Winchester Legislators Join Colleagues in Passing Tax Relief Bill

BOSTON—State Senator Jason Lewis and State Representatives Michael Day and Michelle Ciccolo recently joined their colleagues in the Massachusetts Legislature in overwhelmingly enacting a bipartisan tax relief package to help make living in Massachusetts more affordable for working families and seniors and to bolster our state’s economic competitiveness.

An Act to improve the Commonwealth’s competitiveness, affordability, and equity phases in a series of tax reforms expected to provide $561 million in taxpayer savings in the current fiscal year and grow to approximately $1 billion in tax relief by fiscal year 2027.

The bill substantially increases the child and dependent tax credit, senior circuit breaker tax credit, and earned income tax credit. The bill also reforms the Massachusetts estate tax by raising the threshold to $2 million and eliminating the current cliff effect. A number of housing production tax credits are also expanded to help spur the creation of more market-rate and affordable housing units throughout Massachusetts.

“The goal of this bill is to help low-income residents, working families, and seniors afford the high cost of living in Massachusetts,” said State Senator Jason Lewis. “Substantially increasing the child and dependent, senior circuit breaker, and earned income tax credits, along with estate tax reform and increased housing production will make the Commonwealth more affordable and equitable. I'm particularly pleased that an important provision that I advocated for -- to close a loophole in the new millionaire's tax that voters approved last November -- was also included in the final bill.”

“This package of tax breaks will positively impact every resident of Massachusetts,” said State Representative Michael Day. “I am very appreciative that many of my priorities were included in this bill, including providing meaningful tax relief to our seniors, our families and both our property owners and renters. Fixing the provisions of the previous estate tax will also help to keep our residents here, where they want to be, as they age, and it was one of the issues our residents frequently mentioned to me. I am very happy to see that fix implemented in this legislation.”

"Overall, this bill helps level the playing field, from including important measures like the single-filer loophole for the Fair Share Amendment to bringing our estate tax more in line with other states,” said State Representative Michelle Ciccolo. “It addresses statewide problems, like skyrocketing housing costs, by incentivizing housing supply in gateway cities and affordable housing statewide. These policies took hundreds of hours of research and deliberation, and I applaud my colleagues and all their staff who have made that work possible."

Among other provisions, this tax relief bill:

• Increases the Child and Dependent Tax Credit from $180 to $310 in taxable year 2023, and then to $440 in taxable year 2024 and beyond, while eliminating the current cap on children/dependents, benefitting more than 565,000 families and providing the most generous universal child and dependent tax credit in the country;
• Increases the Earned Income Tax Credit from 30% to 40% of the federal credit;
• Doubles the maximum annual Senior Circuit Breaker Credit from $1,200 to $2,400;
• Increases the cap on the Rental Deduction from $3,000 to $4,000;
• Raises the Estate Tax threshold from $1 million to $2 million, and establishes a uniform credit of $99,600 in order to eliminate the current cliff effect penalty;
• Increases the Housing Development Incentive Program (HDIP) statewide cap from $10 million to $57 million one-time, and then to $30 million annually, which will create an estimated 12,500 new homes in Gateway cities; and
• Raises the annual Low Income Housing Tax Credit authorization cap from $40 million to $60 million, providing increased funding for new affordable housing units.

The bill also includes a requirement that married couples who file a joint tax return with the federal government also file a joint state tax return. This provision -- which aligns Massachusetts with many other states -- was championed by Senator Lewis and is intended to close a tax avoidance loophole in the new millionaire’s tax that was approved by voters last November.

The bill was signed into law by Governor Maura Healey on October 4, 2023.