Flat-Fee Tax Preparation for Massachusetts Residents

Massachusetts enacted a 4% surtax on income over $1M starting in 2023 — bringing the effective top MA rate to 9% for high earners (5% standard rate + 4% surtax)

MA short-term capital gains (assets held 1 year or less) are taxed at 8.5% — higher than the long-term rate — making holding period planning important for MA investors

The MA Pass-Through Entity Tax election allows eligible entities to pay MA income tax at the entity level, bypassing the federal SALT cap

Massachusetts imposes a real estate excise tax (transfer tax) on all property sales — $2.28 per $500 of value (approximately 0.456%), paid by the seller

MA does not tax Social Security benefits and provides a retirement income exclusion for certain pension income — favorable for retirees

Massachusetts imposes an estate tax on estates over $2M — one of the lowest thresholds in the nation — with rates from 0.8% to 16%

Boston imposes a short-term rental registration and oversight program — Airbnb operators in Boston face registration, insurance, and tax obligations beyond state-level requirements

MA has aggressive residency audit practices similar to NY — high-income earners who claim to have left MA face scrutiny, particularly those who maintain a home in MA

Massachusetts Real Estate Tax

Massachusetts — particularly the Greater Boston market — is one of the highest-value real estate markets in the US. The low estate tax threshold ($2M) affects many Boston-area real estate investors whose estate value includes their primary residence plus investment properties. MA's short-term capital gains rate of 8.5% creates strong incentives to hold real estate at least 12 months before selling.

Massachusetts Business Tax

Massachusetts businesses face the combination of a 5% flat income tax rate, a 4% surtax on income over $1M, and the MA PTET election as the primary SALT cap mitigation tool. The Millionaires Tax creates planning pressure for business owners whose pass-through income regularly exceeds $1M — income smoothing, entity restructuring, and retirement contribution strategies become highly valuable.

Do I need to file a Massachusetts state tax return?

If you are a Massachusetts resident or earned MA-source income above the filing threshold, you must file a MA Form 1. Massachusetts residents are taxed on worldwide income at 5%, plus the 4% Millionaires Tax surtax on income over $1M. Non-residents with MA-source income — including wages earned in MA or income from MA real estate — file a MA Form 1-NR/PY.

What is the Massachusetts Millionaires Tax?

Beginning in 2023, Massachusetts imposes an additional 4% income tax on all income over $1 million in a single year. This brings the effective MA rate to 9% on income above $1M. The $1M threshold is not inflation-adjusted. For business owners with large pass-through income in a single year — such as from a business sale or large capital gain — the MA Millionaires Tax can result in a substantial incremental state tax cost.

Does Massachusetts have an estate tax?

Yes. Massachusetts imposes an estate tax on estates with gross assets over $2 million. This is one of the lowest thresholds in the US — many Boston-area homeowners with a primary residence, retirement accounts, and modest investment portfolio may be subject to MA estate tax. Rates range from 0.8% to 16%. The estate tax is an important planning consideration for MA residents with combined assets approaching $2M.

How are short-term capital gains taxed in Massachusetts?

Massachusetts taxes short-term capital gains (assets held 1 year or less) at 8.5%, which is higher than the standard 5% MA rate. Long-term capital gains are taxed at 5% in MA (plus the 4% Millionaires Tax surtax if applicable). This differential creates a meaningful incentive to hold assets at least 12 months before selling to achieve the lower long-term rate.