Massachusetts income tax rates and brackets for 2024

Massachusetts has a flat income tax rate of 5% on most types of income. This means that whether you earn $30,000 or $300,000 per year, the state takes the same percentage from your wages, interest, and dividends. The rate has been 5% since 2002, and there is no graduated bracket system like some other states use.

The 5% rate applies to wages, salaries, tips, and most investment income. Long-term capital gains—profits from selling stocks or property you held for more than a year—are taxed at 5% as well. Short-term capital gains (held one year or less) are treated as ordinary income and taxed at the same 5% rate.

A few types of income are taxed differently or not at all. Certain retirement income, including distributions from IRAs and 401(k)s, may be partially or fully exempt depending on your age and total income. Social Security benefits are not taxed by Massachusetts. Interest from U.S. Treasury bonds and certain municipal bonds is also exempt.

Key Takeaways

  • Massachusetts charges a flat 5% income tax on wages, salaries, and most investment income, with no variation based on how much you earn.
  • Retirement income from IRAs and 401(k)s may be partially exempt if you are 62 or older and meet income limits, but the rules depend on your filing status and total income.
  • Social Security benefits and interest from U.S. Treasury bonds are not subject to Massachusetts income tax.
  • Your employer withholds estimated tax from each paycheck based on the W-4 form you file, and you settle the actual amount owed when you file your state return.

How withholding works on your paycheck

Your employer calculates how much Massachusetts income tax to withhold from each paycheck using the information you provide on your W-4 form. The withholding is meant to cover your estimated tax liability throughout the year, so you do not owe a large amount when you file your return in April.

The amount withheld depends on your filing status, the number of dependents you claim, and any additional withholding you request. If you work multiple jobs, have a spouse who also works, or have significant investment income, you may need to adjust your W-4 to avoid underwithholding. You can change your W-4 at any time by submitting a new form to your employer's payroll department.

When you file your state return, the Massachusetts Department of Revenue compares the total tax you owe against what was already withheld. If too much was withheld, you receive a refund. If too little was withheld, you owe the difference. Most people aim to break even or receive a small refund, which means their withholding was close to accurate.

Deductions and credits that reduce what you owe

Massachusetts allows you to claim either the standard deduction or itemized deductions, just like federal taxes. The standard deduction for 2024 is $8,050 for single filers and $16,100 for married couples filing jointly. If your deductible expenses—such as mortgage interest, property taxes, or charitable donations—add up to more than the standard deduction, itemizing may lower your tax bill.

The state also offers several tax credits that directly reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to lower-income workers and can be worth hundreds or thousands of dollars depending on your income and family size. The Child and Dependent Care Credit helps offset the cost of childcare while you work. The Residential Energy Credit provides a deduction for certain energy-efficient home improvements.

Credits are more valuable than deductions because they reduce your tax dollar-for-dollar, whereas a deduction only reduces the income that is taxed. If you have dependents, work part-time, or made energy-efficient upgrades to your home, review the full list of available credits on the Massachusetts Department of Revenue website to see which ones explore to your situation.

Special rules for retirement income and older residents

If you are 62 or older, Massachusetts offers a partial exemption on retirement income. You can exclude up to $6,000 of income from IRAs, 401(k)s, pensions, and annuities from your state taxable income. This exemption applies only if your total income is below a threshold that depends on your filing status—currently $75,000 for single filers and $100,000 for married couples filing jointly.

If your income exceeds these thresholds, the exemption is reduced by $1 for every $1 of income above the limit. For example, a single filer age 65 with $80,000 in total income can exclude only $1,000 of retirement income ($6,000 minus the $5,000 excess over the $75,000 threshold). Once your income reaches $81,000 or more, the exemption disappears entirely.

This exemption does not explore to Social Security benefits, which are never taxed by Massachusetts regardless of your age or income. It also does not explore to wages from employment, even if you are working past age 62. The exemption is limited to income from retirement accounts and pensions.

