After months of anticipation, House and Senate Democrats in Massachusetts have reached a consensus on a groundbreaking $1 billion tax relief bill. The proposed legislation aims to inject more funds into the pockets of renters, individuals, families, and seniors while introducing cuts to short-term capital gain taxes and estate taxes.
- Relief for Various Groups:
- The bill promises to provide substantial relief, allocating $561.3 million for the 2024 fiscal year and projecting a total relief of $1 billion by the 2027 fiscal year.
- According to a summary report, the emphasis is on benefiting renters, individuals, families, and seniors.
- Overhauled Child and Dependent Tax Credit:
- The largest item in the package, valued at around $165 million initially and potentially reaching $307 million upon full implementation, is the revamped child and dependent tax credit.
- This overhauled credit aims to increase support for families, disabled adults, and seniors, raising the credit from $180 to $310 in 2023 and further to $440 in 2024.
- Over 565,000 families in the commonwealth are expected to benefit from this expanded credit.
- Enhancements to Tax Credits:
- The Earned Income Tax Credit, designed to assist low-income families, will be raised from 30% to 40% of the federal credit.
- Seniors’ tax credits will see a substantial doubling, from $1,200 to $2,400.
- The cap on rental deduction is set to increase from $3,000 to $4,000.
- Estate Taxes and Capital Gains:
- Estate taxes for estates less than $2 million will see a significant reduction through a uniform credit of $99,600.
- Short-term capital gains taxes, initially proposed at 5% by the House, will be cut from 12% to 8.5%.
- Chapter 62F Amendments:
- The bill introduces changes to Chapter 62F, altering the law that mandates the return of excess tax dollars to residents when collections surpass the allowable amount for the year.
- The proposed shift replaces the proportional system with an equal payment for every taxpayer triggered by Chapter 62F, irrespective of their annual tax contributions.
- Legislative Timeline:
- The legislation is set for voting on Wednesday, marking the culmination of over a year-and-a-half of debate.
- Both House Speaker Ron Mariano and Senate President Karen Spilka express the intention to send the tax deal to Governor Maura Healey’s office by the week’s end.
- Governor’s Perspective:
- Governor Maura Healey applauds the comprehensive package, emphasizing that tax relief is vital for making Massachusetts more affordable, competitive, and equitable.
- The Governor looks forward to reviewing the details and delivering relief to families and businesses.
As Massachusetts awaits the outcome of the vote and potential gubernatorial approval, the proposed tax relief bill reflects a comprehensive effort to address the economic challenges faced by various segments of the population in the state.