Yes, Massachusetts has a state income tax
Massachusetts charges a state income tax on wages, investment income, and other earnings. The tax rate is a flat 5% on most types of income, which is lower than many other states but higher than states with no income tax at all. You will owe this tax if you live in Massachusetts or work there, even if you live in another state.
The state also collects sales tax (6.25%), property tax (varies by town), and excise taxes on gas and other goods. This guide focuses on the income tax, which is what most people mean when they ask whether a state "has tax."
Key Takeaways
- Massachusetts charges a flat 5% income tax on wages, capital gains, and most other income sources.
- You owe Massachusetts income tax if you live in the state or work there, regardless of where you live.
- The state also collects 6.25% sales tax and property tax that varies by town.
- Tax filing important date follow the federal calendar: April 15 for income tax returns and quarterly estimated tax payments if you are self-employed.
Who pays Massachusetts income tax
You owe Massachusetts income tax if you are a resident of the state or a nonresident who earned income in Massachusetts. Residency is determined by where you live on December 31 of the tax year. If you moved to Massachusetts partway through the year, you file as a resident for that year. If you moved out, you file as a nonresident for the year you left.
Nonresidents who work in Massachusetts but live elsewhere pay tax only on income earned in the state. For example, if you live in New Hampshire and work in Boston, you owe Massachusetts tax on your wages but not on investment income from outside the state.
Certain groups are exempt or partially exempt. Military members stationed in Massachusetts do not owe state income tax on military pay. Clergy and religious workers may claim exemptions on housing allowances. Students who are not Massachusetts residents and work part-time may be exempt under specific conditions.
The 5% flat tax rate and what it covers
Massachusetts applies a flat 5% tax rate to most income. This includes W-2 wages from an employer, self-employment income, rental income, and interest from savings accounts. Capital gains (profit from selling stocks or property) are also taxed at 5%, though there is a proposal to raise this rate that changes periodically.
Some income is not taxed at the state level. Social Security benefits are exempt. Certain retirement distributions, including may have access to distributions from 401(k)s and IRAs, are exempt if you are over 59½. Unemployment benefits are also exempt from Massachusetts income tax, though they are subject to federal tax.
Dividend income and interest income are taxed at the same 5% rate as wages. If you have investment accounts, you will report this income on your state return even if you do not owe federal tax.
How to file your Massachusetts return
You file your state return using Form 1040-MA (the Massachusetts resident income tax return) or Form 1040-NR (for nonresidents). 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 is April 15, the same as the federal important date. If you file your federal return late, your state return is also late. You can request an extension, which gives you until October 15 to file, but taxes are still due by April 15 even if you extend the filing important date.
If you are self-employed or have other income not subject to withholding, you may need to make quarterly estimated tax payments on April 15, June 15, September 15, and January 15. The state sends notices if you owe estimated tax, but you can also calculate this yourself using Form 1040-ES-MA.
Tax withholding from paychecks
Your employer withholds Massachusetts income tax from your paycheck if you work in the state. The amount depends on your W-4 form, which you fill out when you start a job. If you claim too many exemptions, too little tax is withheld and you will owe money at tax time. If you claim too few, you will overpay and receive a refund.
You can adjust your withholding at any time by submitting a new W-4 to your employer. This is useful if your life changes—you get married, have a child, take a second job, or your spouse starts working. The state does not have a separate withholding form; it uses the federal W-4 to calculate state withholding.
If you work for multiple employers or are self-employed, you may not have enough tax withheld. In that case, you can make estimated tax payments or adjust your W-4 to withhold extra from one job to cover the shortfall.
Deductions and credits available in Massachusetts
Massachusetts allows a standard deduction similar to the federal standard deduction, though the state amount is different. For 2024, the Massachusetts standard deduction is $4,400 for single filers and $8,800 for married filing jointly. You can claim the standard deduction or itemize deductions if itemizing results in a larger deduction.
The state offers several tax credits that reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to low-income workers and is worth up to several hundred dollars depending on your income and family size. The Child and Dependent Care Credit helps offset childcare costs. The Residential Energy Credit provides a small credit for home energy improvements.
Unlike the federal return, Massachusetts does not allow a deduction for state and local taxes (SALT) paid to other states. If you paid income tax to another state, you may be able to claim a credit for taxes paid, but this is limited and does not work the same way as a deduction.
What happens if you move out of Massachusetts
If you move out of Massachusetts during the tax year, you file as a nonresident for that year. You owe Massachusetts tax only on income earned while you lived in the state. Once you move, you no longer owe tax on future income, but you must file a final return for the portion of the year you were a resident.
If you move to a state with no income tax, such as New Hampshire or Florida, you will no longer owe Massachusetts tax once you establish residency in the new state. The state determines residency based on where you live on December 31, so moving late in the year may still make you a resident for that entire tax year.
Keep records of when you moved, where you lived, and where you worked. If the state questions your residency status, you will need to show proof such as a lease, utility bills, or a driver's license with your new address.
Frequently Asked Questions
Do I owe Massachusetts tax if I live in New Hampshire but work in Massachusetts?
Yes. Massachusetts taxes nonresidents on income earned in the state. You owe tax on your wages from your Massachusetts job, but not on investment income or income from work outside Massachusetts. You will file Form 1040-NR with the state.
Is Social Security taxed in Massachusetts?
No. Social Security benefits are exempt from Massachusetts state income tax. However, they are subject to federal income tax if your combined income exceeds certain thresholds, so you may still owe federal tax on them.
What is the sales tax rate in Massachusetts?
The state sales tax is 6.25%. Some items are exempt, including most groceries, prescription medications, and clothing under $175. Restaurant meals and prepared foods are taxed at the full rate.
Can I deduct property taxes paid to Massachusetts on my state return?
No. Massachusetts does not allow a deduction for property taxes paid within the state. You can only deduct property taxes on your federal return if you itemize deductions and your total itemized deductions exceed the federal standard deduction.
What if I did not have enough tax withheld during the year?
You will owe the difference when you file your return. You can avoid this in future years by adjusting your W-4 to withhold more, making quarterly estimated tax payments if you are self-employed, or having extra tax withheld from one job if you work multiple jobs.