Massachusetts personal income is taxed at a flat 5%, with short-term capital gains taxed at 8.5% and an extra 4% surtax on taxable income above $1,107,750 for 2026.1Mass.gov. Massachusetts Tax Rates The state also charges a 6.25% sales and use tax, lets cities and towns set property tax rates under the limits of Proposition 2½, collects a motor vehicle excise of $25 per $1,000 of value, imposes a corporate excise with an 8% income measure and a $456 minimum, and levies an estate tax on estates above $2,000,000. The Massachusetts tax rates below cover how each one is calculated and who it reaches.
Personal Income Tax
Residents owe Massachusetts income tax on all income regardless of where it was earned. Non-residents owe tax only on income from Massachusetts sources, such as wages earned here or rent from property located in the state.2General Court of Massachusetts. Massachusetts General Laws Chapter 62 – Taxation of Incomes The flat 5% rate covers wages, salaries, pensions, and long-term capital gains.
Short-term capital gains are the exception. Profits from selling assets held one year or less are taxed at 8.5%, well above the standard rate.1Mass.gov. Massachusetts Tax Rates That catches some investors and quick property sellers off guard.
The 4% surtax, often called the Millionaire’s Tax, sits on top. For 2026, any taxpayer with total taxable income above $1,107,750 pays an extra 4% only on the portion over that threshold.3Mass.gov. Massachusetts 4% Surtax on Taxable Income The threshold began at $1,000,000 in 2023 and has been adjusted upward for inflation each year since. All taxable income counts toward the threshold, including both short-term and long-term capital gains. Surtax revenue is constitutionally dedicated to education and transportation.
Exemptions and Deductions That Reduce the Taxable Amount
Massachusetts begins with your federal gross income, applies state-specific adjustments, and then subtracts personal exemptions and eligible deductions to arrive at taxable income.4Mass.gov. Massachusetts Gross, Adjusted Gross, and Taxable Income
Personal exemption amounts depend on your filing status:5Mass.gov. Massachusetts Personal Income Tax Exemptions
- Single: $4,400
- Married filing jointly: $8,800
- Head of household: $6,800
- Dependent: $1,000 per qualifying dependent
- Age 65 or older: an additional $700 per qualifying spouse
Renters can deduct 50% of rent paid on a primary Massachusetts residence, up to $4,000 ($2,000 if married filing separately).6Mass.gov. Deductions on Rent Paid in Massachusetts Contributions to Social Security (FICA), railroad retirement, and certain government pension funds are deductible up to $2,000 per person, and Medicare tax withheld from wages counts toward that same cap.7Mass.gov. Social Security (FICA) and Medicare Deduction
Part-year residents report income from all sources during the time they lived in Massachusetts and may need to prorate their exemptions based on how long they resided in the state.4Mass.gov. Massachusetts Gross, Adjusted Gross, and Taxable Income
Sales and Use Tax
Massachusetts charges 6.25% on sales of tangible personal property and certain services like telecommunications.1Mass.gov. Massachusetts Tax Rates Vendors collect it at the register and remit it to the Department of Revenue. Buy something out of state and bring it in without paying sales tax, and you owe a 6.25% use tax instead.8Mass.gov. TIR 09-11 – Change in Rate, Scope, and Computation of Sales/Use Taxes
Two broad exemptions keep common purchases out of the tax base. Groceries and food products for home consumption are not taxed, though prepared restaurant meals are.9Mass.gov. 830 CMR 64H.6.5 – Sales Tax on Meals Clothing is exempt as long as a single item costs $175 or less; above that, only the amount over $175 is taxed. A $200 jacket, for example, generates tax on only $25.10Mass.gov. Sales and Use Tax
Online retailers without a physical presence in Massachusetts still have to collect the 6.25% tax if their remote sales to Massachusetts customers exceed $100,000 in a calendar year.10Mass.gov. Sales and Use Tax Marketplace operators count both their direct sales and sales they facilitate toward that threshold.
