Massachusetts — Personal Income Tax

Massachusetts imposes personal income tax on individuals based on residency status. Understanding whether you are a resident, part-year resident, or nonresident determines both what income is taxable and whether you must file a return.

## Who Is a Resident

A resident (or "inhabitant") of Massachusetts is any natural person who either (1) is domiciled in the commonwealth, or (2) is not domiciled in Massachusetts but maintains a permanent place of abode in the commonwealth and spends in the aggregate more than 183 days of the taxable year in Massachusetts. Source: M.G.L. c. 62, § 1(f)

Residents are taxed on all income, regardless of source. Source: Personal Income Tax for Residents | Mass.gov

## Who Is a Part-Year Resident

A part-year resident is any person who either moves to Massachusetts and becomes a resident during the taxable year or terminates Massachusetts residency during the taxable year. Source: 830 CMR 62.5A.1

Part-year residents are taxed on all income earned during the period of residency, plus income from Massachusetts sources during the nonresident portion of the year. Source: Personal Income Tax for Part-Year Residents | Mass.gov

## Who Is a Nonresident

A nonresident is any natural person who is neither a full-year resident nor a part-year resident. Source: 830 CMR 62.5A.1

Nonresidents are taxed only on Massachusetts source income, which includes income from (1) any trade or business, including employment, carried on in Massachusetts; (2) participation in any lottery or wagering transaction in Massachusetts; or (3) ownership of any interest in real or tangible personal property located in Massachusetts. Source: 830 CMR 62.5A.1

## Filing Thresholds

Residents: Every resident whose Massachusetts gross income is $8,000 or more must file a Massachusetts personal income tax return (Form 1). Source: M.G.L. c. 62C, § 6

Part-year residents: Any part-year resident with annual Massachusetts gross income of more than $8,000 must file a Massachusetts tax return (Form 1-NR/PY). Source: Who Must File a Massachusetts Personal Income Tax Return | Mass.gov

Nonresidents: A nonresident must file if Massachusetts gross income exceeds $8,000 or the prorated personal exemption, whichever is less. Nonresidents file Form 1-NR/PY. Source: Who Must File a Massachusetts Personal Income Tax Return | Mass.gov

## Due Date

Massachusetts personal income tax returns are due on or before April 15 following the close of the taxable year. If April 15 falls on a weekend or legal holiday, the due date is the next business day. Source: Personal Income Tax for Residents | Mass.gov

Massachusetts imposes a flat 5.0% tax on Part B income, which includes wages, salaries, business income, and most other income (including long-term capital gains). Short-term capital gains—gains from the sale of assets held one year or less—are taxed at 8.5% as Part A income. Long-term capital gains on collectibles are taxed at 12.0%.

## 4% Surtax on High Earners

Effective for tax years beginning on or after January 1, 2023, Massachusetts imposes an additional 4% surtax on taxable income exceeding an annually adjusted threshold. The surtax applies to the total of a taxpayer's Part A, Part B, and Part C taxable income for the year (treating any negative Part as zero). The threshold is adjusted annually for inflation by the Department of Revenue pursuant to M.G.L. c. 62, § 4(d).

The inflation-adjusted surtax thresholds by tax year are:

• Tax year 2023: $1,000,000
• Tax year 2024: $1,053,750
• Tax year 2025: $1,083,150 (returns filed in 2026)
• Tax year 2026: $1,107,750 (returns filed in 2027)

A taxpayer whose total taxable income exceeds the threshold for the applicable tax year pays the ordinary rate (5.0%, 8.5%, or 12.0%, depending on income type) on all income, plus an additional 4% on the amount above the threshold. For example, a taxpayer with $1,200,000 of Part B wages in tax year 2026 pays 5% on the entire $1,200,000, plus 4% on the $92,250 excess above the $1,107,750 threshold, for a combined effective rate of 9% on the amount above the threshold.

The Department of Revenue certifies the inflation-adjusted threshold annually and publishes it on Form 1-ES (Estimated Tax Payment Vouchers) for the applicable tax year. Taxpayers filing 2025 tax returns in 2026 use the $1,083,150 threshold; those making 2026 estimated tax payments or filing 2026 returns in 2027 use the $1,107,750 threshold. The current and historical thresholds are published on the Mass.gov surtax information page.

Source: M.G.L. c. 62, § 4; Massachusetts 4% Surtax on Taxable Income | Mass.gov; 2026 Form 1-ES | Mass.gov; 2025 Form 1 Instructions | Mass.gov

Massachusetts allows personal exemptions that reduce taxable income. The amounts vary by filing status: $4,400 for single filers, $6,800 for head-of-household filers, and $8,800 for married couples filing jointly. Additional exemptions are available: $2,200 if the taxpayer or spouse is legally blind at year-end, $700 if the taxpayer reached age 65 before year-end (also available for a qualifying spouse), and $1,000 per qualifying dependent.

Source: M.G.L. c. 62, § 3

Massachusetts does not allow the federal standard deduction. Instead, taxpayers reduce taxable income through personal exemptions (set amounts based on filing status, dependents, age, and disability) and specific itemized deductions enumerated in M.G.L. c. 62, § 3. The principal deductions available include rent paid, college tuition exceeding 25% of Massachusetts adjusted gross income, and certain commuter expenses. Unlike federal law, Massachusetts does not permit a broad medical expense deduction or net operating loss carryforward.

