Massachusetts has made the following changes to the tax laws for the 2021 tax year:
2021 Personal Income Tax Rates
- Effective for tax years beginning on or after January 1, 2020, the tax rate on most classes of taxable income has been changed to 5%.
Annual Update of Circuit Breaker Tax Credit
- Massachusetts has done an annual update on the income thresholds for the Senior Circuit Breaker Tax Credit. Your total income cannot exceed $62,000 for single filers, $78,000 for a head of household filer, and $93,000 for joint filers.
Tax Implications for Remote Workers during the COVID-19 Pandemic
- Due to Massachusetts' COVID-19 state of emergency, all compensation for work-from-home services performed before September 16, 2021 (to non-residents who would generally perform these services in Massachusetts) will be treated as MA source income subject to MA personal income tax.
Dependent Care Tax Credit
- Beginning tax year 2021, individuals may be eligible for a Dependent Care Tax Credit that is equal to employment-related expenses for the care of a qualified child under 13, disabled dependent, or disabled spouse. The taxpayer must be eligible for the federal Dependent Care Tax Credit.
Household Dependent Tax Credit
- Beginning tax year 2021, individuals subject to tax under MGL CH 62 may claim the Household Dependent Tax Credit if they maintain a household under IRC 21 that includes a dependent that qualifies under IRC 152 and is under the age of 12, 65 or older, or is disabled. The HDTC is $180 for one dependent or $360 for two or more dependents. IF a taxpayer claims the HDTC, they cannot claim the Dependent Care Tax Credit.
For more details on these changes, please click here.