Massachusetts has a flat 5% income tax, a 6.25% sales tax, and property taxes that vary by town

Massachusetts taxes income at a single rate of 5%, which applies to wages, interest, dividends, and most other income. This rate has been in place since 2002. Unlike many states, Massachusetts does not use tax brackets — everyone pays the same percentage regardless of how much they earn.

The state sales tax is 6.25% and applies to most goods and some services. Groceries, prescription medications, and clothing under $175 per item are exempt. Some services like haircuts and repairs are taxable; others like professional services are not.

Property tax rates are set by each city and town, not the state. They range from roughly 0.8% to 1.3% of assessed home value, depending on where you live. A homeowner in one town may pay significantly more or less than a homeowner with an identical house in a neighboring town.

Key Takeaways

  • Massachusetts income tax is a flat 5% on wages and most other income, with no tax brackets.
  • Sales tax is 6.25% statewide, but groceries, prescription drugs, and clothing under $175 are not taxed.
  • Property tax rates vary by town and range from about 0.8% to 1.3% of your home's assessed value.
  • Your employer withholds income tax from your paycheck based on a Massachusetts W-4 form you fill out.

How Massachusetts income tax withholding works

When you start a job in Massachusetts, you complete a Massachusetts W-4 form (not the federal one). Your employer uses this form to calculate how much state income tax to withhold from each paycheck. The withholding is sent to the Massachusetts Department of Revenue on your behalf.

If too much is withheld, you receive a refund when you file your state tax 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 a second job or your spouse's income changes.

Self-employed people and business owners do not have an employer to withhold taxes, so they must make quarterly estimated tax payments to the state. These are due on April 15, June 15, September 15, and January 15.

What the 6.25% sales tax covers and excludes

Massachusetts sales tax applies to clothing, electronics, furniture, household goods, and most prepared food. It also applies to services like dry cleaning, haircuts, and car repairs. However, the state maintains a long list of exemptions.

Exempt items include unprepared groceries (bread, milk, vegetables, meat), prescription and over-the-counter medications, medical devices, and clothing and footwear under $175 per item. Items over $175 are taxed only on the amount above $175 — so a $200 coat is taxed on $25. Newspapers, magazines, and certain educational materials are also exempt.

Some services are not taxed at all. Professional services like accounting, legal information, and medical care are exempt. Utilities (electricity, gas, water) are not subject to sales tax. Rent and mortgage payments are never taxed.

How property tax is calculated in your town

Property tax in Massachusetts is based on the assessed value of your home, not its market value. Your town's assessor determines this value, usually by comparing your home to similar recent sales in the area. The assessed value is often lower than what you paid or what your home is worth.

Your town then applies its own tax rate to this assessed value. If your home is assessed at $300,000 and your town's rate is 1.0%, your annual property tax is $3,000. A town with a 1.2% rate would charge $3,600 for the same house. This is why property tax bills vary so widely across the state.

You receive a property tax bill twice a year, usually in May and November. If you disagree with your assessed value, you can file an abatement process with your town assessor, usually by a important date in May. You must show evidence that the assessment is too high — comparable sales, recent appraisals, or photos of needed repairs.

Tax deductions and credits available to Massachusetts residents

Massachusetts allows a personal exemption of $4,400 per person (as of 2024, though this amount can change). This reduces your taxable income before the 5% tax is applied. If you are married filing jointly, you get two exemptions.

The state also offers a dependent exemption of $1,000 per child or dependent. If you have three children, you can deduct $3,000 from your income. These exemptions are separate from the federal exemptions on your federal tax return.

Massachusetts residents over 65 may may have access to for a property tax exemption or deferral program. Homeowners with low income can defer property taxes until the home is sold or the estate is settled. The specific income limits and property value limits vary by town.

Filing your Massachusetts state tax return

Massachusetts residents file a state income tax return using Form 1 (the main return form) along with any necessary schedules. You file this return with the Massachusetts Department of Revenue, separate from your federal return. The important date is typically April 15, the same as the federal important date.

You can file by mail, online through the state's website, or through tax software that supports Massachusetts returns. If you owe money, you pay it with your return. If you are due a refund, the state processes it and sends it by check or direct deposit.

If you did not earn enough to owe tax, you may still want to file to claim the Earned Income Tax Credit (EITC), which is available to low-income workers. Massachusetts also has a state version of the EITC that can provide additional money back.

Special tax situations: seniors, veterans, and low-income households

Massachusetts offers a property tax exemption for seniors in many towns. To may have access to, you must be at least 65 years old, own your home, and meet income limits that vary by town. Some towns exempt a percentage of the home's value; others exempt a flat dollar amount. You explore through your town assessor.

Veterans who are disabled may may have access to for a property tax exemption. The amount depends on the disability rating from the U.S. Department of Veterans Affairs. Surviving spouses of veterans killed in action may also may have access to. Again, you explore through your town assessor.

Low-income households may may have access to for the Circuit Breaker Tax Credit, which reduces property tax or rent burden. You must be a homeowner or renter with income below a certain threshold. The credit is claimed on your state tax return.

Frequently Asked Questions

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

Yes. Massachusetts taxes anyone who earns income within the state, regardless of where they live. If you work in Massachusetts but live in another state, you owe Massachusetts tax on that income. You may also owe tax to your home state, though many states offer a credit to avoid double taxation.

Is Social Security taxed in Massachusetts?

No. Social Security benefits are not subject to Massachusetts income tax. Pension income and retirement account withdrawals (like 401k distributions) are taxed as regular income at the 5% rate.

What happens if I do not file a Massachusetts tax return?

If you owe tax and do not file, the state can assess penalties and interest. If you are due a refund, you have three years to claim it before the money is forfeited. It is worth filing even if you do not owe, because you may be due credits or a refund.

Can I deduct federal taxes paid on my Massachusetts return?

No. Massachusetts does not allow you to deduct federal income tax paid. You can deduct state and local property taxes, but only up to $10,000 total per year on your federal return (this is a federal limit, not a Massachusetts rule).

How often do Massachusetts tax rates change?

The income tax rate of 5% has been stable since 2002. The sales tax rate of 6.25% has been in place since 1990. Property tax rates are set annually by each town and can change year to year. Check your town's assessor's office for current rates.