Legislative Update – Senator Bruce Tarr

A message from MA State Senator Bruce Tarr

This month, with the stroke of Governor Healey's pen, our state government took a major step toward becoming more affordable and competitive with the enactment of “An Act to Improve the Commonwealth’s Competitiveness, Affordability, and Equity” (H.4104).

Tax relief for employers and households has consistently been among my top priorities, and I am glad we have been able to find bipartisan common ground to deliver nearly $1 billion in needed and deserved relief from the high costs of living in our state.

This law provides desperately needed tax relief to respond to household budgets under stress and employers struggling to compete in a state whose costs are a major challenge. Former Governor Charlie Baker began this initiative by proposing tax relief in January 2022, and since that time I have worked to capture every opportunity to advance these objectives, filing its components as amendments and stand-alone pieces of legislation.

Over the past two years, we have worked to illustrate the heavy burdens being carried by people in our state for things ranging from childcare to housing, and the uphill climb employers are facing on the road to greater prosperity for our economy. This legislation is an important first step that will make a real difference for all of them.

It marks a major benchmark for making the Commonwealth more affordable, and I was glad to serve on the 6-member conference committee that produced the final bill that has become law. That law sets the stage for more efforts in the days to come, giving us a good foundation to build on for the future.

The compromise bill, which is now law, includes the following tax changes:

• Child and Dependent Tax Credit

Increases the refundable tax credit for a dependent child, disabled adult, or senior from $180 to $310 per dependent in taxable year 2023, and then to $440 in taxable year 2024 and beyond, while eliminating the child/dependent cap.

• Estate Tax

Reduces the estate tax for all taxpayers and eliminates the tax for all estates under $2 million by allowing a uniform credit of $99,600.

• Earned Income Tax Credit (EITC)

Increases the refundable Earned Income Tax Credit (EITC) from 30 per cent to 40 per cent of the federal credit.

• Single Sales Factor Apportionment

Supports companies headquartered in Massachusetts by establishing a single sales factor apportionment in the Commonwealth based solely on receipts, matching what 39 other states currently do.

• Senior Circuit Breaker Tax Credit

Doubles the refundable senior circuit breaker tax credit, which supports limited-income seniors facing high rents or real estate taxes, from $1,200 to $2,400.

• Rental Deduction Cap

Increases the rental deduction cap from $3,000 to $4,000.

• Short-Term Capital Gains Tax

Lowers the short-term capital gains tax rate from 12 per cent to 8.5 per cent.

• Low Income Housing Tax Credit

Raises the annual authorization from $40 million to $60 million.

• Local Option Property Tax Exemption for Affordable Housing

Permits municipalities to adopt a local property tax exemption for affordable real estate that is rented by a person whose income is less than a certain level set by the community.

• Title V Cesspool or Septic System Tax Credit

              Triples the maximum credit from $6,000 to $18,000 and increases the amount claimable to $4,000 per year, easing the burden on homeowners facing the high cost of septic tank replacement or repair.