Massachusetts taxpayers filing a 2026 return should be aware of several updates, including changes related to federal tax conformity, excess business losses, Qualified Opportunity Zones, and certain deduction limitations. Massachusetts also continues to adjust income thresholds and credits for inflation.
2026 Filing Deadline
The deadline to file a 2026 Massachusetts individual income tax return is April 15, 2027.
4% Surtax Threshold
Massachusetts continues to impose a 4% surtax on income above the annual threshold.
For 2026 returns, the surtax applies to taxable income exceeding $1,083,150.
Senior Circuit Breaker Credit
Taxpayers age 65 or older may qualify for the Senior Circuit Breaker Credit.
For the 2026 tax year:
- Maximum credit: $2,820
- Income limit: $75,000 for single filers
- Income limit: $94,000 for head of household filers
- Income limit: $112,000 for married taxpayers filing jointly
- Property assessment limit: $1,298,000
Qualified Opportunity Zone Changes
For tax years beginning on or after January 1, 2026, Massachusetts requires a Qualified Opportunity Zone to be located entirely within Massachusetts.
Taxpayers may need to add back certain federal exclusions for investments made in Qualified Opportunity Zones outside Massachusetts.
Massachusetts Does Not Conform to Certain Federal Tax Changes
Massachusetts does not adopt several federal tax law changes enacted under Public Law 119-21. As a result, taxpayers may need to make adjustments when preparing their Massachusetts return.
Business Interest Expense Limitation
Massachusetts does not adopt the federal revision to IRC §163(j)(8) for tax years 2025 and 2026. Taxpayers must calculate the Massachusetts deduction using the rules that applied before the federal change.
Special Depreciation Allowance
Massachusetts does not allow the federal 100% special depreciation allowance for qualified production property under IRC §168(n). Taxpayers must use depreciation methods allowed under Massachusetts law.
Research and Experimental Expenses
Massachusetts does not conform to the federal deduction for domestic research and experimental expenditures under IRC §174A. Research costs must continue to be capitalized and recovered through amortization for Massachusetts purposes.
IRC §179 Expense Deduction Limits
Massachusetts does not adopt the increased federal Section 179 limits.
For Massachusetts purposes in 2026:
- Maximum deduction: $1,250,000
- Phaseout threshold: $3,130,000
Excess Business Loss Adjustment
For tax year 2026, taxpayers must add back any federal excess business loss reported on Schedule 1 of Form 1040 when calculating Massachusetts income.
Massachusetts does not allow federal excess business loss carryforwards as a deduction.
Paid Family and Medical Leave (PFML) Updates
For 2026:
- PFML wage base limit: $184,500
- Maximum employee PFML contribution: $848.70
- Maximum self-employed opt-in PFML contribution: $1,623.60
Taxpayers who had PFML contributions withheld by multiple employers may qualify for a credit if their total contributions exceeded the annual maximum.
Federal Deductions Massachusetts Does Not Allow
Massachusetts does not adopt:
- The federal deduction for tip income (IRC §224)
- The federal deduction for overtime pay (IRC §225)
These deductions may reduce federal taxable income but are not allowed on a Massachusetts return.
For more details on new changes, please click here.