## Rent Deduction — 50% of Rent, Capped at $4,000

An individual who pays rent for a principal place of residence located in Massachusetts is entitled to deduct an amount equal to 50% of such rent from Part B adjusted gross income. For tax years beginning on or after January 1, 2023, the maximum deduction is $4,000 for a single person, for a person who qualifies as head of household, or for a married couple filing jointly. For married persons filing separate returns, the maximum deduction is $2,000 per return (though couples may allocate the deduction differently if both spouses consent, provided the combined deduction does not exceed $4,000).

This $4,000 cap was enacted by St. 2023, c. 50, which amended M.G.L. c. 62, § 3(B)(a)(9), effective for tax years beginning on or after January 1, 2023. Prior to the 2023 amendment, the maximum deduction was $3,000 ($1,500 for married filing separately), a cap that had been in effect since tax year 2001.

The updated regulation 830 CMR 62.3.1(1)(a) (working draft, amended October 4, 2023) confirms the $4,000 cap and cites the statutory amendment. The pre-2023 version of the regulation (last amended December 16, 2016) reflected the prior $3,000 cap.

Source: M.G.L. c. 62, § 3(B)(a)(9); 830 CMR 62.3.1: Rent Deduction (Working Draft); 2023 Massachusetts Tax Cuts Legislation | Mass.gov

## Other Deductions

Additional deductions from Part B adjusted gross income include:

• Commuter expenses: Amounts expended for tolls paid through a Fast Lane account, for MBTA or regional transit authority fares, for bikeshare memberships, or for bicycles (including electric bicycles) and bicycle improvements, repair, and storage, not including amounts reimbursed by an employer. For single filers or married persons filing separately or heads of household, the deduction applies only to the portion exceeding $150, with a total deduction capped at $750. For married couples filing jointly, the total deduction cap is $1,500, with the $150 floor applied per individual.

• College tuition: An amount equal to the amount by which tuition payments by the taxpayer to a two- or four-year college in which the taxpayer or a dependent is enrolled (less any scholarships, grants, or financial aid received) exceeds 25% of the taxpayer's Massachusetts adjusted gross income, exclusive of this deduction. The deduction is subject to statutory limitations.

• Charitable contributions: An amount equal to the charitable contribution deduction allowed or allowable under IRC § 170, subject to the condition that the prior taxable year's Part B tax rate was 5%. Taxpayers are not required to itemize deductions on their federal return to claim this deduction. Contributions of household goods or used clothing are not deductible. (This deduction became available for tax years beginning on or after January 1, 2023, pursuant to a condition in statute that was met.)

• Student loan payment assistance from employer: For tax years beginning on or after January 1, 2023, an amount equal to the amount of student loan payment assistance received by an individual from an employer during the taxable year, to the extent not already excluded under IRC § 127.

Massachusetts does not allow deductions for medical expenses (except within very narrow circumstances), state and local taxes, mortgage interest, or most other federal itemized deductions.

Source: M.G.L. c. 62, § 3(B)(a); Differences Between MA and Federal Tax Law | Mass.gov

Massachusetts requires quarterly estimated tax payments from taxpayers who expect to receive income not subject to withholding. Understanding the thresholds, payment schedule, safe harbors, and penalties is essential for compliance.

## Who Must Pay Estimated Tax

Every taxpayer who can reasonably expect to receive income taxable under M.G.L. c. 62 from sources other than wages subject to withholding and for whom the amount of estimated tax exceeds $400 must make quarterly estimated tax payments. This requirement applies to residents, part-year residents, nonresidents, and fiduciaries.

Common types of income requiring estimated payments include self-employment income, partnership and S corporation distributions, rental income, capital gains, dividends and interest, certain pension and retirement plan distributions, unemployment compensation (if withholding was not elected), and lottery or gambling winnings.

Source: M.G.L. c. 62B, § 13; AP 241: Estimated Income Tax Payments

## Payment Schedule and Installment Amounts

For calendar-year taxpayers, estimated tax is payable in four equal installments of 25% of the required annual payment, due on or before:

• First installment: April 15
• Second installment: June 15
• Third installment: September 15
• Fourth installment: January 15 of the following year

If any due date falls on a weekend or legal holiday, the payment is due on the next business day. Taxpayers may pay the full estimated tax with the first installment or spread payments across the four due dates. The required annual payment is the amount necessary to meet the 80% safe harbor described below (or 66.67% for farmers and fishermen).

Taxpayers subject to the 4% surtax on income exceeding $1 million must include the surtax when calculating required estimated payments and are required to file and pay all taxes electronically.

Source: AP 241: Estimated Income Tax Payments; Massachusetts DOR Personal Income and Fiduciary Estimated Tax Payments

## Safe Harbors and Required Annual Payment

Massachusetts taxpayers are generally required to pay at least 80% of their annual income tax liability through withholding and estimated tax payments combined to avoid underpayment penalties. Farmers and fishermen—taxpayers whose gross income from farming or fishing is at least two-thirds of their annual gross income—need only pay 66.67% of their annual tax liability.

