January 10, 2012
Massachusetts Tax Rate Change
On January 3, 2012, The Massachusetts Department of Revenue provided notice that the personal income tax rate will be decreasing from 5.3% to 5.25% effective January 1, 2012.
The Massachusetts personal income statutes contain a section that triggers an automatic reduction in the income tax rate if certain economic thresholds have been met. The thresholds related to revenue growth from year to year with a minimum level target. Once these factors are met, the rate automatically reduces without any further legislative action.
This tax rate change affects ordinary income, interest and dividends and most long term capital gains. These items of income will now be taxed at the new rate of 5.25%. The tax on short-term capital gains and long term gains on the sale of collectables remains at 12%.