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Massachusetts State Taxes: What You’ll Pay in 2025

Posted on 12/19/24 by Michelle Cerulli McAdams

Most earners in the Bay State pay an income tax rate of 5 percent, though Massachusetts began charging a surtax for income over $1 million starting with the 2023 tax year.

The average property tax rate and the sales tax in Massachusetts fall in the middle of the pack across all states. 

Massachusetts has numerous tax benefits for older residents, including a 65-or-over exemption, a Senior Circuit Breaker tax credit, an opportunity in some cities and towns to volunteer in exchange for a property tax bill reduction and a $2 million estate tax exemption.

The big picture:

  • Income tax: 5-9 percent
    Massachusetts has an income tax rate of 5 percent for most earners. Starting with the 2023 tax year, the Bay State began taxing income over $1 million an additional 4 percent, for a total of 9 percent.
  • Property tax: 1.04 percent of a home’s assessed value (average)
    Real estate taxes vary by county and town across Massachusetts, with an average tax rate of 1.04 percent of a home’s assessed value in 2022, according to the Tax Foundation.
  • Sales tax: 6.25 percent (state only)
    A state sales tax rate of 6.25 percent is levied on the sale, rental or use of tangible personal property (such as furniture, appliances, books, handbags, etc.) and telecommunication services. There are no local sales taxes.
1140-state-tax-massachusetts.jpg
Getty/AARP

How is income taxed in Massachusetts?

For most taxpayers, Massachusetts has a flat income tax of 5 percent. In November 2022, Bay State voters approved an additional 4 percent tax on annual income above $1 million, beginning in tax year 2023. Annual income above $1 million (adjusted annually for inflation) is taxed at 9 percent.

A personal income tax exemption allows for a subtraction from gross income.

Filing statusExemption
Single$4,400
Married filing separate$4,400
Head of household$6,800
Married filing joint$8,800

Source: Massachusetts Department of Revenue

Check for additional tax exemptions, including those for nonresidents and part-year residents, legal blindness and medical and dental expenses.

Some low-income Massachusetts residents are not required to pay state income taxes (they qualify for No Tax Status). If you meet the criteria below, you may qualify for No Tax Status.

Filing statusMassachusetts adjusted gross income
Single$8,000 or less
Head of household$14,400 or less, plus $1,000 per dependent
Married filing joint$16,400 or less, plus $1,000 per dependent

Source: Massachusetts Department of Revenue

If your income is a little too high to qualify for No Tax Status, you may qualify for the Limited Income Credit, which can lower your tax burden. See criteria below:

Filing statusMassachusetts adjusted gross income
Single$8,000-$14,000
Head of household$14,400-$25,200, plus $1,750 per dependent
Married filing joint$16,400-$28,700, plus $1,750 per dependent

Source: Massachusetts Department of Revenue and DOR Tax Tips for Seniors and Retirees
 
Learn more about No Tax Status and the Limited Income Credit.

Watch the video below to learn how to identify your 2024 federal income tax brackets.

Understanding Your 2024 Income Tax

Are pensions or retirement income taxed in Massachusetts?

Money withdrawn from most private pensions and retirement accounts, including 401(k)s and traditional IRAs, is considered taxable income. However, IRA contributions that were previously taxed by the state may be distributed tax-free, according to the Massachusetts Department of Revenue.

Most government pensions, including U.S. military pensions, are not taxed in Massachusetts. Some exceptions include federal employee Thrift Savings Plan distributions and senior U.S. judges’ pension distributions, which are taxable.

Distributions from 403(b) plans are tax-exempt if you’ve already paid Massachusetts tax on contributions.

If you’ve moved to Massachusetts and receive government pension payments from your prior state, that income is tax-exempt if your prior state doesn’t tax its residents on income they receive from Massachusetts. Check the Massachusetts Form 1-NR/PY to learn more.

AARP’s Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.

What about investment income?

Long-term capital gains from investments are taxed at 5 percent in Massachusetts, and short-term capital gains are taxed at 8.5 percent. Long term gains from the sale or exchange of collectibles is taxed at 12 percent. A long-term capital gain is a profit from selling an asset you’ve owned for more than one year. A short-term capital gain is a profit from the sale of an asset you’ve owned for one year or less.

Does Massachusetts tax Social Security benefits?

No. But you may pay federal taxes on a portion of your Social Security benefits, depending on your income. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income — or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple. If you receive less than $25,000 as an individual and $32,000 as a couple, Social Security benefits aren't taxed.

AARP’s Social Security Calculator can assist you in determining when to claim and how to maximize your Social Security benefits.