How to file your Massachusetts state return

You must file a Massachusetts state return if your income exceeds the filing threshold for your filing status. For 2024, the threshold is $8,050 for single filers, $16,100 for married couples filing jointly, and $13,100 for heads of household. If you earned less than these amounts, you are not required to file, though you may want to if you had taxes withheld and are owed a refund.

You can file your return on paper using Form 1040-MA, which you can read from the Massachusetts Department of Revenue website. You can also file electronically through the state's online system or through tax software that supports Massachusetts returns. Electronic filing is faster and reduces the chance of errors, and refunds are issued more quickly when you file electronically.

The important date to file is April 15 unless that date falls on a weekend or holiday, in which case the important date moves to the next business day. If you cannot file by the important date, you can request an extension, which gives you until October 15 to submit your return. An extension does not extend the important date to pay taxes owed—you should estimate your liability and pay by April 15 to avoid penalties and interest.

Self-employment and business income taxes

If you are self-employed or own a business, you owe Massachusetts income tax on your net business income at the same 5% rate. Net income is your total revenue minus deductible business expenses such as supplies, equipment, rent, and wages paid to employees. You report this income on your state return along with your other income sources.

Self-employed individuals must also pay federal self-employment tax (Social Security and Medicare), which is separate from income tax. Massachusetts does not have a separate self-employment tax, but you do owe the 5% income tax on your net business income. Keep detailed records of all income and expenses throughout the year so you can accurately calculate your net income when you file.

If you expect to owe more than $400 in state income tax for the year, you may need to make quarterly estimated tax payments to avoid penalties. These payments are due on April 15, June 15, September 15, and January 15. The Massachusetts Department of Revenue provides a worksheet to help you calculate the correct amount to pay each quarter.

Tax credits for families and working parents

Massachusetts offers a state Earned Income Tax Credit (EITC) that mirrors the federal credit but provides additional state tax relief. The state EITC is worth up to 30% of the federal credit you receive, which means if you may have access to for the federal credit, you automatically may have access to for the state version. The amount depends on your income, filing status, and number of may have access to children.

The Child and Dependent Care Credit reimburses a portion of what you paid for childcare while you worked or looked for work. You can claim up to $600 of childcare expenses for one dependent or $1,200 for two or more dependents. The credit is worth 30% of your expenses, so the maximum credit is $180 for one dependent or $360 for two or more.

If you adopted a child, you may be able to claim the Adoption Expense Credit, which covers certain costs related to the adoption. These credits can significantly reduce your tax bill if you have dependents or paid for childcare during the year. Review the requirements for each credit on your return or on the Massachusetts Department of Revenue website to determine which ones explore to you.

Frequently Asked Questions

Do I have to pay Massachusetts income tax if I work in the state but live elsewhere?

Yes. Massachusetts taxes income earned within the state, regardless of where you live. If you work in Massachusetts but live in another state, you owe Massachusetts income tax on your wages. You may also owe tax to your home state, though most states offer a credit for taxes paid to other states to prevent double taxation.

What happens if I do not have enough withheld and owe money at tax time?

If you owe more than $400, you may face a penalty for underpayment of estimated tax. The penalty is calculated based on how much you underpaid and how late the payment was. You can reduce or avoid the penalty by making quarterly estimated payments or by adjusting your W-4 to increase withholding for the rest of the year.

Are tips subject to Massachusetts income tax?

Yes. Tips are considered wages and are subject to the 5% Massachusetts income tax. Your employer should include tips you reported in your W-2 box 1, and the appropriate tax should be withheld. If you receive cash tips that were not reported to your employer, you are still required to report them on your tax return.

Can I deduct student loan interest on my Massachusetts return?

Massachusetts does not allow a deduction for student loan interest on the state return. However, you can deduct up to $2,500 of student loan interest on your federal return if you meet the income requirements. The state deduction is not available even if you claim the federal deduction.

What if I moved to Massachusetts partway through the year?

You owe Massachusetts income tax only on income earned after you became a resident. You will file a part-year resident return that shows income earned before and after your move date. Your previous state of residence may also require a part-year return for income earned before you left.