Massachusetts Tax Calculator 2026

Massachusetts Income Tax

Massachusetts levies a flat 5.0% income tax on all taxable income for the 2026 tax year. For decades, Massachusetts was known as “Taxachusetts” for its relatively high tax burden, and the state’s constitution historically required a flat-rate income tax. The rate has been gradually reduced over the years from 5.95% in the early 2000s to the current 5.0%. Massachusetts taxes most forms of income at this flat rate, including wages, salaries, business income, interest, dividends, and capital gains (though short-term capital gains are taxed at a higher 8.5% rate).

The most significant recent change to Massachusetts income tax is the Fair Share Amendment (also known as the Millionaire Tax), which took effect on January 1, 2023. Approved by voters in November 2022 as a constitutional amendment, it imposes an additional 4% surtax on annual taxable income exceeding $1 million. This effectively creates a 9% rate on income above the threshold. The $1 million threshold is indexed to inflation based on the Consumer Price Index, so it adjusts upward over time. Revenue from the surtax is constitutionally earmarked for education and transportation spending.

Massachusetts uses its own definition of taxable income that differs from federal AGI in several ways. The state does not conform to all federal deductions; for instance, Massachusetts does not allow the standard deduction used on federal returns but instead offers its own personal exemptions and deductions. Single filers receive a $4,400 personal exemption, and married couples filing jointly receive $8,800. Massachusetts also allows deductions for rent paid (up to 50% of rent, capped at $3,000), commuter expenses, and student loan interest.

Massachusetts Sales Tax

Massachusetts imposes a 6.25% state sales tax with no local additions. This uniform rate applies throughout the Commonwealth. One of Massachusetts’ most notable exemptions is on clothing: individual clothing items priced at $175 or less are exempt from sales tax. The portion of any clothing item exceeding $175 is taxable. For example, a $200 jacket would be taxed only on the $25 above the $175 threshold. This exemption does not apply to special clothing like costumes or sports equipment.

Groceries (food for home consumption), prescription medications, and newspapers are exempt from Massachusetts sales tax. The state holds an annual sales tax holiday, typically the second weekend in August, when most retail items priced at $2,500 or less are exempt from sales tax. This holiday has become a significant shopping event in the state. Massachusetts applies sales tax to meals and prepared food at the standard 6.25% rate, and some communities have adopted a local meals tax of up to 0.75%, making the total meals tax up to 7% in those areas.

Massachusetts Property Tax

Massachusetts has an average effective property tax rate of approximately 1.12%, which is near the national average. Property taxes in Massachusetts are governed by Proposition 2½, a 1980 ballot initiative that limits the total property tax levy in each city or town to 2.5% of the total assessed value of all taxable property, and limits annual increases in the levy to 2.5% (plus new growth from development). This has been one of the most significant property tax limitation measures in the country and has kept Massachusetts property tax rates from escalating as rapidly as in some other Northeastern states.

Despite the Proposition 2½ limits, Massachusetts property tax bills can be substantial due to high real estate values, particularly in the Greater Boston area, Cape Cod, and the western suburbs. A median-priced home in the Boston metro area with a value around $600,000 would face an annual property tax bill of approximately $6,700. Communities can override the Proposition 2½ limits through voter-approved overrides (permanent) or exclusions (temporary, typically for capital projects or debt service). Massachusetts offers property tax exemptions for seniors, disabled veterans, surviving spouses, and blind persons.

Massachusetts Millionaire Tax & Its Impact

The Fair Share Amendment, which added the 4% surtax on income over $1 million, has been one of the most debated tax policy changes in Massachusetts history. Supporters argued it would generate approximately $1–2 billion annually in dedicated funding for education (including public schools, higher education, and early education) and transportation (roads, bridges, and public transit). In its first year of implementation, the surtax generated approximately $1.8 billion in revenue.

Critics raised concerns about high-income residents and business owners relocating to neighboring states like New Hampshire (which has no income tax on wages) or Florida. There has been evidence of some migration, particularly among business owners who can choose their tax domicile, but the scale of any “millionaire flight” has been debated. Massachusetts defines the $1 million threshold based on total taxable income in a single year, which means one-time events like selling a business, exercising stock options, or selling a home with a large gain could trigger the surtax even for people who are not annual millionaires.

An important planning consideration is that short-term capital gains in Massachusetts are already taxed at 8.5% (rather than the standard 5%), so combined with the 4% surtax, short-term gains above the million-dollar threshold face a 12.5% state tax rate. Long-term gains above the threshold face a 9% rate. These are among the highest state-level capital gains tax rates in the country and have implications for investment and business sale planning.

Massachusetts vs. Neighboring States

• Massachusetts vs. New Hampshire: New Hampshire has no income tax on wages and no sales tax, making it dramatically cheaper for most earners. However, New Hampshire property taxes average about 1.86%, much higher than Massachusetts. Many workers commute from tax-free NH to higher-paying MA jobs, benefiting from both systems.
• Massachusetts vs. Connecticut: Connecticut has graduated rates up to 6.99% (with an additional recapture provision). Massachusetts’ flat 5% is lower for most taxpayers, but the millionaire surtax makes MA more expensive at the top end (9% vs. ~6.99%). Connecticut’s 6.35% sales tax is similar to MA’s 6.25%.
• Massachusetts vs. Rhode Island: Rhode Island has graduated rates up to 5.99%, higher than Massachusetts’ flat 5% for most earners but lower than the 9% millionaire rate. Rhode Island’s 7% sales tax is higher, and property taxes (about 1.40%) are also higher than Massachusetts.
• Massachusetts vs. New York: New York’s top state rate of 10.9% (plus NYC’s additional 3.876%) far exceeds Massachusetts rates. Massachusetts is generally cheaper than New York for high-income earners, even with the millionaire surtax. New York’s combined sales tax rates also tend to be higher.