BOSTON — House Minority Leader Bradley H. Jones, Jr. (R-North Reading) recently supported a sweeping $1.1 billion tax relief package that will deliver savings to individuals, families, and seniors across the state while also helping Massachusetts to attract more businesses.
House Bill 3770, An Act to improve the Commonwealth’s competitiveness, affordability, and equity, was passed by the House of Representatives on a vote of 150-3 on April 13. The wide-ranging bill contains a series of tax relief provisions that would double the Senior Circuit Breaker tax credit, reform the estate tax, increase the rental tax deduction and child care/dependent tax credit, provide a higher state match on the federal Earned Income Tax Credit, and reduce the tax on short-term capital gains over two years.
“The House tax relief package promises significant savings for Massachusetts residents of all backgrounds and income levels, and also contains a single sales factor apportionment provision that will make it easier for the state to attract and retain businesses,” said Jones. “My hope is that the Senate will take up this proposal in short order and that both branches can come to a consensus in the near future to help get more money back in the pockets of the state’s hard-working taxpayers as soon as possible.”
Jones highlighted some of the key provisions contained in the House tax relief package, including:
SENIOR CIRCUIT BREAKER — Under the House proposal, the Senior Circuit Breaker tax credit would increase from $1,200 to $2,400. Over 100,000 taxpayers are expected to benefit from the expanded tax credit, which provides relief to qualifying homeowners and renters 65 and older who meet certain eligibility requirements.
ESTATE TAX — House Bill 3770 also calls for reforms to the Massachusetts estate tax law. In addition to raising the estate tax threshold from $1 million to $2 million, the bill would eliminate the law’s “cliff effect” by making the tax applicable only to the value of the estate that exceeds $2 million.
RENTAL DEDUCTION — Renters of all ages will benefit from a change in the rental deduction cap, which would increase from $3,000 to $4,000 under House Bill 3770. An estimated 881,000 taxpayers will be able to take advantage of this tax credit.
DEPENDENT CARE CREDIT — House Bill 3770 also combines the existing Childcare Expenses Credit with the Dependent Member of Household Credit into one refundable tax credit of $600 per dependent, to be phased in over three years. The credit will total $310 per dependent in the first year, $455 per dependent in the second year and $600 per dependent beginning in the third year, while also eliminating the current cap on the tax credit. Over 700,000 Massachusetts families are expected to be impacted by this tax credit.
EARNED INCOME TAX CREDIT — The House tax package also increases the Earned Income Tax Credit from 30 percent to 40 percent of the federal tax credit. Approximately 396,000 taxpayers with incomes below $57,000 will benefit from this change.
SHORT-TERM CAPITAL GAINS — Massachusetts residents who experience short-term capital gains will also get a tax break under the House proposal. While long-term capital gains are currently taxed at 5 percent, short-term capital gains are taxed at a higher 12 percent rate. House Bill 3770 calls for the tax rate on short-term capital gains to be reduced to 8 percent in the first year of implementation and to 5 percent after two years to match the current tax rate tied to long-term capital gains.
SINGLE SALES FACTOR – Massachusetts businesses will also benefit from a provision in the House tax bill that would establish a single sales factor apportionment for companies that operate in multiple states. Current corporate tax laws for most industries utilize a three-factor apportionment that takes into account the business’ share of employee payroll, sales, and property located in Massachusetts. By streamlining the tax so it is based solely on in-state sales, Massachusetts hopes to be more competitive in attracting more multi-state companies to do business here.
House Bill 3770 now moves to the Senate for its consideration.
