After months of discussion, the Massachusetts tax relief bill is finally nearing becoming a law. The proposed $1 billion Massachusetts tax relief bill has something for all, including renters, individuals, families and seniors. The new child tax credit from Massachusetts is the centerpiece of this massive tax relief bill. It not only raises the child tax credit amount, but also removes the existing cap to ensure more families receive the benefit.
What Does The New Child Tax Credit From Massachusetts Offer?
The Massachusetts’ tax relief bill includes an overhauled child and dependent tax credit. It is the package’s largest item, worth about $165 million this year and up to $307 million once fully implemented.
Currently, the state allows parents and guardians to claim a tax credit of up to $240 for each child below 13 years and for dependents over the age of 65, as well as for disabled dependents of any age.
The new child tax credit from Massachusetts raises the credit to $310 per dependent for tax year 2023 and up to $440 for tax year 2024 and beyond.
Additionally, the new bill removes the current limit of two qualifying dependents. Now, eligible families will be allowed to claim the credit for any number of qualifying dependents. For example, a couple with four kids could now claim $1,280 more per year starting from the 2024 tax year.
According to the summary report, the new child tax credit from Massachusetts would benefit over 565,000 families. Once implemented fully, it would be the most generous universal child and dependent tax credit in the country.
Massachusetts Tax Relief Bill: What Else Does It Offer?
The Massachusetts tax relief bill also raises the Earned Income Tax Credit (EITC) for low-income residents from 30% to 40% of the federal credit. For lower-income seniors aged 65 and older, the bill doubles the credit – known as the “senior circuit breaker credit” – from $1,200 currently to $2,400.
Massachusetts currently allows renters to write off 50% of their rent (up to $3,000) from their taxes annually. The new bill raises the maximum deduction to $4,000.
As for estate taxes, the new bill reduces the taxes for all estates with a value below $2 million by offering a uniform credit of $99,600. Also, the bill reduces the short-term capital gains from 12% to 8.5%, rather than 5% as proposed by the House.
The bill also updates Chapter 62F, a 1986 law that requires the state to return excess money to residents if the revenue exceeds the allowable amount for the year. Specifically, the new bill replaces the proportional system with an equal payment for all taxpayers, irrespective of how much they paid in taxes that year.
Also, the bill sets aside more money for programs supporting new house development. It also triples the maximum credit (up to $18,000) for homeowners wanting to replace or repair a septic tank.