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Massachusetts lawmakers unveiled a tax relief package Tuesday aimed at delivering $561 million in reductions to taxpayers and companies during the current fiscal year through a slew of tax credits and other steps aimed at lowering tax burdens.
The proposal – which would top $1 billion in tax relief by the 2027 fiscal year when fully phased in – includes more than a dozen specific tax proposals, from eliminating the tax for estates under $2 million to increasing the child and dependent tax credit from $180 to $330 per child or dependent in the current tax year to $440 for the 2024 tax year.
Lawmakers say the increased child tax credit will benefit 565,000 families and will be the most generous universal child and dependent tax credit in the country.
The bill would also increase the cap on the rental deduction from $3,000 to $4,000, reduce the tax rate on short-term capital gains from 12 percent to 8.5 percent and allow cities and towns to adopt a local property tax exemption to encourage affordable housing.
Senate President Karen Spilka called the proposal historic.
“It is the largest bipartisan legislative tax relief proposal in over a generation,” Spilka said. “This tax relief bill will help alleviate many, many financial burdens that our families, our seniors, our renters face and put real dollars in their pockets.”
A low-income household with two children will see its tax refund check increase by more than $1,000 if the bill becomes law, she said.
“This is real money,” she added.
House Speaker Ronald Mariano also praised the bill, in particular the provision that strengthens from $1,200 to $2,400 the maximum senior circuit breaker tax credit, a refundable credit for senior citizens based on real estate taxes or rent paid on residential property owned or rented as a principal residence.
“It’s one of the greatest programs that we’ve ever come up with in my time involved in the state where you can actually get money to stay in your house, even if you don’t pay state taxes,” Mariano said.
Business-backed groups praised the package.
“I am grateful to Speaker Mariano, Senate President Spilka, Chair Michlewitz, Senator Rodrigues and the conference committee for their work to finalize tax relief legislation for Massachusetts.,” Greater Boston Chamber of Commerce President and CEO Jim Rooney said in a statement. “This legislation demonstrates that the Legislature prioritizes our state’s workers, employers, and economic competitiveness. As we continue to advance our competitive edge, tax relief and a strong business climate will help ensure that the Commonwealth attracts and retains residents and businesses, especially as other states actively pursue our talent and companies.”
Some business leaders had painted the estate tax and capital gains tax changes as a necessary antidote to damage the Fair Share Amendment income surtax on high-earners had done to the state’s reputation among the nation’s wealthy.
“The tax relief in this bill is affordable, advisable, and will accelerate improvements to the economic competitiveness and quality of life in Massachusetts, which will help the Commonwealth attract and retain residents and businesses alike,” Massachusetts Taxpayers Foundation President Doug Howgate said in a statement. “Each element of tax relief, which combined will provide close to $1 billion in relief, speaks directly to the cost and competitiveness challenges that are currently threatening our state. This bill alone does not solve those challenges; work must continue to ensure that our tax code reflects a changing world, but we cannot win the race for our economic future unless we start competing. This bill ensures that Massachusetts is in the race.”
The bill is expected to be voted on Wednesday in the House and Thursday in the Senate.
If approved, the next stop is Gov. Maura Healey’s office for her signature.
Healey called tax relief essential for making Massachusetts “more affordable, competitive and equitable.”
