Jones, Tarr Support Passage of $1.02B Tax Relief Package

House Minority Leader Bradley H. Jones, Jr. (R-North Reading) and Senate Minority Leader Bruce E. Tarr (R-Gloucester) joined with their House and Senate colleagues this week to support a comprehensive tax package that will provide significant financial relief to Massachusetts residents and businesses.

House Bill 4104, An Act to improve the Commonwealth’s competitiveness, affordability, and equity, phases in a series of tax reforms expected to produce $561 million in taxpayer savings this fiscal year and an estimated $1.02 billion in savings once the changes are fully implemented in 2026. The bill, which represents a compromise negotiated over the last three months by a six-member conference committee, was approved by the House of Representatives on a vote of 155-1 on September 27 and by the Senate on a vote of 38-1 the following day.

The final tax package contains provisions that will benefit seniors, families, renters, commuters and businesses. In addition to increasing the child and dependent tax credit, the rental deduction cap, and the Earned Income Tax Credit, the bill raises the estate tax threshold from $1 million to $2 million and doubles the Senior Circuit Breaker tax credit. According to the Department of Revenue’s most recent usage report figures, 395 North Reading residents filed for the Senior Circuit Breaker in tax year 2021 and received on average a credit of $1,048 to help defray their housing costs.

House Bill 4104 also authorizes a reduction in the short-term capital gains tax rate and implements a single sales factor for companies beginning January 1, 2025 to encourage economic growth and help maintain Massachusetts-based businesses. In addition, the bill triples the maximum allowable Title V tax credit for homeowners repairing or replacing their septic systems, while also expanding the lead paint abatement and taking steps to promote more housing development across the state.

“This long-overdue reform package will provide meaningful financial relief for the state’s taxpayers,” said Representative Jones. “Raising the rental deduction cap and expanding the child and dependent tax credit will help families who are struggling with high housing and childcare costs. I’m particularly pleased that this bill assists our seniors living on fixed incomes by increasing the base credit on the Senior Circuit Breaker Tax Credit, raising the estate tax threshold and eliminating the ‘cliff effect’ so our older residents can continue to live in the communities where they have established roots and raised their families.”

“Today the legislature finally took decisive action to bring needed and deserved tax relief for heavily burdened household budgets, and the employers we need to provide jobs and bring more prosperity to our economy,” said Senator Tarr. The broad package of measures contained in this bipartisan bill will respond directly to families with children, seniors, low wage earners, renters, and others who are feeling the crushing impacts of inflation and the high cost of living in our state every day, and it will move us closer to a reasonable estate tax that encourages people to stay in Massachusetts as they age. Moreover, it will reward businesses for making the investments in employment and physical assets that translate into good jobs for the future. I am glad that we have been able to find a way forward, between the House and Senate and across the aisle, to deliver a package worth almost $1 billion to the desk of Governor Healey. It has been a long time in the making, and it has happened not a moment too soon.”

The following provisions are included in House Bill 4104:

• Changes in the tax credit for a dependent child, disabled adult, or senior, which will increase from $180 to $310 in FY23 and to $440 in FY24, and will benefit over 565,000 families;
• An increase in the rental deduction cap from $3,000 to $4,000, which will assist approximately 800,000 renters;
• An increase in the Earned Income Tax Credit from 30% to 40% of the federal credit, which will benefit approximately 400,000 taxpayers earning less than $60,000;
• A doubling of the maximum Senior Circuit Breaker tax credit from $1,200 to $2,400, indexed to inflation, which will assist nearly 100,000 seniors;
• The elimination of the estate tax for all estates valued under $2 million and the establishment of a uniform credit of $99,600, effective January 1, 2023;
• Provisions allowing municipalities to provide up to $2,000 in property tax reductions for older residents participating in the senior work-off program, which is currently capped at $1,500;
• A reduction in the tax on short-term capital gains from 12% to 8.5%;
• The replacement of the current three-prong sales tax apportionment for Massachusetts-headquartered businesses that incorporates property, payroll and sales with a new system that only factors in sales;
• An increase in the maximum tax credit for septic system repairs or replacement under Title V from $6,000 to $18,000, and an increase in the amount that can be claimed to $4,000 per year;
• The doubling of the lead paint abatement to $1,000 for partial abatement and $3,000 for full abatement;
• An increase in the statewide cap on the Housing Development Incentive Program (HDIP) from $10 million to $57 million for one year, after which the annual cap will be set at $30 million;
• An increase in the annual authorization for the Low Income Housing Tax Credit from $40 million to $60 million;
• Provisions allowing cities and town to adopt a local property tax exemption for renters whose income falls below a certain level set by the community;
• Language making public transit fares and certain other expenses eligible for the commuter expenses tax deduction; and
• Provisions exempting employer student loan payments from being counted as taxable income by the state.

House Bill 4104 is now on Governor Maura Healey’s desk for her review and signature.