A taxpayer avoids penalties if total payments equal or exceed the lesser of:

1. 80% of the current year's tax (the amount shown on the current year's return when filed), or
2. 100% of the prior year's tax (the total tax shown on the Massachusetts return for the preceding taxable year, provided the taxpayer filed a return for a full 12-month period).

The prior-year safe harbor is available only if the taxpayer filed a Massachusetts return covering a full 12 months in the preceding year. New Massachusetts residents and first-time filers cannot use the prior-year safe harbor and must rely on the 80% current-year test.

Source: AP 241: Estimated Income Tax Payments

## Underpayment Penalty

Taxpayers who fail to pay at least 80% of their annual tax liability (or 66.67% for farmers and fishermen) through withholding and estimated payments are subject to an addition to tax for underpayment. The penalty is calculated at the federal short-term rate plus four percentage points per year, compounded daily, on the amount of the underpayment for the period of underpayment. The underpayment period runs from the installment due date to the earlier of the payment date or the return due date.

No penalty is imposed if the tax due after withholding and credits is $400 or less.

Taxpayers calculate the penalty using Form M-2210 (Underpayment of Massachusetts Estimated Income Tax), which must be completed and attached to the annual return if the 80% threshold was not met.

Source: M.G.L. c. 62B, § 14; AP 241: Estimated Income Tax Payments; Massachusetts DOR Personal Income and Fiduciary Estimated Tax Payments

Massachusetts taxes nonresidents only on income from sources within the Commonwealth. Understanding what constitutes Massachusetts-source income is essential for nonresident compliance, for multi-state workers, and for employers withholding on behalf of nonresident employees.

## General Rule — Income from Trade or Business in Massachusetts Under M.G.L. c. 62, § 5A(a), Massachusetts-source income includes items of gross income derived from or effectively connected with (1) any trade or business, including any employment, carried on by the taxpayer in Massachusetts, (2) participation in any lottery or wagering transaction in Massachusetts, or (3) ownership of any interest in real or tangible personal property located in Massachusetts. The trade-or-business category is the broadest and most frequently applied.

All items of income that derive from the conduct of a trade or business or employment in Massachusetts are Massachusetts-source income, even if the taxpayer has not been present in Massachusetts during the year in which the income is received. This rule applies regardless of the taxpayer's current residence or domicile. Income earned from or attributable to a Massachusetts trade or business in any year remains Massachusetts-source income when received, regardless of when payment occurs or where the taxpayer lives at the time of receipt.

Source: M.G.L. c. 62, § 5A; 830 CMR 62.5A.1(3)

## Employment Income — Physical Location Where Services Are Performed For compensation for personal services (wages, salaries, bonuses, commissions), Massachusetts sources the income based on where the services are physically performed. Massachusetts does not apply a "convenience of the employer" rule. A nonresident employee who performs services entirely outside Massachusetts—including telecommuting from another state for a Massachusetts-based employer—does not have Massachusetts-source income from those services, provided the work is actually performed outside the Commonwealth.

During the COVID-19 pandemic, Massachusetts temporarily adopted an emergency regulation (830 CMR 62.5A.3) that treated wages of nonresidents who had worked in Massachusetts before March 10, 2020, and then telecommuted from outside the state due to pandemic-related circumstances, as continuing to be Massachusetts-source income. That regulation expired on September 13, 2021. Since that date, nonresident telecommuters are taxed based on the actual physical location where services are performed.

Source: 830 CMR 62.5A.1(3)(c)(1); Directive 21-1

## Apportionment for Multi-State and Partial Days Worked in Massachusetts When a nonresident or part-year resident employee earns income from sources both within Massachusetts and elsewhere, and no exact allocation is possible, the regulation requires apportionment by workdays. For employees compensated on an hourly, daily, weekly, or monthly basis, Massachusetts-source income is computed as:

Massachusetts-source income = Total compensation × (Days working in MA ÷ Total working days)

Only days on which actual services are performed count; weekends, holidays, and non-workdays are excluded. Critically, if an employee works part of a day physically present in Massachusetts and part elsewhere, that day is counted as a Massachusetts day unless the taxpayer substantiates that more than half of that day’s compensation-producing activity occurred outside Massachusetts. The burden of proof is on the taxpayer. This rule applies to travel days, hybrid/remote schedules, and any irregular or partial Massachusetts workdays. The Department of Revenue expects accurate recordkeeping and may challenge unsupported allocations in audit.

Evidence and Documentation Requirements: To substantiate non-Massachusetts days, taxpayers must maintain and, upon request, provide contemporaneous and credible documentation, including:

• Detailed calendars and daily work logs;
• Employer records or certified letters specifying work locations;
• Electronic badge data or time entries;
• Travel and expense records (e.g., flight itineraries);
• Signed remote work or telecommuting agreements consistent with actual working patterns.

Generic or reconstructed records often fail to satisfy audit scrutiny. The DOR requires that supporting documentation be retained for at least three years after the tax due date (or two years after payment, if later), consistent with recordkeeping rules at 830 CMR 62C.25.1.

