BOSTON – Representative Richard M. Haggerty (D-Woburn), joined his colleagues in both the House and Senate, to support a comprehensive tax package with the goal of providing financial relief to families and businesses, making Massachusetts more competitive with other states.
“This important tax relief package will help lift some of the financial burden felt by hardworking families and seniors, as well as our businesses, in Woburn and across the Commonwealth,” said Representative Haggerty. “This bill reflects our commitment to making Massachusetts a more competitive and affordable place to live, work, and raise a family.”
House Bill 4104, An Act to improve the Commonwealth’s competitiveness, affordability, and equity, passed last week, phases in a series of tax reforms projected to yield $561 million in taxpayer savings during the current fiscal year. By 2026, when these reforms are fully implemented, the savings are projected to be $1.02 billion. This tax relief legislation, a compromise negotiated by a six-member conference committee over the past three months, was approved by the House of Representatives on a vote of 155-1 on September 27 and by the Senate on a vote of 38-1 the following day.
“Through the expansion of tax credits for families and seniors, estate tax reform, and tackling our housing challenges with tax credits, exemptions, and a raised rental deduction cap, coupled with reduced rates for short-term investments, this package puts money back in people’s pockets during a time of increasing costs,” said Representative Haggerty.
The bill includes a range of tax reforms and credits aimed at helping low- and middle-income taxpayers, especially parents and caregivers, seniors, renters, and workers. It also includes changes to make Massachusetts more competitive with other states by reducing the tax rate on short-term capital gains, increasing the estate tax exemption, and simplifying the tax calculation for multi-state businesses.
The compromise bill includes the following tax changes:
• Child and Dependent Tax Credit – Increases the refundable tax credit for a dependent child, disabled adult, or senior from $180 to $310 per dependent in FY2023, and then to $440 FY2024 and beyond, while eliminating the child/dependent cap. This will help over 565,00 families;
• Estate Tax – Reduces estate tax for all taxpayers and eliminates tax for all estates under $2 million by allowing a uniform credit of $99,600;
• Earned Income Tax Credit (EITC) – Increases the refundable Earned Income Tax Credit (EITC) from 30% to 40% of the federal credit, benefitting nearly 400,000 taxpayers with incomes under $60,000;
• Single Sales Factor Apportionment – Establishes a single sales factor apportionment in the Commonwealth based solely on receipts;
• Senior Circuit Breaker Tax Credit – Doubles the refundable senior circuit breaker tax credit, from $1,200 to $2,400;
• Senior Property Tax Volunteer Program – Provisions allowing municipalities to provide up to $2,000 in property tax reductions for older residents participating in the senior work-off program, which is currently capped at $1,500;
• Rental Deduction Cap – Increases the rental deduction cap from $3,000 to $4,000, which will assist approximately 800,000 renters;
• Short-Term Capital Gains Tax – Reduces tax on short-term capital gains from 12% to 8.5%;
• Housing Development Incentive Program (HDIP) – Increases the statewide cap from $10 million to $57 million for 2023, and in subsequent years to $30 million annually, this increase is estimated to create 12,500 new homes in Gateway Cities and spur over $4 billion of private investment in these communities;
• Low-Income Housing Tax Credit – Raises the annual authorization from $40 million to $60 million, spurring the creation of thousands of new units of affordable housing annually;
• Commuter Transit Benefits – Makes public transit fares, as well as ferry and regional transit passes and bike commuter expenses, eligible for the commuter expense tax deduction;
• Local Option Property Tax Exemption for Affordable Housing – Permits municipalities to adopt a local property tax exemption for renters whose income falls below a certain level set by the community;
• Title V Cesspool or Septic System Tax Credit – Increases the maximum credit for septic tank repairs and replacement from $6,000 to $18,000 and increases the amount claimable to $4,000 per year;
• Lead Paint Abatement – Doubles the credit to $3,000 for full abatement and $1,000 for partial abatement;
• Student Loan Repayment Exemption – Ensures that employer student loan payments are not treated as taxable compensation;
• Apprenticeship Tax Credit Reforms – Expands the occupations for which this workforce development credit is available;
• Dairy Tax Credit – Increases the statewide cap from $6 million to $8 million, to provide more assistance for local farmers during downturns in milk prices; and
• Cider Tax – Raises the maximum amount of alcohol for these classes of drinks to 8.5%
Representative Haggerty has consistently advocated for comprehensive tax relief. He has voted multiple times in its favor and will continue to work on reducing the tax burden for residents of Woburn and Massachusetts.
In addition to tax relief, the legislation updates Chapter 62F of the Massachusetts General Laws, which triggered close to $3 billion in taxpayer refunds in 2022. This law requires the return of surplus revenue to taxpayers when tax revenue collections in a given fiscal year surpass the annual tax revenue cap and ensures every taxpayer receives an equal credit allocation.
Furthermore, the bill modifies the Stabilization Fund cap, enabling the Commonwealth’s savings account to hold a greater amount of funds. The bill also mandates married taxpayers, who submit a joint return with the federal government, must also file a joint state return, with exemptions or adjustments promulgated by the Department of Revenue (DOR).
Having passed the House of Representatives and Senate, the bill now goes to the Governor for her consideration.