MA Taxpayers Can Reap The Benefits On Some New Revisions!
A reminder: TODAY is the deadline for ALL Federal and State tax returns. They MUST be postmarked by midnight tonight. Meanwhile, The Massachusetts House of Representatives has recently approved a tax reform bill in Boston with significant implications for individuals and businesses. Now that the legislation has been engrossed, the Senate is anticipated to consider this proposal.
Most of the House's proposed modifications would take effect in the tax year 2023, while others would be phased in over several years. For example, the maximum rental deduction would increase from $3,000 to $4,000 as tenants are able to deduct 50% of their yearly rental expenses. The House tax reform proposal would also reduce the income tax rate on short-term capital gains (those held for less than a year) to 8% in 2023 and subsequently to 5% in 2024. There would also be an increase in the Federal Earned Income Tax Credit from 30 to 40%.
There are more revisions including The senior circuit breaker tax credit cap which would be doubled under the House plan, increasing it by 50% from $1,200 to $2,400. This is a refundable credit for seniors paid on privately owned or rented homes in Massachusetts. The House tax reform bill also plans to raise the child tax credit to $600 and eliminating the two dependents per family limit. In the upcoming tax years, 2023, 2024, and 2025, this credit would increase in value from $105 to $310, $455 to $600, and so on.
The House bill proposes raising the Massachusetts estate tax threshold from $1 million to $2 million which has been a sensitive subject at The State House. This revision also eliminates the "cliff effect" by specifying that a portion of an estate that exceeds $2 million is subject to tax. This is achieved by deducting $2 million from the value of each estate.
The House measure also proposes that Massachusetts adopts single sales factor apportionment for all corporations, which is a current practice which is implemented by most other states. This method bases Massachusetts taxes on the proportion of a company's sales within the Commonwealth. The existing system, a "double-weighted sales factor" based on the percentages of the corporation's payroll, property, and sales in Massachusetts, is used by most multistate firms that operate in The Bay State to divide their net income. The current system serves as an obstacle as it hinders businesses looking to expand and create jobs statewide.
Another revision includes The Commonwealth's "rainy day fund," which would be increased from 15% of planned revenues to over 25.5% of budgeted revenues under the House bill. Proposed changes to Chapter 62-F would mandate that tax refunds be dispersed uniformly and equally among all personal income taxpayers who filed returns in the prior taxable year rather than on a proportional basis.
To sum it all up: There will be a tax reform measure with major implications for both people and companies that has been adopted by the State House in Boston. Next time when filing your state taxes, proposed modifications would take effect in 2023 and beyond. Hopefully, this will put some extra MOOLAH, MOOLAH, MOOLAH in your pocket. Let's hope so!