Travel days and split days: On days split between Massachusetts and out-of-state locations, unless the taxpayer can prove that the preponderance of substantive work activity was outside Massachusetts, the day is allocated as a Massachusetts workday. Examples of sufficient proof include contemporaneous time logs, meeting records, badge-in/badge-out scans, or corroborating travel documents.

Source: 830 CMR 62.5A.1(5)(a), (c) Source: 830 CMR 62C.25.1

## Specific Types of Massachusetts-Source Income If a nonresident has a trade or business, including any employment, carried on in Massachusetts, Massachusetts-source income includes the following categories (among others):

• Compensation for personal services performed in Massachusetts, including wages, salaries, tips, bonuses, fees, and commissions.
• Distributive share income from a partnership or S corporation conducting business in Massachusetts (subject to apportionment if the entity has income from multiple states).
• Gain from the sale of an interest in a business or partnership that conducted business in Massachusetts, apportioned if the entity operated in multiple states.
• Deferred compensation, separation pay, sick or vacation pay, and nonqualified pension income not protected from state taxation by federal law, to the extent attributable to services performed in Massachusetts.
• Income from a covenant not to compete, to the extent connected with a Massachusetts trade or business.
• All types of investment income (dividends, interest, capital gains) derived from or effectively connected with the carrying on of a trade or business in Massachusetts.

Massachusetts follows the "unitary business" principle for pass-through entities. If a nonresident is a member of a pass-through entity engaged in a unitary business that conducts a trade or business in Massachusetts, the nonresident's distributive share of Massachusetts-source income is taxable to the extent it would be taxable if received directly.

Source: 830 CMR 62.5A.1(3)(b), (c)

## What Is NOT Massachusetts-Source Income for Nonresidents Certain categories are expressly excluded from Massachusetts-source income for nonresidents, even if the individual has other Massachusetts connections:

• Income from intangibles held for investment and not effectively connected with a Massachusetts trade or business.
• Portfolio income from passive investments, unless effectively connected with a Massachusetts trade or business.
• Gain from the sale of stock in a C or S corporation (if a capital gain federally), unless otherwise connected to Massachusetts employment or business activity.

Source: 830 CMR 62.5A.1(4)

## No Reciprocity Agreements Massachusetts has no income tax reciprocity agreements with any other state. Nonresidents who work in Massachusetts must file a Massachusetts nonresident return (Form 1-NR/PY) and pay Massachusetts tax on their Massachusetts-source income. They may claim a credit for the Massachusetts tax paid on their home-state return if their home state allows such a credit.

Source: 830 CMR 62.5A.1(1)

Not yet human confirmed. The above includes authority and audit practices for partial workdays and hybrid work, as detailed in the controlling regulation and DOR recordkeeping requirements. Audit standards may evolve; practitioners should verify with DOR for the latest audit practices when fact patterns are unusual or recordkeeping is uncertain.

Massachusetts does not permit net operating loss (NOL) carryforward or carryback for personal income tax purposes. Business losses that cannot be used in the current year to offset current-year income are permanently lost and may not be carried to any other tax year. This treatment differs sharply from federal law and from Massachusetts corporate excise tax law, both of which allow NOL carryforwards.

## Statutory Prohibition on NOL Carryforward and Carryback

M.G.L. c. 62, § 2(d)(1)(C) expressly disallows "any net operating loss deduction allowed by section one hundred and seventy-two of the Code" (Internal Revenue Code § 172). The statute makes no distinction between carryforward and carryback—neither is permitted. A taxpayer who incurs a net operating loss in one tax year may not apply that loss to reduce taxable income in a prior year (carryback) or in any future year (carryforward). The Massachusetts Department of Revenue has confirmed that "Massachusetts does not allow the federal treatment of carrying back or carrying forward any unused net operating loss."

Source: M.G.L. c. 62, § 2(d)(1)(C); Massachusetts Gross, Adjusted Gross, and Taxable Income | Mass.gov

## Current-Year Use of Business Losses — Part B Losses Offset Part B Income

A taxpayer may use a business loss incurred in the current year to offset other Part B income earned in that same year. Part B income includes wages, salaries, business income, partnership and S corporation distributive shares, and most other income (other than interest, dividends, short-term capital gains, and long-term capital gains). If a taxpayer has Part B business deductions that exceed Part B business income, the resulting loss offsets other Part B gross income in computing Part B adjusted gross income for that year.

Example (from Directive 86-28): A taxpayer operates two businesses. The plumbing business generates $5,000 of Part B net income. The painting business generates a $15,000 loss (business deductions exceed painting income by $15,000). The taxpayer combines the $5,000 income and the $15,000 loss and reports a net Part B business loss of $10,000 on Form 1 for the current year. That $10,000 loss may be used in the current year, subject to the rules described below, but may not be carried forward if unused.

Source: Directive 86-28: Excess Part B Adjusted Gross Income Deductions

## Excess Part B Deductions May Offset Certain Part A Income in the Same Year

If a taxpayer's Part B adjusted gross income deductions exceed Part B gross income, the excess may reduce Part A income only if two conditions are met:

1. The Part B deductions must be "adjusted gross income deductions" (deductions allowable under IRC § 62, such as trade or business expenses), and
2. The Part A income being offset must be "effectively connected with the active conduct of a trade or business of the taxpayer."

