Massachusetts income tax is generally calculated automatically based on the information entered throughout the return. The Tax section is used to report additional taxes, penalties, interest, and use tax that may apply to a taxpayer's situation.
Program Entry
Massachusetts Return → Tax
The Following Information Can Be Added
Optional 5.85% Tax Rate
Massachusetts allows certain taxpayers to elect an optional 5.85% tax rate instead of the standard 5.25% tax rate.
A taxpayer may benefit from making this election if the higher tax rate allows them to claim a larger deduction that results in a lower overall tax liability. Taxpayers should compare the results before making the election.
Penalty on a Balance Due
If the Massachusetts Department of Revenue assessed a penalty related to a balance due, enter the penalty amount in this section.
Penalty amounts are generally shown on a notice received from the Massachusetts Department of Revenue.
Interest on a Balance Due
If the Massachusetts Department of Revenue assessed interest on an unpaid tax balance, enter the interest amount in this section.
Interest amounts are generally shown on a notice received from the Massachusetts Department of Revenue.
Additional Tax on Installment Sale
Massachusetts imposes an additional tax when a taxpayer receives installment sale payments and is required to pay interest on the deferred tax liability.
This amount is generally calculated on the federal return and applies when gain from the sale of property is reported over multiple years using the installment method.
Use Tax Due
Use tax may be due when taxable goods or services were purchased without paying Massachusetts sales tax.
Common examples include:
- Online purchases where Massachusetts sales tax was not collected.
- Purchases made from out-of-state sellers.
- Purchases made while traveling outside Massachusetts and brought into Massachusetts for use.
Notes
- For more information on your Penalty or Interest on balance due please see the state website here.
- The optional 5.85% tax rate is an election and may not reduce tax for every taxpayer.
- Penalty and interest amounts should only be entered if they have been assessed by the Massachusetts Department of Revenue.
- Taxpayers reporting installment sale income should retain records supporting the installment sale calculation.
- Massachusetts use tax applies when sales tax was not paid at the time of purchase.
- Keep copies of any Massachusetts notices used to determine penalty or interest amounts.