Massachusetts has a state income tax

Yes. Massachusetts charges a state income tax on wages, investment income, and other earnings. The tax rate is a flat 5.0% on most types of income. This is separate from federal income tax — you owe both.

Massachusetts residents and anyone who works in the state must file a state tax return if their income exceeds the filing threshold. The threshold changes each year and depends on your filing status and age. For tax year 2024, a single person under 65 must file if they earned more than $15,000 in Massachusetts income.

Unlike some states, Massachusetts does not exempt retirement income, Social Security, or pension payments from taxation. Military pensions receive a partial exemption, but most other income sources are taxed at the standard 5.0% rate.

Key Takeaways

  • Massachusetts charges a flat 5.0% state income tax on wages, investment income, and most other earnings.
  • You must file a Massachusetts tax return if your income exceeds the annual filing threshold, which is $15,000 for single filers under 65 in 2024.
  • Social Security, pensions, and retirement account withdrawals are subject to Massachusetts income tax, with limited exceptions for military pensions.
  • You owe Massachusetts state tax if you live in the state or work there, even if you live across the border in another state.

Who has to file a Massachusetts tax return

You must file if you lived in Massachusetts on December 31 of the tax year and your income exceeded the filing threshold. The threshold depends on your age and filing status. For 2024, the thresholds are: $15,000 for single filers under 65; $23,000 for single filers 65 and older; $30,000 for married filing jointly under 65; and $38,000 for married filing jointly with at least one spouse 65 or older.

You also must file if you had Massachusetts tax withheld from your paychecks, even if your total income falls below the threshold. This is because you may be owed a refund. Part-time workers, self-employed people, and anyone with investment income should check the threshold carefully — the income limits are lower than federal thresholds, so you may owe Massachusetts tax even if you do not owe federal tax.

Non-residents who worked in Massachusetts during the year may also need to file, depending on how much they earned in the state. A non-resident who earned $15,000 or more in Massachusetts income must file, even if they live in another state.

What income is taxed in Massachusetts

Massachusetts taxes wages, salaries, tips, and self-employment income at the 5.0% rate. It also taxes interest, dividends, and capital gains from the sale of stocks or property. Rental income and income from a business or partnership are taxed as well.

Social Security benefits are taxable in Massachusetts if your total income (including half your Social Security) exceeds certain thresholds. For 2024, if you are single and your combined income exceeds $25,000, you may owe tax on up to 50% of your Social Security. If you are married filing jointly, the threshold is $32,000. This is different from the federal rule, which exempts Social Security for most people.

Pension and retirement account withdrawals are taxed as ordinary income. Distributions from a traditional IRA, 401(k), or similar plan are subject to the 5.0% tax. Military pensions receive a partial exemption — you can exclude up to $6,000 per year of military retirement pay from taxation, but only if you served on active duty.

Tax withholding and estimated payments

Your employer withholds Massachusetts state tax from your paycheck if you work in the state or live there. The amount withheld depends on the W-4 form you file with your employer. If too little is withheld, you will owe tax when you file your return. If too much is withheld, you will receive a refund.

Self-employed people and those with income not subject to withholding may need to make quarterly estimated tax payments. These are due on April 15, June 15, September 15, and January 15. If you do not pay enough throughout the year, you may owe a penalty when you file your return, even if you pay all the tax you owe.

You can adjust your withholding at any time by filing a new W-4 with your employer. If you expect a large refund, you may want to increase your withholding so you have more money in your paycheck during the year instead of waiting for a refund.

Filing your Massachusetts tax return

Massachusetts residents file using Form 1 (the resident income tax return) or Form 1-NR/PY (the non-resident or part-year resident return). Both forms are available on the Massachusetts Department of Revenue website. You can file by mail or electronically using tax software or a tax preparer.

The filing deadline is April 15 each year, the same as the federal deadline. If you need more time, you can request an extension, which gives you until October 15 to file. An extension does not extend the time to pay — taxes owed are still due on April 15, and interest accrues on any unpaid balance.

You will need your Social Security number, income documents (W-2s, 1099s, K-1s), and records of any deductions or credits you claim. Keep receipts and documentation for at least three years in case the Department of Revenue audits your return.

Deductions and credits available in Massachusetts

Massachusetts allows a standard deduction, which reduces the income you pay tax on. For 2024, the standard deduction is $5,250 for single filers and $10,500 for married filing jointly. You can also itemize deductions if they exceed the standard deduction, though Massachusetts does not allow all the deductions the federal government does.

Massachusetts offers several tax credits that reduce the tax you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers. The Child and Dependent Care Credit helps pay for childcare expenses. The Dependent Exemption Credit provides a credit for each dependent you claim. These credits can result in a refund even if you owe no tax.

Some income is exempt from taxation. Certain scholarships, gifts, and inheritances are not taxed. Interest from U.S. Treasury bonds and certain municipal bonds is exempt. Disability income and workers' compensation are also exempt from Massachusetts tax.

What happens if you do not file or pay

If you owe Massachusetts tax and do not file or pay, the Department of Revenue will send you a notice. If you do not respond, they can place a lien on your property, garnish your wages, or offset your state tax refund. Interest accrues at 14% per year on unpaid tax, and penalties can add 5% to 50% to the amount you owe, depending on the reason for non-payment.

If you cannot pay the full amount, you can request a payment plan. The Department of Revenue offers installment agreements that allow you to pay over time. You must still pay interest and penalties, but a payment plan prevents collection action while you pay.

If you filed late or made a mistake on your return, you can file an amended return (Form 1-X) within three years. This can reduce the tax you owe or increase a refund you are due. Filing an amended return does not trigger an audit automatically, but it does reset the statute of limitations for that tax year.

Frequently Asked Questions

Do I have to pay Massachusetts tax if I work there but live in another state?

Yes. Massachusetts taxes all income earned within the state, regardless of where you live. If you work in Massachusetts and live in another state, you must file a Massachusetts non-resident return. You may also owe tax to your home state, depending on its rules. Some states offer a credit for taxes paid to other states to avoid double taxation.

Is Social Security taxed in Massachusetts?

It may be. Massachusetts taxes Social Security if your combined income (wages plus half your Social Security) exceeds $25,000 for single filers or $32,000 for married filing jointly. This threshold is lower than the federal threshold, so you could owe Massachusetts tax on Social Security even if the federal government does not tax it.

What if I moved to Massachusetts partway through the year?

You file as a part-year resident using Form 1-NR/PY. You only owe Massachusetts tax on income earned while you lived in the state. You must report your move date and provide documentation of when you established residency. Part-year residents still use the same tax rate and deductions as full-year residents.

Can I deduct federal income tax from my Massachusetts return?

No. Massachusetts does not allow a deduction for federal income tax paid. You can only deduct state and local income taxes (up to $10,000 total) on your federal return, not the other way around. This is a key difference from some other states.

What is the penalty for filing late?

The penalty for filing late is 5% per month (up to 25% total) of the tax owed, unless you have a reasonable cause. Interest also accrues at 14% per year. If you file more than 60 days late, the minimum penalty is $100 or the tax owed, whichever is less. Filing an extension before April 15 prevents this penalty.