State Income Tax

BACKGROUND

The personal income tax in Massachusetts is, constitutionally, a flat tax. Since 1977 the income tax rate has ranged from 6.25 Percent to 5 percent and is currently set at 5.3 percent.

The personal income tax tends to be a very good tax from the standpoint of adequacy. A personal income tax generally grows with personal income, allowing revenue to keep pace with increases in costs. It is also excellent from the standpoint of horizontal equity - people with the same taxable income will pay the same taxes. The majority of personal income tax collections are from wages and salaries, which are more stable than those collected from capital gains, bonuses, etc.

Mechanisms such as exemptions, deductions, circuit breakers and credits are incorporated into tax law to make it more progressive. For example, the earned income tax credit, or EITC, reduces the share of taxes paid by people with lower income; the personal exemption means that a fixed amount of all incomes are not subject to the income tax.

[More info from MassBudget on the Personal Income Tax]

Attempts in Massachusetts to pass a constitutional amendment for a graduated income tax have all failed, most recently in 1976 and 1994.

2000. Voters approved a ballot initiative to cut the state income tax from 5.95 percent to 5 percent over three years. Lawmakers eventually froze the rate at 5.3 percent because of the dramatic loss of revenue and inability to fulfill budget requirements.

2002. Voters defeated a proposal to eliminate the state income tax in Massachusetts. The ballot question failed by a three percent margin. (48% voted no, 45% voted yes).

2008. Voters defeated a proposal to eliminate the state income tax in Massachusetts. The proposal was to halve the income tax for 2009 and then to eliminate it completely the following year. Such a measure would have resulted in the loss of approximately $10.4 billion, or 40%, of the Commonwealth’s revenue. (approximately 70% voted no, 30% voted yes)

2009. The Massachusetts Senate voted to defeat a bill proposed by Senator Sonia Chang-Díaz to roll the state income tax back to 5.95%, and would have brought in roughly $1.3 billion in additional revenues per year. (Tally Sheet: 28-11)

ADDITIONAL RESOURCES

INCOME TAX NEWS

  • The New Resentment of the Poor
    Here's a twist on the tax discussion...raise the taxes on those least able to pay (more) and who are currently paying the highest percentage of income in taxes.  This political platform may...
    Aug 31, 2011
  • Mass. Senate rejects cuts to sales, income taxes
    The Massachusetts Senate has rejected proposals to cut both the state sales and income tax rates. The sales tax amendment would have cut the rate from 6.25 percent to 5 percent. A second amendment...
    May 25, 2011
  • Should Massachusetts adopt a graduated tax system?
    [Senator Jamie] Eldridge said changing to a system where very high income earners pay state taxes at a higher rate would not only be fairer but would potentially bring in more revenue for the state....
    May 12, 2011
  • They're getting the message!
    In the last three months, ONE Massachusetts and other organizations across the state organized meetings with legislators urging them to support an An Act to Invest in Our Communities, a revenue...
    Apr 29, 2011
  • Income-tax rollback vote fails
    Two local Democrats joined House Republicans in a failed attempt to cut the state income tax to 5 percent over three years, as debate on the House budget got under way yesterday… Democrats estimated...
    Apr 26, 2011
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