State Taxes at a Glance – Massachusetts
|Type of Tax||2023|
|Individual Rates||5.00% < $1M (flat tax) |
9.00% > $1M (flat tax)
|Corporate / Business Tax Rates||8.00% (flat tax)|
|Gross Receipts Tax||Yes (Corporate Excise Tax)|
|Property Taxes||1.14% as a percentage of primary home|
|Estate or Inheritance Tax||Yes|
State Income Taxes in Massachusetts
Massachusetts is one of a few states with a flat individual income tax. Massachusetts’ individual tax rate is 5.00% of your total income.
Starting in 2023, anyone making over $1,000,000 will pay an additional 4.00% of state tax, bringing the total income tax rate up to 9.00%.
State Business Taxes in Massachusetts
The state of Massachusetts has a flat corporate income tax rate of 8.00% on all income on C Corporations. For other businesses that flow-thru entities, such as S Corporations, Partnerships, LLCs, etc., they are taxed at the individual income tax rate which is 5.00% of your AGI.
Excise & Gross Receipts Tax in Massachusetts
In addition to the business income tax, Massachusetts also has an excise tax that applies to Corporations but not LLCs. The minimum tax, regardless of corporate status, is $456 annually. The Corporate excise tax is 0.26% of the Corporation’s net worth.
However, if your Corporation is an S Corporation, the excise tax also includes a tax on Gross Receipts. Here is the tax range on gross receipts:
- Gross Receipts < $6 Million – no additional tax
- Gross Receipts > $6 Million – 2.67% additional tax
- Gross Receipts > $9 Million – 4.00% additional tax
Sales and Property Taxes in Massachusetts
Unlike most states, Massachusetts only has a state sales tax rate (i.e. no local sales tax rate). Their state sales tax rate is 6.25%.
Property Taxes in Massachusetts – the average property tax rate for residential property in the state of Massachusetts is 1.14%. Which puts it slightly above the national average of 1.08%.
Estate taxes in Massachusetts
The state of Massachusetts does have an estate tax that ranges from 0.8% to 16% depending on the size of the estate. The first $1 Million dollars of the estate is exempt from tax.
Massachusetts DMV Excise Tax
Massachusetts’ DMV fees are based $25 per $1,000 of the vehicles value. Since it’s based on the value of the vehicle, it’s considered an Ad Valorem tax, and is deductible on your personal tax return. You may learn more about your Massachusetts DMV Excise Tax and Fees here.
Massachusetts’ presumption is that it’s your domicile if you’ve lived there for over 183 months and that you also maintain a place of abode.
State Tax on Social Security Benefits
Even though Massachusetts has an income tax, social security benefits are not subject to state tax in “The Old Bay State.”
Payroll Taxes in Massachusetts
Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:
- Wage Base – Massachusetts has a wage base of $15,000
- UI Rates – range from 1.00% to 14.65%, which is a high upper bound
- Schedules – Massachusetts has multiple rate schedules regarding UI
Massachusetts Business Entities – LLCs
Massachusetts is the 2nd most expensive state in the country to open an LLC. Here are some important facts:
- Massachusetts’ annual LLC fee is $500, yikes!
- When you register with the state, you pay a one time fee of $500
- Secretary of State of Massachusetts website – click here