Property Tax and Proposition 2½
Property tax rates are set by cities and towns rather than the state. Chapter 59 provides the framework, but each municipality’s assessors determine fair cash value and set the local rate to fund schools, police, fire, and other local services.11General Court of Massachusetts. Massachusetts General Laws Chapter 59 – Assessment of Local Taxes There is no single statewide rate to quote.
What is statewide is the ceiling. Proposition 2½ places two constraints on every municipality:12Mass.gov. Proposition 2 1/2 and Tax Rate Process
- Levy ceiling: total property taxes cannot exceed 2.5% of the full cash value of all taxable property in the city or town.
- Levy limit: the total tax collected cannot grow by more than 2.5% over the prior year’s maximum allowable levy, plus revenue from newly constructed or improved property (“new growth”).
When a community needs to raise more than those limits allow, voters must approve an override (a permanent increase to the levy limit) or a debt exclusion (a temporary increase to fund a specific capital project such as a new school). Both go on a ballot.13Mass.gov. Proposition 2 1/2 Overrides and Exclusions
Motor Vehicle Excise
Every registered vehicle owes an annual excise of $25 per $1,000 of value.14Mass.gov. Motor Vehicle Excise The bill comes from your city or town, not the state. The value is based on the manufacturer’s list price and depreciates on a set schedule, so the excise drops as the vehicle ages. Failing to pay can block your registration renewal.
Corporate Excise
Businesses organized as corporations pay a corporate excise under Chapter 63 rather than an income tax. The excise has two components, and the corporation pays whichever combination produces the higher amount: 8% on net income and $2.60 per $1,000 of tangible property or net worth. If both measures together come in low, a minimum of $456 applies.1Mass.gov. Massachusetts Tax Rates
Financial institutions and insurance companies face different structures within the same chapter. Insurance companies are taxed on premiums rather than net income, and financial institutions have their own income measure and minimum.15Mass.gov. Massachusetts DOR Corporate Excise Tax Guide Any corporation expecting to owe more than $1,000 for the year must make quarterly estimated payments.
Estate Tax
Massachusetts imposes an estate tax under Chapter 65C whenever the gross estate plus adjusted taxable gifts exceeds $2,000,000. Both residents and non-residents who own Massachusetts property are subject to that threshold.16General Court of Massachusetts. Massachusetts General Laws Chapter 65C – Massachusetts Estate Tax
The detail that trips up families: Massachusetts has a cliff rather than an exclusion. Once an estate crosses $2,000,000, the tax applies to the entire taxable estate from the first dollar, not just the amount over $2,000,000. An estate worth $1,999,999 owes nothing. An estate worth $2,000,001 owes tax on the whole amount. The graduated rates begin at 0.8% and climb to 16% on estates over roughly $10 million.17Mass.gov. Massachusetts Estate Tax Guide Executors file Form M-706 with the Department of Revenue, reporting assets at fair market value as of the date of death.
Filing Deadlines and Late Penalties
The deadline for Massachusetts personal income tax returns is April 15, 2026.18Mass.gov. E-file and Pay Your MA Personal Income Taxes The Department of Revenue’s MassTaxConnect portal handles electronic filing and payment for personal income tax, sales tax, corporate excise, and other tax types.19Mass.gov. Filing Returns in MassTaxConnect
Missing a deadline gets expensive. The penalty for filing late is 1% of the unpaid tax per month, capped at 25%. A separate 1% monthly penalty applies for failing to pay on time, also capped at 25%.20Mass.gov. Massachusetts Tax Penalty Rates Interest compounds daily on top of those penalties at the federal short-term rate plus four percentage points.21Mass.gov. Massachusetts Penalties and Interest Assessed by DOR The filing and payment penalties run concurrently, so a taxpayer who both files and pays late accumulates a combined 2% per month. Filing on time, even if you cannot pay in full, cuts that exposure in half.