M.G.L. c. 62, § 2(c)(1) sets forth this rule. Part A income includes interest, dividends, and short-term capital gains. Only the portion of Part A income that is effectively connected with the taxpayer's active trade or business may be reduced by excess Part B business deductions. Part A income that is passive investment income (for example, dividend income from stock holdings unrelated to the taxpayer's business) cannot be offset by excess Part B business deductions.

In the example from Directive 86-28, the taxpayer's $10,000 net Part B business loss may offset a $5,000 Part A net capital gain from the sale of a plumbing business asset (because that gain is effectively connected with the plumbing business), but may not offset dividend income unrelated to either business.

Source: M.G.L. c. 62, § 2(c)(1); Directive 86-28

## Excess Part B Deductions May Offset Certain Part C Income in the Same Year

After applying excess Part B deductions against qualifying Part A income under § 2(c)(1), any remaining excess Part B deductions may reduce Part C net gains (long-term capital gains), but again only to the extent that the Part C income is "effectively connected with the active conduct of a trade or business of the taxpayer." M.G.L. c. 62, § 2(e)(2) governs this step. Excess Part B deductions may not be applied to increase the amount of any net capital losses and may not reduce the amount of any net capital gain below zero.

Source: M.G.L. c. 62, § 2(e)(2)

## Losses That Cannot Be Used in the Current Year Are Permanently Lost

If, after applying the rules above, a taxpayer still has unused excess Part B business deductions at the end of the tax year—because the taxpayer has no Part A or Part C income, or the only Part A or Part C income is passive investment income not connected with a trade or business—those unused deductions are permanently lost. They may not be carried back to reduce income in prior years, and they may not be carried forward to reduce income in future years. The Massachusetts FY26 budget document confirms: "Ordinary losses may not be carried forward."

This limitation can result in significant permanent loss of tax benefit for taxpayers with volatile business income, start-up businesses with initial losses, or taxpayers whose income and deductions fall in different tax years.

Source: Governor's FY26 Budget Recommendation: Personal Income Tax Introduction

## Contrast with Corporate Excise Tax

The prohibition on NOL carryforward applies only to personal income tax under M.G.L. c. 62. Massachusetts does permit corporations subject to the corporate excise tax under M.G.L. c. 63 to carry forward net operating losses for up to 20 years under certain circumstances, as provided in 830 CMR 63.30.2. The different treatment reflects a policy choice by the legislature to allow loss carryforwards for corporations but not for individuals, partnerships, or S corporations to the extent their income is taxed at the individual shareholder level under c. 62.

Source: 830 CMR 63.30.2: Net Operating Loss Deductions and Carry Forward; 830 CMR 62.17A.2 (confirming "Under the personal income tax provisions of M.G.L. c. 62, a net operating loss carryforward is not allowed")

Taxpayers subject to the 4% surtax on income exceeding the annually adjusted threshold must file their Massachusetts personal income tax returns and make all related tax payments electronically. Failure to comply with this electronic filing and payment requirement, without reasonable cause, may result in a penalty of up to $100 for each improper return or payment.

## Statutory Authority and Electronic Filing Mandate

Massachusetts General Law chapter 62C, section 33(g) authorizes the Commissioner of Revenue to require taxpayers to file returns and make payments by specified electronic means. The Department of Revenue has exercised this authority to mandate electronic filing and payment for all taxpayers subject to the 4% surtax. The Department's official surtax guidance states: "All taxpayers subject to the 4% surtax must file their returns and make all payments electronically." Taxpayers subject to the surtax may not file paper returns or submit paper checks; all submissions must be made through MassTaxConnect (the Department's online portal) or approved commercial tax software.

The electronic filing requirement applies to all returns, estimated tax payments, extension payments, and any other payments related to the personal income tax for any year in which the taxpayer is subject to the surtax. The surtax applies to taxable income exceeding $1,000,000 for tax year 2023, adjusted annually for inflation—the threshold for tax year 2025 is $1,083,150 (as stated in the guide's "Income Tax Rates" section).

Source: M.G.L. c. 62C, § 33(g); Massachusetts 4% Surtax on Taxable Income | Mass.gov

## Two-Step Penalty Process

The statute establishes a two-step process. If a taxpayer required to file or pay electronically instead submits a paper return or payment, the taxpayer "shall be considered not to have made the required filing or the required payment." The Commissioner, in addition to other remedies, sends the taxpayer a notice of improper filing or payment specifying the nonconformity.

After the notice is sent, if the taxpayer continues to fail to comply with the electronic method without reasonable cause, the Commissioner may assess a penalty of up to $100 for each improper return, document, or data transmission, and for each improper payment. The penalty is in addition to any other penalties that may apply, such as late-filing or late-payment penalties under M.G.L. c. 62C, § 33(a)–(c).

The penalty is considered assessed when the Commissioner issues a notice to the taxpayer setting out the penalty amount, the tax period and tax type affected, and the reason for the penalty. No separate notice of intention to assess or demand for payment is required.

