Massachusetts Tax Rates

This post provides an overview of the primary taxes levied at the state level in Massachusetts. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Massachusetts utilizes a primarily flat rate individual income tax system, with an additional surtax on very high incomes.

  • Standard Rate: The standard state income tax rate is a flat 5.00% of Massachusetts taxable net income. This rate applies to most types of earned income (wages, salaries) and certain unearned income (interest, dividends, and most long-term capital gains).
  • Surtax (Millionaire’s Tax): Starting with the 2023 tax year, an additional 4.0% surtax is applied to annual income over $1 million. This results in a top marginal rate of 9.00% on income exceeding that threshold.
  • Capital Gains: Certain capital gains are taxed at different rates:
    • Short-term capital gains (assets held for one year or less) are taxed at 8.5%.
    • Long-term gains from the sale of collectibles are taxed at 12%.
  • Retirement Income: Social Security benefits are not taxable in Massachusetts. Income from most private pensions and IRA withdrawals is generally taxable, but certain government pensions are exempt.

Sales and Use Tax

Sales tax is a key revenue source, and Massachusetts maintains a single, uniform state rate.

  • State Rate: The general state sales tax rate is a uniform 6.25% on the retail sale or rental of most tangible personal property and some telecommunications services.
  • No Local Sales Tax: Massachusetts does not permit local, county, or municipal general sales taxes. Therefore, the combined state and local sales tax rate is uniformly 6.25% across all jurisdictions.
  • Exemptions: Key exemptions include:
    • Groceries (unprepared food for home consumption).
    • Prescription drugs.
    • Clothing costing $175 or less per item. For items costing more than $175, sales tax is only due on the amount over $175.
  • Use Tax: A state use tax of 6.25% applies to taxable items purchased outside of Massachusetts but used, stored, or consumed in the state if state sales tax was not collected or was collected at a lower rate.

Property Tax (Ad Valorem Tax)

Property taxes in Massachusetts are administered and collected exclusively at the local level by cities and towns. The state’s median annual property tax payment is one of the highest in the country, even though the effective rate is near the national average.

  • Assessment: Local assessors must assess all property at its full and fair cash value (market value) as of January 1 each year.
  • Tax Calculation: The tax owed is calculated by applying the local tax rate (expressed as dollars per $1,000 of assessed value, or mills) to the assessed value. These rates vary widely by municipality.
  • Exemptions: Cities and towns often offer property tax exemptions or deferrals for specific groups, such as seniors, veterans, and blind residents.

Corporate Income Tax (Corporate Excise Tax)

Massachusetts imposes a tax on corporations called the Corporate Excise Tax, which has two main components.

  • Tax Rate: The tax is generally the greater of:
    1. 8.00% of the corporation’s taxable net income allocated to Massachusetts.
    2. A tax of $2.60 per $1,000 on the value of the corporation’s taxable tangible property or net worth.
  • Minimum Tax: There is a minimum corporate excise tax of $456.
  • Apportionment (Mandatory Combined Reporting): For multi-state corporations, the state requires mandatory unitary combined reporting and determines taxable income using a single sales factor apportionment method.

Unique and Miscellaneous Taxes

  • Estate Tax: Massachusetts imposes a state estate tax on estates valued over $2 million (effective for deaths on or after January 1, 2023). This tax is calculated on the value of the entire estate, not just the amount over the threshold. The rates are progressive, ranging from 0.8% to 16.0%.
  • Cigarette Tax: The state imposes a high excise tax on cigarettes, currently $3.51 per pack of 20 cigarettes.
  • Marijuana Tax: Retail marijuana sales are subject to the 6.25% sales tax plus a 10.75% state excise tax. Municipalities may also impose an additional local tax of up to 3%.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.