January 13, 2015


State & Local Taxes in 2015


Massachusetts Tax Code Features

Progressive Features

• Provides a 15 percent refundable Earned Income Tax Credit (EITC)

• Sales tax base excludes groceries and clothing under $175

• “No-tax” threshold and low-income credit eliminate income tax liability for poorest taxpayers

• Requires the use of combined reporting for the corporate income tax

Regressive Features

• Personal income tax uses a flat rate

• Fails to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers

• Fails to provide refundable child tax credits

• Comparatively high cigarette tax rate

Tax Changes Enacted in 2013 & 2014

• Flat rate will drop from 5.2 to 5.15% on January 1, 2015 due to meeting revenue targets

• Gas tax increased by 3 cents per gallon

• Cigarette tax rate increased by $1 per pack

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Massachusetts has the 24th most unfair state and local tax system in the country. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

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