Source: M.G.L. c. 62C, § 33(g)

## Reasonable Cause Defense

The electronic filing penalty may be waived or abated if the taxpayer demonstrates that the failure to file or pay electronically was due to reasonable cause and not willful neglect. M.G.L. c. 62C, § 33(g) expressly provides that "a penalty imposed by the commissioner for an improper filing or payment shall be subject to subsection (f) relative to the waiver of penalties."

To meet the reasonable cause standard, the taxpayer must establish that they exercised the same degree of care that an ordinary taxpayer in the same position would have exercised. Each request for waiver or abatement is evaluated based on its unique facts and circumstances. Administrative Procedure 633 confirms that the same reasonable cause factors applicable to late-filing and late-payment penalties apply to the electronic filing penalty.

Taxpayers should request an abatement using MassTaxConnect or Form ABT (Application for Abatement). Administrative Procedure 612 states that "taxpayers that are required to file their taxes electronically must also file abatement requests electronically." Electronic abatement requests are processed faster than paper applications.

Source: M.G.L. c. 62C, § 33(f), (g); AP 633: Guidelines for the Waiver and Abatement of Penalties | Mass.gov; AP 612: Interest and Penalties | Mass.gov

## Effect on Filing and Payment Acceptance

Although M.G.L. c. 62C, § 33(g) states that a taxpayer who fails to use the prescribed electronic method "shall be considered not to have made the required filing or the required payment," the statute's notice-and-penalty structure indicates that the Department does not treat a paper return as entirely unfiled or a paper payment as entirely unmade. The statute directs the Commissioner to send a notice of improper filing or payment (not a notice of non-filing), and the penalty applies only if the taxpayer fails to conform to the electronic requirement without reasonable cause after receiving that notice. The Department does not, in its published guidance, instruct taxpayers subject to the surtax that paper returns will be rejected outright. However, the Department's official e-filing guidance does warn that "if a return is mandated to be e-filed, and is instead filed on paper, it will not be processed."

A taxpayer who receives a notice of improper filing or payment should promptly file or pay electronically as required and, if applicable, submit an abatement request demonstrating reasonable cause for the initial paper submission.

Source: M.G.L. c. 62C, § 33(g); DOR E-filing and Payment Requirements | Mass.gov

Massachusetts allows several refundable and nonrefundable tax credits against personal income tax. The principal credits available to individual taxpayers include the earned income credit, the senior circuit breaker credit, the child and family tax credit, and the lead paint removal credit. Effective for tax years 2026 and forward, additional credits are available — most notably the Farm Food Donation Credit and the new Sustainable Aviation Fuel Credit — as enacted by recent statutes and confirmed by DOR technical information releases.

## Earned Income Tax Credit (EITC) Massachusetts allows a refundable credit equal to 40% of the federal earned income credit claimed on the taxpayer's federal return. The credit is available to residents and part-year residents (prorated for part-year), provided the taxpayer is eligible for and claims the federal EITC for the same tax year. The EITC is fully refundable. Source: M.G.L. c. 62, § 6(h)

## Circuit Breaker Credit for Seniors Refundable credit for taxpayers age 65+ if property tax or rent exceeds 10% of total income, subject to annually adjusted caps and eligibility rules. For 2026, the income limits and assessed value caps are indexed. Source: TIR 25-7

## Child and Family Tax Credit Effective for tax years 2023+, a refundable tax credit is available for qualifying dependents, replacing prior dependent care and household credits. For 2026, the credit is $440 per qualifying individual. Source: TIR 24-4

## Lead Paint Removal Credit (Deleading Credit) Nonrefundable credit for owners of residential property abated of lead hazards, up to $3,000 per unit for full compliance, or $1,000 for interim controls. Unused credits may carry forward up to seven years. Source: 830 CMR 62.6.3

## Farm Food Donation Credit (NEW) Effective for taxable years ending on or after December 31, 2026 and before January 1, 2029: Refundable credit for eligible farm businesses equal to 25% of the certified value of qualifying farm food products donated to eligible food banks, up to $5,000 per year. Unused credits are not carried forward. Documentation from the recipient organization is required. Source: TIR 26-XX

## Sustainable Aviation Fuel Credit (NEW) Effective for taxable years beginning January 1, 2026 through December 31, 2030: Credit available for the purchase of sustainable aviation fuel by qualifying taxpayers, equal to $1.50 per gallon, with a statewide annual program cap. Allocation process and additional details are set by DOR guidance. The credit is nonrefundable but may be carried forward up to five years. Source: TIR 26-XX

## Other Credits under M.G.L. c. 62, § 6 Numerous additional credits exist, including credits for taxes paid to other jurisdictions, septic system repair, conservation land donations, and others. For each, consult the specific subsection and DOR instructions for current requirements and carryover rules. Source: M.G.L. c. 62, § 6

Material changes: The Farm Food Donation Credit and Sustainable Aviation Fuel Credit were enacted by the FY 2026 budget and are available for 2026 and future years. Amounts for principal credits have been checked and remain current.

Not yet human confirmed.

