax on both earned (salaries, wages, tips, commissions) and unearned (interest, dividends, and capital gains) income for the tax year 2021. Massachusetts’ income tax rate is 5.00%. This rate applies to all taxable income. In Massachusetts, unlike the federal income tax, there are no tax brackets. State residents who want to contribute more to the state’s finances can also pay a higher income tax rate.

Mass Income Tax Rate 2022

The following are the mass income tax rate(s) for 2022;

#1. Sales Tax for Mass Income Rate

  • The state levy is 6.25%. There are no local taxes.
  • Groceries are exempt.
  • Clothing is exempt if it costs less than $175.
  • Automobiles: Taxable
  • Exemption for prescription drugs
  • Motor Fuel Taxes in Massachusetts
  • Gasoline costs $26.54 per gallon.
  • Diesel costs $26.54 a gallon.

#2. Massachusetts Penalty Taxes

  • Cigarettes and little cigars cost $3.51 per pack.
  • 210% of the wholesale price for snuff
  • Tobacco chewing: 210% of the wholesale price
  • 40% of the wholesale price for other tobacco goods
  • 75% off the wholesale price of vapor items
  • Beer costs $0.11 per gallon.
  • Wine costs $0.55 per gallon.
  • $4.05 per gallon for liquor
  • Alcohol sales are not subject to sales tax.
  • Marijuana: 10.75% excise tax plus up to 3% local choice tax

#3. Estate and Inheritance Taxes in Massachusetts

A mass income estate tax rate may apply to estates worth more than $1 million. Rates of taxation range from 0.8% to 16%. Property left to a surviving spouse is eligible for an unlimited marital deduction, while property left to a qualifying charity is eligible for an unlimited charitable deduction.

Pay Mass Income Tax Online

To pay for your mass personal income tax return online and receive your refund from the Department of Revenue is the quickest approach. However, when to pay through online filing for mass income tax is quick, secure, and accurate, and it includes electronic confirmation.

90% of Massachusetts taxpayers e-file their personal income tax returns and receive their refund sooner than if they filed on paper. Here are some locations where you can pay your bulk income tax online;

  • Vendors who are members of the Free File Alliance Program
  • MassTaxConnect
  • Self-prepared software certified by the vendor

The following businesses have offered qualifying Massachusetts taxpayers free e-filing through the Free File Alliance program.

#1. 1040NOW

All Massachusetts residents with an adjusted gross income (AGI) of $32,000 or less are eligible for free federal and state tax preparation and e-filing. However, this promotion is only valid for three (3) free tax returns online. It also helps to pay for mass income tax online easily.

#2. Online Taxes From OLT

If your Federal Adjusted Gross Income is between $16,000 and $73,000, regardless of age, Online Taxes would like to offer free federal and free state online tax preparation and e-filing.

Mass DOR Tax Payment Processing Online

  • STEP 1: Click on this link to access the Massachusetts Department of Revenue’s website. Select Make a payment from the Quick Links menu (in yellow below). You do not require an account.
  • STEP 2: Determine who will make personal income tax payments or quarterly anticipated tax payments. Enter the name and Social Security number of the first taxpayer listed on your income tax return. Moreover, choose Return Payment for the Year 2022 if you are paying the balance due on your 2021 income tax return, or Estimated Payment for the Year 2022 if you are paying your 2022 quarterly taxes under Select Payment Type.
  • STEP 3: Determine the amount to be paid. Simply enter your payment amount and mode of payment. Bank debit carries no fees, while credit cards most certainly do.
  • STEP 4: The remaining windows only guide you through the process of entering your payment information. Make a copy of the confirmation page and save it with your tax records as evidence of payment.

Mass Income Tax Refund

The excess tax paid by you that is repaid by the Income Tax Department is referred to as a mass income tax refund. For example, if the tax you needed to pay was $10,000 but you paid $15,000 or it was already deducted and deposited by the person in charge, you would receive a tax refund of $10,000 after filing your income tax return.

You will need the following information to verify the status of your personal mass income tax refund:

  • Amount of Refund
  • Your personal information

The process of obtaining a large mass income tax refund can be done online or on paper. The following are the steps:

#1. Return Filed Electronically

  • Direct deposit requests take 4-6 weeks to process.
  • If a paper check was used,
  • Please add another week as requested.

#2. Return on Paper

  • Direct deposit requests can take 8–10 weeks.
  • If a paper check was used,
  • You can also add another week as requested for the mass income tax refund.

Mass Tax Connect

Mass Tax Connect is a web-based tax filing and payment system in Massachusetts. Although some Mass Tax Connect capabilities are available without checking in, registering for an account gives you more possibilities. You can do the following with a Mass Tax Connect account:

  • Account details can be accessed. 
  • Most tax returns can be submitted and amended.
  • You can also use a bank account or a credit card to make bill payments, return payments, anticipated tax payments, and extension payments.
  • Change or cancel previously scheduled payments with Mass Tax Connect
  • Make payment arrangements.
  • Individuals should be granted hardship status.
  • Secure messages with attachments can be sent and received.
  • DOR letters and notices can be viewed or printed.
  • Submit documents in response to specified notices from DOR
  • Submit a transcript request for a previously filed personal income tax return.
  • Obtain a Certificate of Good Standing
  • Apply for estate tax lien relief.
  • Allow third-party access to your account (such as tax specialists).
  • Manage third-party access to customer accounts.
  • Account closure
  • You can contest a penalty or an audit assessment.
  • A responsible person’s determination can be challenged.
  • Requests for licenses and decals are processed.
  • Manage the energy exemptions for small businesses.
  • Change your profile information
  • Finally, change your legal and mailing addresses.

