Written by: Victoria McHale, Madison G. Houck
On October 4, 2023, Massachusetts Governor, Maura Healey, implemented Bill H.4104, documenting historic tax law changes for the Commonwealth. The important highlights of Bill H.4104 are summarized below.
The Filing Status of Married Individuals
With the implementation of the Massachusetts millionaire’s tax in 2023, a new tax of 4% is imposed on taxpayers with a taxable income of more than $1 million. One of the planning opportunities many pointed to when this came about was the opportunity for married couples to file separate Massachusetts tax returns while continuing to file a joint federal return since the millionaire’s tax is charged on a per-taxpayer basis. This bill closes that loophole for tax years beginning January 1, 2024, requiring consistency in filing status at the federal and state level.
Short-Term Capital Gains Tax
Effective for the 2023 tax year, Massachusetts reduced the short-term capital gains tax from 12% to 8.5%. Those subject to the Massachusetts millionaire’s tax will pay 12.5% on their short-term capital gains.
Estate Tax
For the first time since 2006, Massachusetts has increased the estate tax exemption from $1 million to $2 million. This change was made effective for the estate of decedents dying on or after January 1, 2023. Thus, a decedent’s gross estate valued at less than $2 million will not be subject to a Massachusetts estate filing requirement.
Prior to executing any related tax planning for 2023 and 2024, please consult your Wolf engagement team directly.
