Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2012

Governor's Budget Recommendation FY 2012

Deductions from Adjusted Gross Income

Fiscal Year 2012 Resource Summary (in Millions)
Deductions from Adjusted Gross Income 772.2 791.5 813.0

View tax item language

item description amount
Deductions from Adjusted Gross Income 813.0
1.401 Deduction for Employee Social Security and Railroad Retirement Payments 303.7
1.402 Deduction for Employee Contributions to Public Pension Plans 2 N.A.
1.403 Additional Exemption for the Elderly 26.0
1.404 Additional Exemption for the Blind 1.3
1.405 Dependents Exemption Where the Child Earns Income 3 N.A.
1.406 Deduction for Dependents Under 12 139.0
1.407 Personal Exemption for Students Age 19 or Over 9.8
1.408 Deduction for Adoption Fees 0.5
1.409 Deduction for Business-Related Child Care Expenses 15.7
1.410 Exemption of Medical Expenses 68.1
1.411 Rent Deduction 120.7
1.412 Nontaxation of Charitable Purpose Income of Trustees, Executors or Administrators N.A.
1.413 Exemption of Interest on Savings in Massachusetts Banks 5.2
1.414 Tuition Deduction (Over 25% of Income) 35.2
1.415 Charitable Contributions Tax Deduction N.A.
1.416 Educators' Deduction Expired
1.417 Home Heating Fuel Deduction Expired
1.418 Deduction for Costs Involved in Unlawful Discrimination Suits N.A.
1.419 Business Expenses of National Guard and Reserve Members Negligible
1.420 Archer Medical Savings Accounts Negligible
1.421 Deduction for Clean-Fuel Vehicles and Certain Refueling Property Negligible
1.422 Health Savings Accounts 9.4
1.423 Commuter Deduction 6.6
1.424 Self-Employed Health Insurance Deduction 45.3
1.425 Student Interest Loan Deduction (allowed Federally or by Massachusetts) 26.3


IRCFederal Internal Revenue Code (26 U.S.C.)
U.S.C United States Code
M.G.L. Massachusetts General Laws
Rev. Rul.; C.B. Revenue Ruling; Cumulative Bulletin of the U.S. Treasury
ESTIMATES All estimates are in $ millions.


1 1 This item and others citing this endnote cover employee fringe benefits. We accept as standard the following treatment of these benefits: the expense incurred by the employer in providing the benefit is properly deductible as a business expense and the benefit is taxed as compensation to the employee as if the employee had received taxable compensation and then used it to purchase the benefit. Of course, there are problems with this analysis. In some cases, the "benefit" is more a condition of employment than a true benefit. For example, a teacher required to have lunch in the school cafeteria may prefer to eat elsewhere even if the school lunch is free. On the other hand, in many cases the provision of tax-free employee benefits is clearly a substitution for taxable compensation.

2 2 This item and others citing this endnote cover contributory pension plans. The standard tax treatment of these plans is as follows: Component Standard Treatment Contributions: Made out of income that is currently taxed to employees. Investment Income: Taxed to the employee as "earned" income. Distributions from Pension Funds: Tax-free to the extent they are made out of dollars previously taxed to the employees as contributions or investment income. The non-standard treatment of contributions, investment income, or distributions as described in items 1.006, 1.101, 1.104, and 1.402, results in either nontaxation or deferrals of tax.

3 3 FY12 estimates for the basic personal exemptions and the no-tax status discussed in the introduction to the personal income tax are (in millions of dollars): Personal exemption for single taxpayers: $304 Personal exemption for married couples: $540 Personal exemption for married taxpayers filing separately: $14 Dependents exemption: $94 Personal exemption for heads of households: $100 No tax status/Limited income credits: $31 It should be noted that Chapter 186 of the Acts of 2002 reduced personal exemptions for tax year by 25% from their 2001 levels effective in tax year 2002; one-quarter of this reduction was restored effective tax year 2005, with additional one-quarter amounts restored in tax years 2006, 2007, and 2008. These changes in personal exemptions are reflected in the estimates above.

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