Taxes in Massachusetts: State Tax Guide 2026
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Taxes in Massachusetts: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Massachusetts has undergone a significant tax shift. The state’s traditional flat income tax of 5.00% was joined in 2023 by a 4% “millionaire’s tax” surtax on income above $1 million, bringing the effective top rate to 9.00%. Combined with above-average property taxes and a 6.25% sales tax, the Bay State now ranks among the higher-tax states in the nation, particularly for high earners.
Massachusetts Income Tax Rates (2026)
Massachusetts uses a flat-rate income tax with an additional surtax at high income levels:
| Tax Rate | Taxable Income Range |
|---|---|
| 5.00% | All taxable income up to ~$1,000,000 |
| 9.00% | Income over ~$1,000,000 (5.00% base + 4.00% surtax) |
The $1 million threshold is adjusted annually for inflation. The surtax applies to all income types, including capital gains.
Massachusetts does not use filing-status-based brackets. The flat 5.00% rate applies equally to single and married filers, though exemptions and deductions vary.
Short-term capital gains (assets held one year or less) are taxed at 12.00% — the 8.00% short-term rate plus the 4.00% surtax for millionaires, or 8.00% for those below the threshold. Long-term capital gains are taxed at the standard 5.00% (or 9.00% for millionaires).
Sales Tax
| Component | Rate |
|---|---|
| State rate | 6.25% |
| Local add-on | None (no local sales tax) |
| Combined rate statewide | 6.25% |
Massachusetts does not allow municipalities to add local sales taxes, keeping the rate uniform statewide.
Exempt from sales tax: Clothing items under ~$175, most groceries, prescription medications, and newspapers. Items of clothing priced above ~$175 are taxed only on the amount exceeding that threshold.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.12% |
| National average | 0.99% |
Property taxes vary substantially by municipality. Rates in some towns west of Boston fall below 1.00%, while cities like Springfield, Worcester, and some Boston suburbs exceed 1.50%. Massachusetts law requires that all property be assessed at full market value and reassessed at least every three years.
Residential exemption: Boston and a few other cities offer a residential exemption that shifts part of the property tax burden from owner-occupied homes to commercial and rental properties. In Boston, this exemption reduces the taxable value of a primary residence by approximately ~$300,000.
Other Taxes
- Estate tax: Massachusetts imposes an estate tax on estates valued above ~$2,000,000. This is a “cliff” tax — once the estate exceeds $2 million, the entire estate is taxed, not just the amount above the threshold. Effective rates range from ~0.80% to ~16.00%.
- No inheritance tax: Beneficiaries do not pay a separate inheritance tax.
- Capital gains: Long-term gains taxed at 5.00% (9.00% for millionaires). Short-term gains taxed at 8.00% (12.00% for millionaires).
- Excise taxes: Motor vehicle excise of ~$25 per $1,000 of assessed value. Cigarette tax of ~$3.51 per pack. Gas tax of ~$0.28 per gallon.
- Local option meals tax: Municipalities can add a 0.75% tax on restaurant meals (on top of the 6.25% sales tax).
- Room occupancy tax: ~5.70% state rate, plus local add-ons. Short-term rentals (Airbnb, etc.) are subject to these taxes.
Tax Breaks and Credits
- No tax on Social Security: Massachusetts does not tax Social Security benefits.
- Pension income exemption: Government pension income (federal, state, military) is exempt from Massachusetts income tax. Private pension income does not receive this exemption.
- Rent deduction: Renters can deduct 50% of rent paid, up to ~$3,000 per year.
- Commuter deduction: Deduction for transit and commuter rail passes, up to a cap.
- Dependent care credit: A percentage of the federal child and dependent care credit.
- Lead paint credit: Up to ~$1,500 for lead paint removal from residential properties.
- Solar/renewable energy credits: Various credits for residential solar installations and energy efficiency improvements.
- 529 plan: Massachusetts does not offer a state tax deduction for 529 contributions.
Key Takeaways
- The flat 5.00% income tax rate applies to most residents, but income over ~$1 million faces a 9.00% effective rate
- Short-term capital gains are taxed at a steep 8.00% (or 12.00% for millionaires), well above most states
- The $2 million estate tax threshold is among the lowest nationally, and the cliff structure can result in unexpected liability
- Property taxes run above the national average, though Boston’s residential exemption provides meaningful relief for homeowners
- No sales tax on clothing under ~$175 and no local sales tax add-ons keep consumption taxes relatively moderate
Next Steps
- Compare Massachusetts to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Explore deductions you may be missing — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.