Provides Significant Housing, Dependent Care, and Estate Tax Assistance
BOSTON – Last Thursday, Senator DiDomenico and his Senate colleagues approved a $590 million Tax Relief bill that delivers support to low- and middle-income earners and chips away at the headwinds that threaten Massachusetts’ competitiveness. Focusing on providing relief to residents across Massachusetts while upholding fiscal responsibility, the Senate's tax relief package will provide relief to renters, seniors, and parents struggling with high early education costs while also increasing much-needed housing production. With the recent passage of the FY24 budget last month, the Commonwealth is now poised to secure and strengthen its economic foundation to weather future uncertainty. This bill also includes language that DiDomenico has filed and pushed for in the areas of the Earned Income Tax Credit and the Child Tax Credit.
“Our state is losing its competitive edge because many working families, older residents, and young people can’t afford to live here anymore and this tax relief package reflects our focus on fixing that,” said Senator DiDomenico, Assistant Majority Leader of the Massachusetts Senate. “I am pleased to share that some of my biggest priorities were included, from increasing tax credits for working families to reforming some of our cumbersome public benefit programs which will ensure people can easily access all the financial support they deserve. I am also thrilled that we have taken steps to address our housing crisis, as well. I want to thank Senate President Karen Spilka, Chair Rodrigues, and Senator Moran for their dedication to making this a tax package that benefits residents who need it most.”
“As I have said from the outset, tax relief should go to the workers, families, and elderly residents of the Commonwealth who need it most,” stated Senate President Karen E. Spilka (D-Ashland). “Massachusetts doesn’t need just any tax relief; we need permanent, progressive, smart, and sustainable tax relief. Too many families have been caught between the rising costs of healthcare, housing, education, and basic goods. While we advance reforms to lower these costs and shore up our social services, meaningful tax relief is another tool in our kit to encourage people to live and raise their families in Massachusetts. I want to thank each of my Senate colleagues who contributed to this proposal, especially Senator Rodrigues and Senator Moran for their leadership in developing this strong package.”
This package includes a variety of initiatives as tax relief for the residents of Massachusetts. The bill:
Increases the Earned Income Tax Credit (EITC), which provides critical support to working families, from 30% to 40% of the federal credit
Merges existing credits into a new and enhanced Child and Dependent Tax Credit (CDTC), increases the amount of the credit from $180 to $310 per child/dependent, and eliminates the current cap of two children/dependents
Increases statewide cap for the Housing Development Incentive Program (HDIP) from $10 million to $57 million on a one-time basis and then to $30 million annually
Increases the cap on the rental deduction from $3,000 to $4,000
Raises annual authorization of the Low Income Housing Tax Credit, which directly supports the production of affordable housing units across the Commonwealth, from $40 million to $60 million
Doubles the maximum senior circuit breaker credit, which supports elderly residents who struggle with high housing costs, from $1,200 to $2,400
Excludes homes valued at under $2 million from the Estate Tax and eliminates the “cliff effect” by allowing a uniform credit of $99,600 for all estates
Triples the maximum credit under the Title V Tax Credit, which supports families who must replace failed septic systems, from $6,000 to $18,000, and lifts the amount claimable to $4,000 per year
Increases the statewide cap for the Dairy Tax credit from $6 million to $8 million
Expands eligible occupations for the Apprenticeship Tax Credit
Doubles the credit for lead paint abatement to $3,000 for full abatement and $1,000 for partial abatement
Expands the types of alcoholic drinks which qualify for a lower tax rate as part of the cider tax
Notably, this legislation ensures that student loan payment assistance offered by employers will not be treated as taxable compensation. The bill also adds regional transit fares and bike commuter expenses to the allowable commuter expenses eligible for favorable tax status.
To encourage affordable housing, the bill gives municipalities the option of adopting a local property tax exemption for real estate that is rented to a person below a certain area-dependent income level.
Additionally, the bill also directs the following studies:
A study by the Executive Office of Administration and Finance on the feasibility of making advance quarterly payments of the Child and Dependent Tax Credit
A study by the Department of Revenue on the efficacy of an additional, elective entity-level tax of up to 4 percent on a portion of qualified taxable income in the Commonwealth, coupled with a refundable credit, for eligible pass-through entities
As different versions of this legislation have passed the Senate and the House of Representatives, a conference committee will now be appointed to resolve differences between the two bills.
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