Massachusetts determines whether an individual is domiciled in the Commonwealth (and therefore a resident for income tax purposes) by weighing a broad set of factual indicators reflecting the individual’s social, economic, and political life. Audits may involve collecting detailed evidence across multiple categories. While the legal definition of domicile is derived from common law—the place an individual intends as his or her permanent, fixed home—Massachusetts Department of Revenue (DOR) guidance and regulations translate that principle into a list of practical factors.

Key categories of domicile evidence considered by the DOR include:

• Primary residence and occupancy: Location of the main home; date of sale or lease of former Massachusetts property; purchase or rental of out-of-state home; homestead exemption claims.
• Government records and registrations: Driver’s license issuance or renewal; vehicle registration; voter registration and location of voting; passport issuance/renewal address.
• Family and dependents: Residence of spouse and minor children; location of principal schooling for children; claimed dependents' state of residence.
• Business, employment, and professional ties: Principal location of work or business; participation in Massachusetts businesses, partnerships, or boards; location of accountants, attorneys, doctors, and other professional advisors.
• Banking and financial connections: Location of primary banks, investment accounts, and safe deposit boxes; locations where income tax returns are filed for federal and other states.
• Social, religious, and community ties: Membership and active participation in clubs, churches, synagogues, or community organizations; local charitable contributions.
• Mailing address and records: Where bills, financial statements, and official documents are delivered; insurance policy address.
• Physical presence: Number of days spent in Massachusetts versus elsewhere during the year (noting the parallel 183-day statutory residency test, which triggers full-year resident status if combined with a permanent place of abode in Massachusetts).

No single factor is dispositive; the DOR and Massachusetts courts consider the totality of a taxpayer’s circumstances in determining domicile. Changing domicile requires both a clear move to a new location and demonstrated intent to remain there permanently or indefinitely. The burden is on the taxpayer when seeking to prove a change from Massachusetts domicile. Representative cases and official bulletins support the principle that strong, objective connections—especially family, home, and intent—are critical in audit evidence.

Official authority includes TIR 95-7, which confirms the multi-factor analysis and enumerates many factors DOR examiners use in practice; the DOR’s published guidance on legal and residency status in Massachusetts likewise outlines DOR audit practices.

Source: TIR 95-7: Change in the Definition of “Resident” for Massachusetts Income Tax Purposes Source: Legal and Residency Status in Massachusetts | Mass.gov

Not yet human confirmed. The above list draws on DOR-issued TIR and summary guidance; if DOR issues a formal residency-audit manual or if controlling case law develops, this section should be re-examined for completeness and detail.

Massachusetts provides a credit to residents for taxes paid to another jurisdiction on income that is also subject to Massachusetts tax, under M.G.L. c. 62, § 6(a) and detailed in 830 CMR 62.6.1. This credit is generally intended to relieve double taxation for individuals taxed by both Massachusetts and another state on the same income.

General Credit Rule A full-year Massachusetts resident who pays income tax to another state, territory, or the District of Columbia on income also taxed by Massachusetts may claim a credit against their Massachusetts tax. The credit is limited: it cannot exceed (1) the amount of income tax actually paid to the other jurisdiction on the same income or (2) the proportionate Massachusetts tax on that income. Credit is available only for taxes "legally due and actually paid" for the same taxable period. Credit cannot be claimed for taxes paid voluntarily or for payments not required by law.

Dual Residency — Authority Silence and Effect There is no explicit Massachusetts statute, regulation, or Department of Revenue directive that addresses how the credit applies when a taxpayer is treated as a resident by both Massachusetts and another state for overlapping or the same tax year (dual residency). None of the current Massachusetts primary sources provide allocation, apportionment, or special relief rules for dual residents. The credit under § 6(a) and 830 CMR 62.6.1 is limited strictly by its statutory terms: it is allowed only to the extent the resident has paid tax to another jurisdiction on income also taxed by Massachusetts as resident income, and only for amounts not offset by other credits or mitigated by nonresident allocation.

No Double Credit or Duplicative Relief DOR Directives confirm that credit may not be claimed for the same income if such relief has already been provided in another state via a similar credit or if Massachusetts is not actually imposing resident tax on the item in question. If the other jurisdiction grants a credit for tax paid to Massachusetts on the same income, double relief is not permitted under Massachusetts law. The statute and directives emphasize avoidance of double crediting and require that the Massachusetts credit applies only to the portion of income taxed by both states and for which Massachusetts tax has not been otherwise relieved.

No Special Procedure, Apportionment, or Pro Rata Rule There are no Massachusetts-specific procedures, worksheets, or apportionment formulas provided for dual residents. Taxpayers in this situation must apply the general credit limitation and ensure that no more than one credit (either in Massachusetts or the other jurisdiction) is claimed on the same income for the same period. If uncertainty exists, practitioners must review current year tax forms and DOR instructions for any updates. As of June 2024, Massachusetts has not published additional guidance for dual-resident scenarios.

Source: M.G.L. c. 62, § 6(a) Source: 830 CMR 62.6.1 Source: DOR Directive 08-6 Source: DOR Directive 19-1 Source: Personal Income Tax Credit for Taxes Paid to Other Jurisdictions | Mass.gov

Massachusetts taxes income of estates and trusts either at the entity level or to beneficiaries or the grantor, depending on statutory classification, residency, and income source. All claims below are directly tied to 830 CMR 62.10.1, DOR Directive 89-4, and TIR 04-23.

