The Massachusetts tax relief package is now going into effect, offering relief worth hundreds of millions of dollars to residents. This tax relief package includes an expanded child and family tax credit, increases the rental deduction and the senior circuit breaker tax credit, and reduces the estate tax, among other things.
Expands Child and Dependent Tax Credit
In October, Gov. Maura Healey signed a $1 billion tax relief package to benefit renters, caregivers, and seniors. The bill went into effect as the calendar officially flipped to 2024, and eligible residents will be able to apply for it in the coming weeks and months.
“This tax package delivers savings for those who need it most while making long overdue changes that will better allow Massachusetts to compete with other states,” Gov. Healey said when signing the bill.
Although the Massachusetts tax relief package offers several benefits, one of its most significant provisions is expanding the Child and Dependent Tax Credit. The bill raises the credit amount for a dependent child, disabled adult, or senior from $180 to $310 in taxable year 2023 and to $440 in taxable year 2024 and beyond.
Additionally, the bill eliminates the child/dependent cap. The expanded credit will benefit more than 565,000 families, making it the most generous child and dependent tax credit in the U.S.
In addition to the tax relief, the bill also requires that payments be made equally amongst taxpayers if Chapter 62F is triggered. The Massachusetts tax relief package is estimated to cost $561 million this year and over $1 billion starting in 2027.
Massachusetts tax relief package: what else does it offer?
For renters the new bill raises the cap amount that could be deducted from rent payments. Previously, the cap was half the rent paid for the year or $3,000, whichever is lower, but the new bill raises this cap to $4,000.
For low- and middle-income seniors who rent or own a home, the new bill doubles the credit amount. Previously, the credit amount for individual seniors making less than $80,000 (less than $96,000 for couples) was $1,200. The new bill doubles the credit amount to $2,400.
For low-income earners under $60,000, the Massachusetts tax relief package raises the earned income tax credit (EITC) from 30% to 40% of the federal credit. This increase will benefit almost 400,000 low-income working individuals and families.
The tax relief package also expands the coverage of deductible commuter expenses. Previously, only commuters who paid tolls or bought MBTA passes were eligible to claim the expenses. Now, the deductible commuter expenses include all public transit fares, bike commuter expenses and ferry and regional transit passes.
Massachusetts’ tax relief package also reduces the estate tax for all taxpayers, as well as eliminates the tax for all estates below $2 million by approving a uniform credit of $99,600.
Apart from these, the Massachusetts tax relief package offers several more benefits. Visit this link to learn more about the tax relief package.
