Navigating the complexities of state taxes can be daunting, but understanding Massachusetts' tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Bay State's tax system, from income and sales taxes to property taxes and retirement benefits.
Massachusetts tax: Overview
Massachusetts has a flat personal income tax rate of 5% on your federal adjusted gross income. However, if you're earning more than $1 million, there's an additional 4% tax—often called the "Millionaires Tax."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When it comes to property taxes, the Bay State isn’t exactly the most affordable, and it also has an estate tax to think about. On the bright side, Massachusetts keeps its sales tax relatively low, which helps balance things out.
In the News: As Kiplinger reported, lawmakers compromised last year on a widespread Massachusetts tax relief package, which includes tax breaks for residents of all income levels. What some call the largest tax relief package in history would cost the Commonwealth $1 billion when the legislation is fully phased in.
Massachusetts Gov. Maura Healey says the tax relief would make Massachusetts “more affordable.”
For more information, see $1 Billion Massachusetts Tax Relief: What's Included?
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the Tax Foundation, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Massachusetts income tax rate
Massachusetts has a graduated state individual income rate ranging from 5% to 9% of federal adjusted gross income. (Note: Massachusetts voters approved a constitutional amendment to add a 4% tax on taxable income over $1 million. That started in 2023.)
Massachusetts retirement taxes
- Social Security: Not taxable
- Pensions: Taxable (Government and public pension plans may be tax-exempt.)
- 401(k) and IRA Distribution: Taxable
- Railroad Retirement benefits are also exempt.
Massachusetts sales tax
Massachusetts has a 6.25% state-level sales tax. There are no local sales taxes.
- Groceries: Exempt
- Clothing: Exempt if sold for $175 or less
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
How much are property taxes in Massachusetts?
In Massachusetts, average property taxes are paid about 1.04% of assessed home value, according to the Tax Foundation.
Massachusetts Property Tax Breaks for Retirees
Massachusetts homeowners and renters who are 65 or older may qualify to claim a refundable "circuit breaker" tax credit on their state income taxes to offset real estate taxes or rent paid during the year on their principal home.
Massachusetts gas tax
- Gasoline: $0.24 per gallon
- Diesel: $0.24 per gallon
Massachusetts taxes on alcohol and tobacco
Massachusetts tobacco and marijuana taxes
Product | Tax Amount |
|---|---|
Cigarettes and cigars | $3.51 per pack of 20 |
Other tobacco products | 40% of the wholesale price |
Medical Marijuana | 0.00% |
Recreational Marijuana | 17% (cannabis sales tax of 6.25% and state excise tax of 10.75%) |
Source: The Sales Tax Handbook
Massachusetts alcohol taxes
Product | Tax Amount |
|---|---|
Beer | $0.11 per gallon |
Wine | $0.55 per gallon |
Liquor | $4.05 per gallon |
Alcohol sales are exempt from sales tax in Massachusetts.
Source: The Sales Tax Handbook
Massachusetts estate and inheritance taxes
- Estates valued at more than $2 million may be subject to a Massachusetts estate tax. Tax rates range from 0.8% to 16%.
- There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity.
Related Content
-
Five Ways to Cash In On the $6,000 'Senior Bonus' DeductionTaxpayers aged 65 and older may be able to benefit from a $6,000 'senior bonus' deduction over the next four tax years. Here are five ways to make it pay.
-
Are AI Search Results Ghosting Your LinkedIn Posts? This Could Be WhyPosts generated by AI don't hold enough authority with AI search engines to significantly boost your visibility (yes, that's ironic!). Here's what you can do instead.
-
Tax Brackets 2025 Quiz: How Much Do You Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
About 40% of Heirs Say They Can’t Afford an Inherited HomeEstate Planning The ‘Great Wealth Transfer’ may not help with high property taxes, soaring homeownership costs, and liquidity issues in 2025.
-
Retirees Face a Growing Capital Gains Tax Trap: What's Next?Home Sales A changing housing market and unchanged IRS exclusion amounts can add up to a headache for many homeowners. Will Congress offer a fix?
-
New York Inflation Refund Checks Are Coming Soon: What to Know NowTax Relief Inflation relief checks are on the way for over 8 million New York taxpayers. Here's a full breakdown of who gets a payment and when you may expect yours.
-
Mortgage Refinance in 2025? These Tax Breaks Can Boost Your SavingsTax Breaks Refinancing your mortgage comes with tax implications, but also opportunities to deduct certain expenses on your return.
-
IRS Paper Checks Deadline: What Happens After September 30?Tax Changes Avoid delays when IRS tax refunds and Social Security paper checks are cut off. Here’s what to know.
-
New IRS Start Date for Mandatory Roth Catch-Up ContributionsRetirement Savings The IRS has clarified some questions surrounding new catch-up contribution rules for retirement savings plans.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
