Research Areas
Massachusetts
The Facts on Massachusetts' Tax Climate
Last updated July 1, 2009
Here are some basic facts on Massachusetts' tax system and how it compares to other states:
Tax Freedom Day Arrives on April 16 in Massachusetts
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Massachusetts taxpayers had to work until April 16 to pay their total tax bill, ranking the state 7th highest nationally. That's three days after national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are as follows: Rhode Island, April 14 (ranked 10th nationally); Connecticut, April 30 (ranked 1st nationally); New York, April 25 (ranked 3rd nationally); New Hampshire, April 10 (ranked 22nd nationally); and Vermont, April 12 (ranking 19th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Massachusetts' State/Local Tax Burden Slightly Below Average
Estimated at 9.5% of income, Massachusetts' state/local tax burden percentage ranks 23rd nationally, just below the national average of 9.7%. Massachusetts taxpayers pay $5,377 per capita in state and local taxes. Massachusetts has dropped 17 places in the rankings since 1977 by imposing a property tax limitation and keeping a lid on its personal income tax rate, living down its "Taxachusetts" nickname.
Massachusetts' State and Local Tax Burdens, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Massachusetts' 2010 Business Tax Climate Ranks 36th
Massachusetts ranks 36th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Rhode Island (44th), Connecticut (38th), New York (49th), New Hampshire (7th) and Vermont (41st).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Massachusetts' Individual Income Tax System
Massachusetts' personal income tax system consists of a flat rate of 5.3% on most personal income, which ranks 29th highest nationally. Massachusetts' 2006 individual income tax collections were $1,630 per person, which was the 4th highest in the nation.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Massachusetts' Corporate Income Tax System
Massachusetts' corporate tax structure consists of a flat rate of 9.5% on all corporate income. Among states levying corporate income taxes, Massachusetts' rate ranks 4th highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $327 per capita, which ranked 5th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita
Massachusetts Levies Sales Tax below National Median; Cigarette Tax among Highest in the Nation
Massachusetts levies a 6.25% general sales or use tax on consumers, above the national median of 6 percent. State and local governments combined collected approximately $623 per capita in sales taxes in 2006, ranking 41st highest nationally. Massachusetts' gasoline tax stands at 23.5 cents per gallon, which ranks 26th highest nationally. Massachusetts' cigarette tax stands at $2.51 per pack of twenty, ranking 6rd highest in the nation. The sales tax was adopted in 1966, the gasoline tax in 1929 and the cigarette tax in 1939.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita
Massachusetts Property Taxes among Nation's Highest
Massachusetts is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Massachusetts' localities collected $1,683.66 per capita in property taxes in fiscal year 2006, which is the latest year that the Census Bureau published state-by-state data. Despite a well-known property tax limitation measure passed in the early 1980s, Proposition 2 1/2, Massachusetts' combined state/local property taxes are the 8th highest in the nation per capita. High levels of collections have been possible because the limitations in law are relatively easy to override locally. At the state level, Massachusetts collected a mere $0.01 per capita during FY 2006, making its combined state/local property taxes $1,683.67 per capita.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Massachusetts is a Donor State
Massachusetts taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Massachusetts citizens received approximately $0.82 in the way of federal spending. This ranks the state 40th nationally and represents a fall from 1995 when Massachusetts received $0.92 per dollar of taxes in federal spending (when the state ranked 39th nationally). Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were as follows: Rhode Island ($1.00), Connecticut ($0.69), New York ($0.79), New Hampshire ($0.71), and Vermont ($1.08).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
