The Massachusetts House has approved a $654 million tax relief package for the 2024 fiscal year. The tax relief package, among other things, offers a $600 refundable tax credit for dependents, doubles a tax credit for eligible seniors, boosts the earned income tax credit and raises the rental deduction cap.
Tax Relief Package: What Does It Include?
On Thursday, the Massachusetts House approved a $654 million tax relief package by an overwhelming majority of 150-3. This tax relief package is aimed at helping seniors, renters, businesses and wealthier homeowners.
The House proposal would cost $654 million in the first year and about $1.1 billion once it takes full effect in three years. It must be noted that the House proposal is very similar to the $750 million tax relief package that Gov. Maura Healey proposed in February.
Massachusetts House Speaker Ronald Mariano notes that the relief package rewrites the law that returned about $3 billion to the taxpayers last year.
The proposal would make changes to a 1986 tax cap law, which limits the state tax revenue growth by returning any excess back to taxpayers. The law caught lawmakers by surprise last year when it resulted in $3 billion in refunds to taxpayers.
Further, the proposal raises the estate tax threshold to $2 million from $1 million and calls for lowering the short-term capital gains tax rate from 12% to 5% over two years. Gov. Healey’s proposal called for eliminating the estate tax on estates valued up to $3 million.
The proposal also calls for making changes to the Massachusetts stabilization fund (or the rainy day fund). As per the current law, if the balance in the stabilization fund at the end of a fiscal year is more than 15% of budgeted revenues, then the excess fund should be returned to the taxpayers. The House proposal would raise the threshold to 25.5% to allow the state to keep more money.
Refundable Tax Credit For Dependents And Other Benefits For Taxpayers
In direct benefit to taxpayers, the proposal would combine the child care expenses credit and the dependent member of household credit into a $600 refundable tax credit for dependents.
The House proposal also calls for doubling the tax credit for eligible seniors, who own or rent property, to $2,400, as well as raise the rental deduction cap from $3,000 to $4,000. There is also a provision to increase the earned income tax credit from 30% to 40% of the federal credit.
“We wanted to have something that we felt impacted all segments of the economy, all segments of our constituency with some fairness and some equity,” Mariano told reporters at the time of introducing the tax relief plan earlier this week.
Now the proposal heads to the Senate. The House and Senate tried to pass a tax overhaul bill last year as well, but ran out of time.
