Senate Resoundingly Approves Bill for Progressive Tax Relief and Assistance

The Massachusetts Senate approved on Thursday a $590 million Tax Relief bill which delivers support to low- and middle-income earners and chips away at the headwinds that threaten Massachusetts’ competitiveness. Focusing on providing relief to residents across Massachusetts while upholding fiscal responsibility, the Senate’s tax relief package will provide relief to renters, seniors, and parents struggling with high early education costs while also increasing much-needed housing production. With the recent passage of the FY24 budget last month, the Commonwealth is now poised to secure and strengthen its economic foundation to weather future uncertainty.

“As I have said from the outset, tax relief should go to the workers, families, and elderly residents of the Commonwealth who need it most,” stated Senate President Karen E. Spilka (D-Ashland). “Massachusetts doesn’t need just any tax relief; we need permanent, progressive, smart, and sustainable tax relief. Too many families have been caught between the rising costs of healthcare, housing, education, and basic goods. While we advance reforms to lower these costs and shore up our social services, meaningful tax relief is another tool in our kit to encourage people to live and raise their families in Massachusetts. I want to thank each of my Senate colleagues who contributed to this proposal, especially Senator Rodrigues and Senator Moran for their leadership in developing this strong package.”

“While there has been calls for the Senate to act more swiftly on tax relief, my colleagues and I took a deliberative and practical approach to tax relief, centering our proposal on what we saw as major areas of concern to individuals and working families of the Commonwealth. Namely, providing critical housing assistance to the demographic that is most affected by housing instability and unaffordability; the 25-40 age group who are being priced out of the Commonwealth at an alarming rate. We need this group to remain in Massachusetts, put down roots, and buy a home of their own.” said Senator Michael J. Rodrigues, Chair of the Senate Committee on Ways and Means (D-Westport). “Consistent with the views of the Senate membership, our Senate tax package is forward-looking, fiscally sustainable, comprehensive, and progressive. It puts money back into the pockets of our residents, providing permanent tax cuts for low-income workers, families, renters, seniors, persons with disabilities, while focusing on the largest issue that is undercutting our Commonwealth’s overall competitiveness – which is the affordability and availability of housing. Thank you to my colleagues in the Senate, especially my colleagues on the Committee, whose advocacy, collaboration, and dedication helped to inform and shape this comprehensive tax relief proposal. A sincere thanks to the Ways and Means staff, whose seamless transition from the budget to this tax relief bill was truly remarkable. Lastly, a very warm and genuine thank you to Senate President Spilka for her determined and compassionate leadership as we work together to rebuild our economy and bolster our state’s long-term economic health.”

“Working families aren’t leaving the Commonwealth because of taxes on day-traders,” said Senator Susan Moran, Chair of the Joint Committee on Revenue (D-Falmouth). “They are leaving because they can’t find housing they can afford. This package aimed at growing housing will also grow our workforce and the Commonwealth’s competitiveness.”

“We gave the Choice to municipalities to reward the good behavior of landlords who make rent affordable. This is just one more tool in the toolbox to get people housed.” said Senator Edwards, Chair of the Joint Committee on Housing (D-East Boston).

This package includes a variety of initiatives as tax relief for the residents of Massachusetts. The bill:

• increases the Earned Income Tax Credit (EITC), which provides critical support to working families, from 30% to 40% of the federal credit

• merges existing credits into a new and enhanced Child and Dependent Tax Credit (CDTC), increases the amount of the credit from $180 to $310 per child/dependent, and eliminates the current cap of two children/dependents

• increases statewide cap for the Housing Development Incentive Program (HDIP) from $10 million to $57 million on a one-time basis and then to $30 million annually

• increases the cap on the rental deduction from $3,000 to $4,000

• raises annual authorization of the Low Income Housing Tax Credit, which directly supports the production of affordable housing units across the Commonwealth, from $40 million to $60 million

• doubles the maximum senior circuit breaker credit, which supports elderly residents who struggle with high housing costs, from $1,200 to $2,400

• excludes homes valued at under $2 million from the Estate Tax and eliminates the “cliff effect” by allowing a uniform credit of $99,600 for all estates

• triples the maximum credit under the Title V Tax Credit, which supports families who must replace failed septic systems, from $6,000 to $18,000, and lifts the amount claimable to $4,000 per year

• increases the statewide cap for the Dairy Tax credit from $6 million to $8 million

• expands eligible occupations for the Apprenticeship Tax Credit

• doubles the credit for lead paint abatement to $3,000 for full abatement and $1,000 for partial abatement

• expands the types of alcoholic drinks which qualify for a lower tax rate as part of the cider tax

Notably, this legislation ensures that student loan payment assistance offered by employers will not be treated as taxable compensation. The bill also adds regional transit fares and bike commuter expenses to the allowable commuter expenses eligible for favorable tax status.

To encourage affordable housing, the bill gives municipalities the option of adopting a local property tax exemption for real estate that is rented to a person below a certain area-dependent income level.

Additionally, the bill also directs the following studies:

• A study by the Executive Office of Administration and Finance on the feasibility of making advance quarterly payments of the Child and Dependent Tax Credit

• A study by the Department of Revenue on the efficacy of an additional, elective entity-level tax of up to 4 percent on a portion of qualified taxable income in the Commonwealth, coupled with a refundable credit, for eligible pass-through entities

As different versions of this legislation have passed the Senate and the House of Representatives, a conference committee will now be appointed to resolve differences between the two bills. 

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