Classification and Residency—Specific Definitions from 830 CMR 62.10.1

• A "resident trust" is:
• (1) Any trust created by will of a decedent who was a Massachusetts resident at death; or
• (2) Any trust whose fiduciary is a Massachusetts resident (effective the entire taxable year).

All other trusts are "nonresident trusts" (§ 62.10.1(2)-(4)). Residency of a trust may change if the fiduciary’s residence changes.

• Resident estates and trusts are taxed on all income, regardless of source (§ 62.10.1(5)), while nonresident trusts/estates are only taxed on Massachusetts-source income.

Filing and Payment Requirements

• Every trust or estate with either (a) any Massachusetts gross income over $100, or (b) any Massachusetts resident beneficiary entitled to any actual or potential distribution, must file Form 2 (§ 62.10.1(13)).

Grantor Trust Rules

• For grantor trusts (IRC §§ 671–678), the income is taxed directly to the grantor rather than the trust as a separate entity. If the grantor is a Massachusetts resident, all trust income is taxable; if the grantor is a nonresident, only Massachusetts-source income is taxable to the grantor. (See § 62.10.1(7); DOR Directive 89-4.)
• Grantor trusts with nonresident grantors must file Form 2G and withhold if Massachusetts-source income is distributed to a nonresident beneficiary (Directive 89-4).

Distributable Net Income and Beneficiary Sourcing—Tiering Rule

• For tax years beginning on or after January 1, 2005, distributed income retains its character and source as it passes from the trust or estate to the beneficiary. Resident beneficiaries are taxed on all their share of distributed income; nonresident beneficiaries are taxed only on the Massachusetts-source portion (§ 62.10.1(9) and (10); TIR 04-23).
• The trust/estate itself is taxed on fiduciary income that is not distributed or distributable to beneficiaries during the year.
• Trusts and estates must withhold on distributions of Massachusetts-source income to nonresident beneficiaries, and are required to report distributable net income and identify beneficiary allocations on Form 2.

Effective Date

• The "character tiering" and allocation mechanics are effective for tax years beginning on or after January 1, 2005 (TIR 04-23).

Source: 830 CMR 62.10.1; DOR Directive 89-4; TIR 04-23

Not yet human confirmed.

Massachusetts part-year residents must allocate income from equity compensation (such as nonqualified stock options and RSUs) and partnership distributive share between the resident and nonresident portions of the year using specific regulatory formulas and recordkeeping requirements. The primary rules are contained in 830 CMR 62.5A.1(6). This section draws directly from the text of the regulation and supporting Department of Revenue (DOR) guidance.

General Rule and Required Methodology Under 830 CMR 62.5A.1(6), a part-year resident is taxed on all income received while a resident, and on Massachusetts-source income while a nonresident. However, for compensation (including equity awards) and certain passthrough income that vests, accrues, or is received over a period spanning a residency change, Massachusetts requires proportional allocation based on where and when the underlying services were performed or the income was earned, not merely on receipt date. The taxpayer must maintain substantiating records and apply the allocation method specified in the regulation.

Nonqualified Stock Options (NQSOs): Per 830 CMR 62.5A.1(6)(a), the Massachusetts-source portion of income from exercising a nonqualified stock option is determined using a workday allocation formula: the ratio of days worked in Massachusetts during the grant-to-vest period to total workdays in that period. For part-year residents, this means:

• The portion allocable to Massachusetts-resident period is taxed as resident income.
• The portion allocable to nonresident period is taxed only if it is Massachusetts-source (i.e., attributable to services performed in Massachusetts).

Regulation text (summarized): “If a part-year resident is granted a nonqualified stock option in connection with services performed partly during his period of Massachusetts residence and partly during a period of nonresidence, the amount included in Massachusetts gross income is determined by multiplying the gain by a fraction, the numerator of which is the total number of days of actual service during the grant period while a Massachusetts resident, and the denominator is the total days of service in the grant period.”

RSUs and Other Equity Compensation: Although the regulation explicitly details options, it states: “the same allocation method applies to any other form of equity-based compensation for services performed over a period of residency and nonresidency.” Thus, RSUs and restricted shares are similarly allocated using the same workday or service-period ratio.

Partnership and Passthrough Income: For distributive share from partnerships or S corporations, part-year residents report:

• As residents: all distributive income received or accrued during the resident period, regardless of source.
• As nonresidents: only distributive share attributable to Massachusetts-source business activities, determined by the partnership’s apportionment. If partnership activities, and thus distributive income, span periods of residency and nonresidency (or are derived from services rendered over time), the taxpayer must allocate the income using business activity or workday fraction consistent with the regulation.

Documentation and Forms: Taxpayers must retain detailed records substantiating their allocation, including work calendars or partnership/corporate apportionment data. The Massachusetts DOR Form 1-NR/PY Instructions (tax year 2025, pages 21–22: Worksheet NR-PY “Allocation and Apportionment”) walk taxpayers through the required steps and lines for reporting.

Source: 830 CMR 62.5A.1(6); 2025 Form 1-NR/PY Instructions, pp. 21–22