Massachusetts has made the following changes to the tax laws for the 2025 tax year:
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 $75,000 for single filers, $94,000 for a head of household filer, and $112,000 for joint filers. Maximum credit for 2025 is $2,820.
Filing Deadline
- The 2025 tax deadline for Massachusetts is April 15, 2026.
4% Surtax
- For 2025, the 4% Surtax applies to income over $1,083,150. This is up from $1,000,000 in 2023.
Employer-Provided Parking, Transit Pass, and Commuter Highway Vehicle Benefits Exclusion amounts
- Massachusetts follows the federal income exclusion for employer-provided transportation benefits, including parking, transit passes, and commuter highway vehicle programs.
- For 2025, the IRS has set the monthly exclusion limits at:
- $325 for employer-provided parking
- $325 for combined transit pass and commuter highway vehicle benefits
Failure to Obtain Health Insurance Penalty
- For 2025, individuals over the age of 18 must obtain health insurance that meets the Minimum Creditable Coverage (MCC) as defined by MA Health Connector. Penalties are imposed monthly and based upon monthly insurance premiums that the individual would have qualified for.
Withholding on Sales of Massachusetts Real Estate
- Sales of Massachusetts real estate are subject to withholding when the gross sales price is $1,000,000 or more.
- By default, the withholding amount is calculated on the gross sales price. However, the seller may elect to use an alternative calculation based on the estimated net gain from the sale.
Climatetech Tax Incentive Program
- For tax years beginning January 1, 2024 and after, the incentive program adds three new credits for eligible expenses incurred by climatetech companies:
- Climatetech Incentive Jobs Credit - the amount awarded is determined by MASSCEC to climatetech companies that create at least 5 new jobs in the climatetech sector.
- Climatetech Capital Investment Credit - the amount awarded is determined by MASSCEC, up to 50% of climatetech company's investment in a climatetech facility.
- Climatetech Qualified Research Expenses - the amount awarded is at the discretion of MASSCEC and equal to the sum of 10% of the excess of qualified research expenses for the taxable year, over a base amount, and 15% of the basic research payments as determined.
Live Theater Credit
- For tax years beginning January 1, 2025, this nonrefundable credit is available for costs incurred in presenting live theater productions in Massachusetts. The credit is equal to the sum of 35% of a theater company's total in-state payroll costs, 25% of its total in-state production and performance expenditures, and 25% of its total in-state transportation expenses. Any unused portion of the credit can be carried forward up to 5 years. The credit is set to expire Jan. 1, 2030.
Homeownership Credit
- For tax years beginning from January 1, 2025 and after, this nonrefundable credit is available to real estate developers that build certain new housing units. The amount of credit awarded is determined by the Massachusetts Housing Finance Agency based on applications submitted by developers.
Qualified Conversion Credit
- For tax years beginning January 1, 2025, this nonrefundable credit is available to real estate developers that convert existing commercial property to residential or mixed use. The amount of credit awarded is determined by the Executive Office of Housing and Livable Communities based on applications submitted by developers. The credit cannot exceed 10% of a developer's costs. Set to expire December 31, 2029.
For more details on new changes, please click here.