How is property taxed in Massachusetts? 

Property tax rates are based on home values and vary by location. The average property tax rate in Massachusetts is 1.04 percent, according to the Tax Foundation.

Learn more about property tax in Massachusetts. People who are blind, seniors, surviving spouses and veterans, as well as anyone who claims the Bay State as their primary residence,  may qualify for local property tax exemptions. Personal property such as cars and boats are typically taxed locally through excise taxes.

 What about sales tax and other taxes?

  • Sales tax: The state collects a 6.25 percent tax on the sale or rental of many goods, such as books, appliances and furniture, as well as on some telecommunication services.
  • Use tax: Massachusetts use tax is 6.25 percent of the sale or rental price of goods and certain telecommunication services on which no sales tax was paid and which will be used in the state. This includes items bought in person, online and over the phone. For example, if you bought a desk from a business in another state and paid a sales tax of less than 6.25 percent, you’ll owe a use tax to Massachusetts to cover the difference between the sales tax you paid and the Bay State’s 6.25 percent sales tax. 

  • Exemptions: Groceries and clothing up to $175, newspapers, magazines, certain health care and household items, event tickets, shipping services, personal and professional services, and sales of gas, steam, electricity and heating fuel to residential properties are not taxed. View a list of taxed and tax-exempt items and services.

  • Gas and diesel: Massachusetts consumers pay a 24-cents-per-gallon state excise tax on gas and diesel fuel. The excise tax is included in the price at the pump. (Gas and diesel fuel are not subject to the state’s sales tax.)

  • Alcohol: Alcohol tax rates range from 3 cents to $4.05 per gallon, depending on the type of beverage and percentage of alcohol. Beer is taxed at $3.30 per barrel (31 gallons), or roughly 11 cents per gallon. Wine is taxed at 55 cents per gallon, and liquor is taxed at $4.05 per gallon. These excise taxes are paid by the vendor, but some or all may be included in the retail price. Alcoholic beverages are exempt from sales tax, unless they’re sold as part of a meal.
  • Lottery: Massachusetts state lottery winnings (as well as from lotteries outside the Bay State) must be included in Massachusetts gross income. Winnings greater than $5,000 are also subject to federal tax.

Will I or my heirs have to pay inheritance and estate tax in Massachusetts?

In the Bay State, estates are taxed at rates ranging from 0.8 percent to 16 percent, depending on the value of the estate. Estates valued under $2 million are not subject to the estate tax.

Are there any tax breaks for older Massachusetts residents?

Residents who are 65 or older by Dec. 31, 2024, can receive a $700 exemption on top of the state’s personal exemptions. This is per person (not household), so if your spouse turned 65 by Dec. 31, they can also claim the exemption.

If you are 65 or older by Dec. 31, 2024, you may be eligible for the Senior Circuit Breaker tax credit, depending on the taxes or rent you paid on your principal residence. The maximum credit for tax year 2024 is $2,730. Learn more, including how to apply.

Those older than 60 may be able to take advantage of a Senior Citizen Property Tax Work-Off Abatement, in which taxpayers volunteer with their city or town for a property tax bill reduction of up to $2,000 per year. View details for Boston residents. Contact your city or town to see if they participate.

View tax tips for seniors and retirees in Massachusetts.

Are military benefits taxed in Massachusetts?

Massachusetts does not tax U.S. military pensions. Veterans Administration disability compensation is also not taxed in the state.

Spouses of military personnel may be eligible for exemptions.

What is the deadline for filing Massachusetts state taxes in 2025?

The deadline to file a Massachusetts state tax return is Tuesday, April 15, 2025. Federal tax returns are also due on Tuesday, April 15.

For help estimating your annual income taxes, use AARP’s Tax Calculator.

Personal income tax extensions should also be filed by the Tuesday, April 15, deadline. Extensions provide additional time to file (until Oct. 15, 2025) — not additional time to pay taxes owed. Massachusetts requires its own form for extensions, which can be completed electronically or by mail. The filing extension is automatic, with no need to file forms, if at least 80 percent of the tax due is paid by the April 15 deadline. Learn more about filing an extension, as well as penalties and interest.

Michelle Cerulli McAdams is a freelance writer based in Massachusetts. She has written for the AARP Bulletin for 10 years, covering health, medicine, politics and policy.

Writer Michelle Tuccitto Sullo contributed to this story. 

Also of Interest: 

This story is provided by AARP Massachusetts. Visit the AARP Massachusetts page for more news, events, and programs affecting retirement, health care, and more.

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