Does Massachusetts Have State Income Tax? Rates, Filing, and Credits

Yes, Massachusetts has a state income tax. Most income is taxed at a flat 5%, but the Massachusetts state income tax also hits short-term capital gains at 8.5%, long-term gains on collectibles at 12%, and adds a 4% surtax on taxable income above an inflation-adjusted threshold that sits at $1,083,150 for tax year 2025.¹

The Rates

Massachusetts does not use graduated brackets. Wages, salaries, business income, pension payments, rental income, interest, dividends, and long-term capital gains all run through the same 5% rate.²

Two kinds of investment income are taxed more heavily. Short-term capital gains, meaning gains on assets held one year or less, are taxed at 8.5%. Long-term gains on collectibles are taxed at 12%, though the rate applies to only half the gain because of a built-in 50% deduction.²

The 4% surtax, approved by voters in 2022, applies only to the slice of taxable income above the threshold. Everything below the threshold stays at 5%, and the portion above it is effectively taxed at 9%. The threshold adjusts each year for inflation, so the 2026 figure will be slightly higher once the Department of Revenue publishes it.¹

Who Has to File

You must file a Massachusetts return if your gross income is more than $8,000. The threshold applies per person, not per household, so if you are married and only one spouse clears $8,000 in gross income, only that spouse has an independent filing obligation.³

Starting with tax year 2024, married couples who filed a joint federal return generally must also file jointly in Massachusetts, unless one spouse had Massachusetts gross income of $8,000 or less.⁴

Nonresidents file if their Massachusetts-source income exceeds their prorated personal exemption or if their total gross income is above $8,000.⁵ Part-year residents who moved in or out during the year file Form 1-NR/PY and are taxed on all income received while they lived in Massachusetts.⁶

The deadline is April 15 following the end of the tax year.⁷

What’s Taxed and What’s Not

Massachusetts casts a wide net. Wages, tips, business income, rental income, pensions and annuities, interest, dividends, and capital gains are all taxable. One notable carve-out: Social Security benefits are excluded from Massachusetts gross income no matter how much you earn.⁸ That is a real break for retirees compared with the federal return, where a portion of benefits can be taxable depending on total income.⁹

No Tax Status and Low-Income Relief

Filing does not always mean paying. Massachusetts zeroes out tax liability for filers whose adjusted gross income falls below set limits:

Single: $8,000
Head of household: $14,400, plus $1,000 per dependent
Married filing jointly: $16,400, plus $1,000 per dependent¹⁰

If your income is just over those limits, a Limited Income Credit phases the tax in gradually so one extra dollar of earnings does not trigger a sudden jump in what you owe.¹⁰

Exemptions and the Rent Deduction

Every filer gets a personal exemption that comes off taxable income before the 5% rate applies:

Single or married filing separately: $4,400
Head of household: $6,800
Married filing jointly: $8,800¹¹

Add $1,000 for each qualifying dependent.¹¹ Part-year residents have their exemptions prorated based on the days they lived in the state.⁶

If you rent your primary Massachusetts residence, you can deduct 50% of the rent you paid, capped at $3,000.¹² At Massachusetts rents, most tenants hit the cap easily, which works out to roughly $150 off the tax bill.

Credits That Cut Your Bill

Credits reduce tax owed directly, not just taxable income. Three to know about:

Earned Income Tax Credit. The state EITC equals 40% of the federal credit, and if you qualify federally you qualify in Massachusetts.¹³
Senior Circuit Breaker Credit. Homeowners and renters 65 or older whose Massachusetts income falls under set ceilings can claim a credit tied to property taxes or rent. For 2025 the maximum is $2,820, with income limits running from $75,000 for single filers to $112,000 for joint filers. The 2026 figures had not been published at the time of writing.¹⁴
Lead Paint Removal Credit. Property owners who de-lead a residential unit can claim up to $3,000 per unit, with any unused amount carrying forward.

Deadlines, Extensions, and Estimated Payments

Returns are due April 15. Massachusetts grants an automatic six-month extension to October 15, but only if you have paid at least 80% of your total tax liability by the April deadline.¹⁵ Miss that threshold and the extension is void, with penalties and interest running from April 15 as if no extension existed. An extension is more time to file, never more time to pay.

If you expect to owe more than $400 after withholding and credits, you have to make quarterly estimated payments.¹⁶ This hits freelancers, landlords, and retirees with meaningful investment income. Underpayment triggers an addition to tax at the federal short-term rate plus four points, calculated per quarter.¹⁷

The Health Insurance Penalty on Your Return

Massachusetts is one of the few states that still enforces its own individual health insurance mandate, and the penalty is collected on your state income tax return. Adults 18 and older who have access to affordable coverage but go without insurance meeting “minimum creditable coverage” standards owe monthly penalties. A gap of 63 consecutive days or less is forgiven.¹⁸

For tax year 2026, annual penalties by income as a percentage of the Federal Poverty Level are:

150% FPL or below: no penalty
150.1%–200% FPL: $312
200.1%–250% FPL: $612
250.1%–300% FPL: $912
300.1%–400% FPL: $1,404
Above 400% FPL: $2,532¹⁸

Married couples who both lack coverage pay the sum of each spouse’s individual penalty.

What Happens If You File or Pay Late

Missing the April 15 deadline without a valid extension can trigger two penalties at once. Failure to file runs 1% of the unpaid tax per month or partial month, capped at 25%. Failure to pay adds another 1% per month, also capped at 25%. Interest accrues on top at the federal short-term rate plus four points, compounded daily.¹⁷

If you cannot pay the full amount, filing on time still matters. It eliminates the failure-to-file penalty and roughly halves your exposure while you work out the balance.

1
Mass.gov. Massachusetts 4% Surtax on Taxable Income
2
Massachusetts Department of Revenue. Massachusetts Tax Rates
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Mass.gov. Personal Income Tax for Residents
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Mass.gov. Filing Status on Massachusetts Personal Income Tax
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Mass.gov. Personal Income Tax for Nonresidents
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Mass.gov. Personal Income Tax for Part-Year Residents
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Massachusetts Department of Revenue. Massachusetts DOR Tax Due Dates and Extensions
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Mass.gov. Massachusetts Social Security (FICA) and Medicare Deduction
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Mass.gov. Differences Between MA and Federal Tax Law for Personal Income
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Mass.gov. Massachusetts No Tax Status and Limited Income Credit
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Mass.gov. Massachusetts Personal Income Tax Exemptions
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Mass.gov. 830 CMR 62.3.1 Rent Deduction
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Mass.gov. Massachusetts Earned Income Tax Credit (EITC)
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Mass.gov. Massachusetts Senior Circuit Breaker Tax Credit
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Mass.gov. File an Extension and Pay MA Personal Income, Fiduciary, or Partnership Tax
16
Mass.gov. Massachusetts DOR Personal Income and Fiduciary Estimated Tax Payments
17
Mass.gov. Massachusetts Penalties and Interest Assessed by DOR
18
Mass.gov. TIR 26-1 Individual Mandate Penalties for Tax Year 2026