The Massachusetts Limited Income Credit is a state income tax break that caps what you owe when your income sits just above the thresholds for No Tax Status. Instead of jumping from owing nothing to owing the full 5% rate the moment you cross the line, the credit limits your total Massachusetts income tax to 10% of the amount by which your state adjusted gross income exceeds the No Tax Status threshold for your filing status. The credit phases out as your income rises and disappears once you cross a second, higher set of limits.
Income Limits That Qualify You
Two sets of numbers matter. The first is the No Tax Status floor: if your Massachusetts AGI is at or below it, you owe no state income tax at all and don’t need the Limited Income Credit. The second is the Limited Income Credit ceiling: fall between the two and the credit applies.
No Tax Status thresholds:1Mass.gov. Massachusetts No Tax Status and Limited Income Credit
- Single: $8,000 (no additional amount per dependent)
- Head of household: $14,400, plus $1,000 for each dependent
- Married filing jointly: $16,400, plus $1,000 for each dependent
Limited Income Credit upper limits:1Mass.gov. Massachusetts No Tax Status and Limited Income Credit
- Single: $14,000 (no additional amount per dependent)
- Head of household: $25,200, plus $1,750 for each dependent
- Married filing jointly: $28,700, plus $1,750 for each dependent
Earn above the upper limit and you pay the standard Massachusetts income tax rate of 5% with no credit.2Mass.gov. Personal Income Tax for Residents Single filers get no bump per dependent at either level, so a single parent with children often does better claiming head of household, which raises both thresholds and adds a per-dependent amount.
How the Credit Is Calculated
The rule is a cap. Your Massachusetts income tax cannot exceed 10% of the amount by which your state AGI exceeds your No Tax Status threshold.3General Court of Massachusetts. Massachusetts Code Chapter 62 Section 5 – Exempt Income of Individuals If the normal 5% tax on your income is higher than that cap, you receive a credit equal to the difference.
A worked example. You file single with $10,000 in Massachusetts AGI. Your No Tax Status threshold is $8,000, so you’ve exceeded it by $2,000. Ten percent of that excess is $200, which becomes the ceiling on your tax. If the normal 5% calculation produces a $350 tax, the credit is $150 and you pay $200. The closer your income is to the No Tax Status floor, the larger the credit relative to what you’d otherwise owe. As income climbs toward the Limited Income Credit ceiling, the gap between the normal tax and the 10% cap narrows until the credit zeros out.
Filing Status Rules
The credit is available to filers who are single, head of household, or married filing jointly, and to both full-year residents and part-year residents.1Mass.gov. Massachusetts No Tax Status and Limited Income Credit One important exclusion: if you file as married filing separately, you can claim neither the Limited Income Credit nor No Tax Status, no matter how low your individual income is. Couples where one spouse earns much less than the other should run the numbers on a joint return before defaulting to separate filings.
Why Your Massachusetts AGI May Be Lower Than You Think
Massachusetts AGI is not the same figure as federal AGI, and the differences matter for eligibility. Several income types that count on your federal return are backed out at the state level:4General Court of Massachusetts. Massachusetts Code Chapter 62 Section 2 – Gross Income, Adjusted Gross Income and Taxable Income Defined
- Social Security benefits included in federal gross income
- Contributory government pension income from the federal government, the Commonwealth, or any Massachusetts municipality
- Military retirement pay from the uniformed services, regardless of whether the retiree contributed
This matters most for retirees and veterans who look at their federal return and assume they earn too much. Someone collecting $25,000 in Social Security plus $6,000 from a part-time job may have a Massachusetts AGI of just $6,000 once Social Security is removed, which puts them under the No Tax Status floor entirely. Calculate your state AGI separately before concluding you don’t qualify.
How to Claim the Credit
The forms depend on your residency.
Full-year residents file Form 1 and work through two worksheets printed in the Form 1 instruction booklet: the Massachusetts AGI Worksheet, which produces your state AGI figure, and the Limited Income Credit Worksheet, which produces the credit itself. The credit goes on Form 1, Line 29.1Mass.gov. Massachusetts No Tax Status and Limited Income Credit
Part-year residents and nonresidents file Form 1-NR/PY and complete Schedule NTS-L-NR/PY, Lines 1 through 17. This schedule requires you to compute your Massachusetts AGI as if you had lived in the state the entire year, including income from all sources. If you qualify, the credit is reported on Form 1-NR/PY, Line 33.1Mass.gov. Massachusetts No Tax Status and Limited Income Credit
Forms are available from the Massachusetts Department of Revenue or through approved commercial tax software.5Massachusetts Department of Revenue. 2025 Massachusetts Form 1 Instruction Booklet Enter dependent information accurately: each dependent increases the thresholds used in both the eligibility test and the credit calculation.
When to File
Massachusetts individual income tax returns for the 2025 tax year are due on or before April 15, 2026.6Mass.gov. Massachusetts DOR Tax Due Dates and Extensions You can file electronically through MassTaxConnect or approved commercial software, or on paper.
Don’t Shade the Numbers to Qualify
If your income is close to a threshold, do the math carefully rather than nudging it. The Department of Revenue charges 1% of unpaid tax per month or partial month for late filing or payment, capped at 25%, with interest at the federal short-term rate plus four points compounded daily.7Cornell Law School. 830 CMR 62C.33.1 – Interest, Penalties, and Application of Payments A separate 20% penalty applies to underpayments the DOR finds to be the result of negligence or substantial understatement, which is the penalty most likely to apply when someone omits income or inflates deductions to stay under a threshold. The credit itself is designed to make the transition out of No Tax Status gradual, so the gain from shading a figure is small and the exposure is not.