If you’re moving to the Bay State for a job at a biotech firm in Cambridge or just scouting for a place to retire near the Cape, you’re probably asking the big question. Does Massachusetts have state tax? Honestly, the answer is a resounding yes. But it’s not as simple as a single number on a paycheck. People used to call it "Taxachusetts," a nickname that stuck for decades like gum on a sidewalk, though the reality today is a bit more nuanced.
You’ve got a flat tax, but then there's a "millionaire" surtax. You have sales tax, but your clothes might be exempt. It's a bit of a maze.
Does Massachusetts Have State Tax on Your Income?
The short version: Massachusetts has a 5% flat income tax rate. This applies to most of what you earn—wages, salaries, tips, and even the interest you get from your bank account. If you’re a resident and your gross income hits more than $8,000, the Department of Revenue (DOR) wants to hear from you.
✨ Don't miss: 119 GBP to USD: Why the Math Behind Your Money is Changing Fast
But "flat" is a bit of a lie these days.
Back in 2022, voters passed the Fair Share Amendment. Now, if you’re doing exceptionally well and your taxable income clears $1,083,150 (for the 2025/2026 tax years), you’re hit with an additional 4% surtax on everything over that threshold. Effectively, the state’s top earners are paying 9% on their highest dollars. It’s a progressive twist on a system that used to be strictly one-size-fits-all.
Capital gains are another story. Most long-term gains (assets held for more than a year) are taxed at that same 5% rate. However, if you’re flipping stocks for short-term gains, the state bites harder at 8.5%. And if you happen to be selling a rare coin collection or high-end art? Collectibles are taxed at a whopping 12%.
The Sales Tax Trap
Walking into a store in Boston, you’ll see a 6.25% sales tax. It’s pretty standard. Unlike some other states, you won't find cities or towns tacking on their own local sales taxes on top of that.
What's actually interesting is what isn't taxed.
Massachusetts is famously kind to your wardrobe. Most clothing items under $175 are completely tax-free. If you buy a designer jacket for $200, you only pay the 6.25% tax on the amount over $175. It’s a quirky rule that makes back-to-school shopping a lot cheaper here than in New York. Groceries are also exempt, though "prepared meals" (think takeout or dining out) carry that 6.25% tax, and some cities—like Boston or Worcester—add a 0.75% local meals tax on top of it.
Property Taxes and the "2.5" Rule
If you buy a house, property taxes will be your biggest headache. These are handled at the local level, not by the state. Every town has a different rate.
There is a famous law here called Proposition 2 1/2. Basically, it prevents a community from increasing its total property tax levy by more than 2.5% per year without a specific vote from the residents (an "override"). It keeps things from spiraling out of control, but with home values in the Greater Boston area skyrocketing, even a 2.5% increase feels heavy.
👉 See also: Why Coca-Cola Is Making a Massive Change to Its Soda Bottles Right Now
The Estate Tax Cliff
This is where Massachusetts gets a bad reputation. While the federal government doesn’t care about your estate unless it's worth over $15 million (starting in 2026), Massachusetts is much more aggressive.
The state has a $2 million estate tax exemption.
If you die and leave behind a house in a nice suburb and a decent 401(k), you could easily cross that $2 million mark. If the estate is worth $2.1 million, you aren't just taxed on the $100,000 extra; you have to file a return for the whole thing, though a credit helps offset the tax on that first $2 million. It’s a significant gap between state and federal law that catches a lot of families off guard.
Ways to Lower the Bill
You aren't totally defenseless. Massachusetts doesn't have a standard deduction like the IRS, which feels weird when you first file. Instead, they offer specific exemptions.
- Personal Exemptions: You get a basic $4,400 if you're single or $8,800 if you're married filing jointly.
- Rent Deduction: This is a fan favorite. You can deduct 50% of the rent you pay for your principal residence, capped at $4,000.
- Commuter Deduction: If you spend money on EZ-Pass tolls or MBTA passes, you can often deduct those costs once they exceed $150, up to a $750 limit.
- Senior Circuit Breaker: For residents age 65 or older, there’s a tax credit if your property taxes (or a portion of your rent) take up too much of your income. For 2026, this can be worth over $2,700.
Real World Action Steps
- Check Your Residency Status: If you spend more than 183 days in the state and maintain a "permanent place of abode," you're a resident for tax purposes. Don't try to "commute" from a tax-free state like New Hampshire if you're actually living in a Medford condo.
- Track Your Rent: If you’re a renter, keep your lease and payment records. That $4,000 deduction is one of the easiest ways to shave a few hundred bucks off your tax bill.
- Plan Your Estate Early: If your net worth—including your home and life insurance—is creeping toward $2 million, talk to a pro. Moving assets into certain types of trusts can prevent the state from taking a huge bite out of what you leave to your kids.
- Use MassTaxConnect: It’s the state’s online portal. It’s actually surprisingly functional for a government website. You can pay estimated taxes, check your refund status, and even file for free if you meet certain income requirements.
Massachusetts definitely has state tax, and it’s a multi-layered system that requires more than just a passing glance at your W-2. Between the 5% flat rate, the high-earner surtax, and the unique estate tax rules, staying on top of the paperwork is the only way to make sure you aren't overpaying.