Massachusetts has a flat income tax rate of 5.0% on most income
Massachusetts taxes your income at a single rate: 5.0% on wages, salaries, and most other income. This rate has been in place since 2002. Unlike some states that use brackets—where you pay different percentages depending on how much you earn—Massachusetts applies the same 5.0% to nearly everyone.
The state also taxes capital gains (profits from selling investments) at 5.0%, with a small exception: long-term capital gains and dividends may be taxed at a lower rate depending on the year and current legislation. Interest income is taxed at the standard 5.0% rate.
You file Massachusetts taxes using Form 1-NR/PY (if you're a nonresident or part-year resident) or Form 1 (if you're a full-year resident). The state collects taxes through withholding from your paycheck if you're an employee, or you may need to make quarterly estimated payments if you're self-employed or have other income sources.
Key Takeaways
- Massachusetts charges 5.0% income tax on wages, salaries, capital gains, and most other income types.
- You must file a state return if you earned income in Massachusetts or lived there for part of the year, even if you owe no tax.
- Your employer withholds state income tax from your paycheck automatically; you reconcile what was withheld against what you owe when you file.
- Certain types of income—including Social Security benefits, some pension income, and certain retirement distributions—are exempt from Massachusetts state tax.
- The state tax important date matches the federal important date, usually April 15, though you can request an extension.
Who has to file a Massachusetts state return
You must file a Massachusetts return if you lived in the state for any part of the tax year and earned income. This includes W-2 wages, self-employment income, rental income, and investment income. The threshold for filing depends on your age and filing status, but generally you file if your income exceeds the standard deduction for your situation.
Even if you owe no tax—because your income was too low or you had enough withholding—you may still need to file to claim a refund. Massachusetts allows you to claim the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and other credits that can result in a refund even if no tax was owed.
If you moved to or from Massachusetts during the year, you file as a part-year resident. You report only the income you earned while living in Massachusetts and claim deductions and credits proportionally.
Income that is not taxed in Massachusetts
Massachusetts exempts certain types of income from state tax. Social Security benefits are not taxed. Distributions from traditional IRAs and 401(k) plans are not taxed if you are age 62 or older (with some limits). Military pensions are exempt. Certain other retirement income also qualifies for exemption if you meet age and income requirements.
Unemployment benefits are not taxed in Massachusetts. Workers' compensation is exempt. Gifts and inheritances are not taxed. Municipal bond interest is not taxed. Some scholarship and fellowship income may be exempt if it meets specific conditions.
If you receive income from sources outside Massachusetts—for example, you worked in another state or received income from a business located elsewhere—you generally do not owe Massachusetts tax on that income unless you were a resident of the state when you earned it.
How withholding works and what to do if too much or too little is taken
When you start a job in Massachusetts, your employer asks you to complete a Massachusetts W-4 form (separate from the federal W-4). This form tells your employer how much state tax to withhold from each paycheck. The amount depends on your filing status, the number of dependents you claim, and any additional withholding you request.
If too much tax is withheld, you receive a refund when you file your return. If too little is withheld, you owe the difference. You can adjust your withholding at any time by submitting a new W-4 to your employer—for example, if you get married, have a child, or take a second job.
Self-employed people and those with income not subject to withholding (such as rental income or investment income) may need to make quarterly estimated tax payments to Massachusetts. These are due on April 15, June 15, September 15, and January 15 of the following year. You can pay online through the Massachusetts Department of Revenue website.
Filing your return and where to send it
You file your Massachusetts return using Form 1 (for full-year residents) or Form 1-NR/PY (for nonresidents and part-year residents). Both forms are available on the Massachusetts Department of Revenue website. You can file by mail or electronically through the state's online system or through tax software that supports Massachusetts returns.
The important date to file is the same as the federal important date, usually April 15. If you need more time, you can request an automatic six-month extension by filing Form 4868 with the federal government; Massachusetts honors the federal extension automatically.
If you file by mail, send your return to the Massachusetts Department of Revenue at the address listed on the form. If you file electronically, the return is transmitted directly. Keep a copy of your filed return and any supporting documents (W-2s, 1099s, receipts for deductions) for at least three years in case the state requests verification.
Deductions and credits you can claim
Massachusetts allows you to claim the standard deduction, which varies by filing status and age. For 2024, the standard deduction is $4,400 for single filers and $8,800 for married filing jointly (these amounts change yearly). If you are age 65 or older, you may claim an additional deduction.
You can also claim the Earned Income Tax Credit if you work and earn below a certain income threshold. The credit amount depends on your income, filing status, and number of may have access to children. Massachusetts also offers a Child and Dependent Care Credit if you paid for childcare to allow you to work.
Other credits include the Dependent Exemption Credit (for each dependent you claim) and the Residential Energy Credit (if you made certain energy-efficient improvements to your home). Unlike the federal return, Massachusetts does not allow you to itemize deductions; you use the standard deduction instead.
What happens if you owe taxes or disagree with an assessment
If you owe taxes when you file, you can pay online, by mail, or by phone through the Massachusetts Department of Revenue. If you cannot pay in full, you can request a payment plan. Interest accrues on unpaid taxes at a rate set by the state (currently around 8% annually, though this changes quarterly).
If the Department of Revenue audits your return and assesses additional tax, you receive a notice explaining the adjustment. You have the right to appeal. You can request an informal conference with the department to discuss the assessment, or you can file a formal appeal with the Appellate Tax Board. Instructions for appealing are included in the notice.
If you believe you made an error on a return you already filed, you can file an amended return using Form 1-X. You have three years from the original filing date to file an amendment and claim a refund.
Frequently Asked Questions
Do I have to pay Massachusetts income tax if I work in Massachusetts but live in another state?
Yes. Massachusetts taxes income earned within the state, regardless of where you live. However, you may be able to claim a credit on your home state's return for taxes paid to Massachusetts to avoid double taxation. Check your home state's rules.
Is there a local income tax in Massachusetts in addition to the state tax?
No. Massachusetts does not allow cities or towns to impose a local income tax. The 5.0% state tax is the only income tax you owe to Massachusetts.
What if I moved to Massachusetts partway through the year?
You file as a part-year resident and report only income earned while you lived in Massachusetts. You claim deductions and credits proportionally based on the number of days you were a resident. Use Form 1-NR/PY to file.
Can I file my Massachusetts return online?
Yes. You can file electronically through the Massachusetts Department of Revenue website, through tax software that supports Massachusetts, or by mail. Electronic filing is faster and you receive confirmation of receipt.
What if I did not earn enough to file but had taxes withheld?
You should still file to claim a refund of the taxes withheld. You may also be able to claim credits like the Earned Income Tax Credit that result in a refund even if no tax was owed.