Twists and Turns of Tax Relief

June 30, 2023

Twists and Turns of Tax Relief

Do you remember when tax relief was first promised at the beginning of 2022? The state was flush with billions of dollars of excess revenue and billions of dollars in federal aid as Massachusetts residents and small businesses suffered under prolonged inflation that drove up the price of goods and services. Lawmakers stated they wanted meaningful tax relief and turned down “gimmicks” like gas tax reductions or longer sales tax holidays. In this period of time, taxes actually increased with the passage of the income tax surcharge, making Massachusetts the only state in the nation to raise income taxes for 2023. Flash forward to July of 2023, and we are still waiting for those tax reforms. Currently, state House and Senate conferees are hashing out the details of what a final tax package may look like. The House and Senate versions of the bill differed, both including provisions that NFIB opposes. A Senate amendment to their bill claimed to close a loophole but fundamentally changed tax law, and as one House lawmaker argued, could impact up to 90,000 tax filers in Massachusetts. As a way to capture as much revenue as possible from the so-called millionaire’s tax, Senator Jason Lewis filed an amendment that would prevent married couples from filing their federal tax returns jointly, and their state returns individually. The House tax relief bill changed the 62F law, the only tax relief Massachusetts residents experienced in 2022. The House opted to make the refund “fairer” for all residents of the Commonwealth by collecting the excess revenue and splitting it evenly amongst all taxpayers, rather than refunding a percentage of what the taxpayers paid to the state. So, whether you pay $20 in taxes or $20,000, taxpayers will receive the same amount back if 62F is triggered. The most encouraging part of the tax relief package for small businesses is the estate tax exemption increase to $2 million from the current $1 million, while eliminating the cliff effect. It is important to note that this was reduced from Governor Healey’s original $3 million proposal. Of the twelve states that have an estate tax, this change will move Massachusetts from worst in the nation to third worst (only less onerous than OR and RI). NFIB will keep you updated if or when the tax relief conferees release a final tax package.

Topics:

Uncategorized

State:

Massachusetts

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