- Massachusetts Democratic House Speaker Ronald Mariano on Tuesday unveiled a proposed $654 million tax cut aimed at providing relief to the wealthiest seniors, renters, businesses and homeowners.
- The plan would increase to $1.1 billion in relief by 2026.
- “This whole issue of competitiveness is real as we face challenges from states like North Carolina,” Mariano said, noting the continued migration of Americans from high-tax blue states.
Massachusetts House Speaker Ronald Mariano on Tuesday unveiled a proposed $654 million tax cut for fiscal year 2024 aimed at helping the wealthiest seniors, renters, businesses and homeowners all by rewriting the law that returned about $3 billion to taxpayers last year.
The plan, which would bring $1.1 billion in tax relief for fiscal year 2026, includes a number of proposals the Democratic president says will help make Massachusetts more affordable and competitive.
“We wanted to have something that we felt would impact all segments of the economy, all segments of our constituency with some justice and some fairness,” Mariano told reporters Tuesday.
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The package would change a series of tax policies, including raising the estate tax threshold from $1 million to $2 million.
Massachusetts is one of 12 states with an estate tax and has the lowest estate tax exemption threshold in the country, along with Oregon. Democratic Governor Maura Healey, who released a $742 million tax relief package in February, would eliminate the tax for estates valued up to $3 million.
The House proposal would also make changes to the 1986 law to limit the growth of state tax revenues and return any excess to taxpayers. The law triggered nearly $3 billion in refunds last year.
The credit is applied to personal income tax on a proportional basis, resulting in higher credits for those who paid the most tax. The bill would credit an equal amount per taxpayer.
“This whole package is based on the success of the economy,” he said of the 1986 law. “It only kicks in when the economy is very, very successful and we wanted everyone world shares in this success.”
The House proposal would also combine the child care expense credit with the household dependent member credit to create a refundable credit of $600 per dependent, doubling the main circuit breaker tax credit of $1,200 $ to $2,400, increase the rent deduction limit from $3,000 to $4,000, and increase the earned income tax credit from 30% to 40% of the federal credit.
The package proposes to lower the tax rate on short-term capital gains from 12% to 5% and to spread this change over two years.
The bill would also make changes to the state’s stabilization fund — also called a rainy day fund.
Under current law, if the amount remaining in the state stabilization fund at the end of a fiscal year exceeds 15% of budgeted revenue, the excess funds must be transferred to taxpayers through one-time increases. personal exemption. The bill would adjust the cap to 25.5%, allowing the state savings account to hold more money.
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Mariano said some of the tax changes are aimed at attracting workers and encouraging people already living and working in the state not to flee.
“This whole competitiveness issue is real as we face challenges from states like North Carolina,” he said.
James Rooney, president and CEO of the Greater Boston Chamber of Commerce, said the group was pleased with tax code changes that he said put employers at a disadvantage compared to other states.
“Massachusetts must take proactive and meaningful steps to ensure employers and people start, stay and succeed here,” he said.
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The House is expected to vote on the proposal on Thursday. The bill then heads to the Senate, which will draft its own tax package before crafting a compromise proposal to send back to the governor for his signature.
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