Many businesses need to register for a sales tax permit in massachusetts before they can legally collect tax. Massachusetts’s flat tax rate should make filing your state income tax return easy, but residency rules, deductions, and credits can sometimes complicate the process. TurboTax simplifies the process, whether you want to do your taxes yourself or get expert help. Massachusetts has always been known for its unique approach to state taxes, and 2025 brings some important updates that every resident, newcomer, and business owner should understand. Whether you are a recent immigrant settling in Massachusetts, a long-time resident, or an employer helping new arrivals, knowing the current income tax rates and the new surtax rules is essential.
Certain Services (Selective Taxation)
- The first is to live in Massachusetts for the entire tax year, while the second is to maintain a home in Massachusetts and spend more than 183 days of the tax year in the state.
- If the PTE has qualified members that are nonresidents, it needs to know its Massachusetts apportionment percentage.
- Unprepared grocery items (e.g. a loaf of bread or bag of rice) are exempt.
- In the Bay State, estates are taxed at rates ranging from 0.8 percent to 16 percent, depending on the value of the estate.
- For tax years beginning on or after January 1, 2024, married couples must file a joint personal income tax return for any year in which they file a joint federal income tax return, unless an exception applies.
- A PTE must report the amount of PTE Excise paid at the entity level and the amount of such excise that is allocated to each of its qualified members on Schedule K-1.
This rate has remained relatively stable over the years, with only minor adjustments since its introduction. The sales tax is collected by retailers at the point of sale, and they are responsible for remitting these taxes to the Massachusetts Department of Revenue. The elective PTE excise is imposed at a statutory rate of 5%, which cannot be increased to account for the 4% surtax. Form 63D-ELT is due at the same time as a PTE’s Form 355S, Form 3 or Form 2.
How and when does an eligible PTE make an election to pay the PTE Excise?
Although other products may be labeled custom or a service, they may not meet the legal definition for tax purposes. If you’re a cigarette retailer, you must register for sales tax since cigarette sales are subject to the sales tax. You should also check with your local Board how is sales tax calculated of Health to see if you also need a local tobacco sales permit. In addition to income tax, you’ll also pay FICA taxes, which include Social Security (6.2%) and Medicare (1.45%) on your earnings. The calculator will automatically estimate your take-home pay after federal taxes, Massachusetts state taxes, Social Security, and Medicare deductions.
Will I or my heirs have to pay inheritance and estate tax in Massachusetts?
Capital gains in those categories are included as taxable income on the Massachusetts income tax return. Short-term capital gains, which are realized in less than a year, are taxed ma income tax rate at a rate of 8.5%, as are long-term gains on the sales of collectibles. Income tax returns must be filed every spring, but income taxes are also paid all year round. This is done by authorizing employers to withhold money from employees’ paychecks to put toward income taxes.
Meals, motor vehicles, or alcohol will not qualify for sales tax holiday exemption. On top of these state taxes, you will also have to pay federal Suspense Account capital gains tax. There are no tax brackets, but residents are welcome to pay higher income tax if they’d like. If you’re a full-year resident with an annual Massachusetts gross income of more than $8,000, you must file a Massachusetts tax return. Once you’ve filed your tax return, all you have to do is wait for your refund to arrive.