Mass Tax Connect services are available without creating an account.

Here is the following process below;

  • Pay your bills with a bank account or a credit card.
  • Pay an individual’s return, projected tax payments, and extension payments.
  • Respond to DOR notices by submitting documentation.
  • Obtain a Certificate of Good Standing.
  • Make a voluntary declaration of previous tax liabilities.
  • Motor Vehicle Sales Tax Appeal
  • On a motor vehicle or trailer, you must file and pay sales/use tax (File Form ST-7R)
  • File and pay sales/use tax on a boat, pleasure vehicle, or snowmobile (File Form ST-6 or ST-6E)
  • Check resale certificates for sales tax.
  • Annual certification of entity tax status must be submitted.

What Is the Massachusetts Income Tax Rate for 2022?

The information in the table below is from the IRS and pertains to tax brackets in 2022. 

  Tax    Rate    Single  Head of      Household  Married    Jointly  Married  Separately
10%$0 to $10,275$0 to $14,650$0 to $20,550$0 to $10,275
12%$10,276 to
$41,775
$14,651 to
$55,900
$20,551 to
$83,550
$10,276 to $41,775
22%$41,776 to
$89,075
$55,901 to
$89,050
$83,551 to
$178,150
$41,776 to $89,075
24%$89,076 to
$170,050
$89,051 to
$170,050
$178,151 to $340,100$89,076 to $170,050
32%$170,051 to $215,950$170,051 to
$215,950
$340,101 to $431,900$170,051 to $215,950
35%$215,951 to $539,900$215,951 to
$539,900
$431,901 to $647,850$215,951 to $323,925
37%$539,901 or more$539,901 or more$647,851 or more$323,926 or more
Mass Income Tax Rate for 2022

How Much Tax Is Deducted From a Paycheck in MA?

Massachusetts is a flat-tax state with a 5.00% tax rate. This applies to both earned (wages, salaries, and commissions) and unearned income (interest and dividends). 

Are State Taxes High in Massachusetts?

Individual income taxes in Massachusetts are levied at a fixed rate of 5.00 percent. Massachusetts levies a corporate income tax of 8%. Massachusetts has a state sales tax of 6.25 percent and no local sales taxes. Meanwhile, in the 2022 State Business Tax Climate Index, Massachusetts’s tax regime ranks 34th nationwide.

Who Pays Income Tax in Massachusetts?

The Massachusetts Department of Revenue taxes residents on all income, whereas non-residents are taxed only on income earned in Massachusetts. If you live in Massachusetts, whether single or married, you must submit a Massachusetts return if your total gross income exceeds $8,000.

Do I Have to Pay Massachusetts State Income Tax?

If you are a full-year resident of Massachusetts with an annual gross income of more than $8,000, you must submit a Massachusetts tax return.

Who Has the Highest State Tax?

For 2021, the top ten highest income tax states (or legal jurisdictions) are:

  • 13.3% in California
  • 11% in Hawaii
  • 10.75% in New Jersey
  • 9.9% in Oregon
  • Minnesota 9.85%
  • The District of Columbia 8.95%
  • 8.82% in New York
  • 8.75% in Vermont
  • Iowa 8.53%
  • 7.65% in Wisconsin

Income taxes are not levied in nine states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. It has also enacted laws to phase away the tax beginning in 2024 and concluding in 2027.

Conclusion 

In summary, you can pay your tax online, in paper form, or even through a third party. In Massachusetts, unlike the federal income tax, there are no tax brackets. State residents who want to contribute more to the state’s finances can also pay a higher income tax rate. Few taxpayers make this choice. The mass income tax is also known as the Massachusetts income tax.

Because of the importance of income tax collections to the annual operating budget, MTF regularly analyzes them, paying close attention to the volatility of investment income and the need to shift some of this revenue to the state’s Stabilization Fund. However, paying taxes is good because it helps the economy. Finally, the tax rate varies depending on the state. This article teaches about “mass income tax.”

MASS INCOME TAX FAQs

How much is Massachusetts federal income tax?

Massachusetts’s income tax rate is 5.00%. This rate is applied to all taxable income equally. Unlike the federal income tax, Massachusetts has no tax brackets. Residents who want to contribute more to the state’s finances might pay a higher income tax rate.

Are property taxes deductible in Massachusetts?

If you itemize your deductions, all real estate taxes paid in Massachusetts are currently 100% tax deductible.

How can I save money on my taxes in Massachusetts?

  • Residential Tax Exemptions.
  • Homestead Tax Exemptions.
  • Home Office Tax Deduction.
  • Mortgage Interest Deduction (MID).
  • Moving Tax Deduction.
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References

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