Commission Members in Attendance:
- Chairperson Rebecca Forter, Designee, MA Department of Revenue
- Lindsay Janeczek, Designee, MA Auditor
- Sue Perez, Designee, MA Treasurer
- David Emer, Designee, Senate Chair Joint Committee on Revenue
- Andrew DeFalco, Designee, Senate Committee on Ways and Means
- Professor Natasha Varyani, Member, Governor’s Appointee
- Professor Thomas Downes, Member, Governor’s Appointee
- Thomas Baranowski, Designee, House Chair Joint Committee on Revenue
- Jamie Oppendisano, Designee, House Minority Leader
- Chris Carlozzi, Designee, Senate Minority Leader
Commission Members Absent:
- Representative Aaron Michlewitz, Member, House Ways and Means Committee
List of Documents:
- Meeting Agenda
- Draft Minutes
- November 17, 2025 Meeting
- Presentation of January tax expenditure evaluation ratings, discuss and vote on ratings
- 2.604 Research Credit
- 1.018 Exemption of Meals and Lodging Provided at Work
- 2.602 Investment Tax Credit
- 1.042 & 1.501 Favorable Tax Treatment of Qualified Small
Business Stock (QSBS) Gain
- 3.106 Exemption for Newspapers and Magazines
- 1.603 & 2.605 EDIP/Economic Development Incentive Program Credit
- 3.309 Exemption for Vessels, Materials, Tools, Fuels, and Machinery Used in
Commercial Fishing
Meeting Minutes:
The meeting via teleconference was called to order at 2:01 PM. Chairperson Forter welcomed Commission members, called roll, and a quorum was recognized. Chairperson Forter put the Commission and public on notice that the meeting is recorded for the purpose of minutes. The recording of the meeting will be kept for public record and will not be deleted.
Chairperson Forter asked for any comments or changes on the November 17, 2025 meeting minutes. Members did not provide any comment. Chairperson Forter made a motion to approve the minutes from the last meeting. Natasha Varyani seconded the motion. Members were in favor to approve the November ‘25 meeting minutes as drafted. The meeting minutes will be posted to the TERC website.
David Emer led a discussion on 2.604 Research Credit. This is a corporate tax expenditure that was adopted in 1991. The annual cost of this tax expenditure is $612.2 - $697.9 million. This tax expenditure is not a result of conformity. The Commission noted that the federal Code has its own research credits. The goal of the expenditure is job creation and maintenance, investment, and competitiveness/strategic. David Emer noted that the ratings did not change much since the last time the tax expenditure was evaluated and flagged that some companies that are not traditionally thought of as R&D companies are eligible for this credit, such as Finance and Real Estate and Leasing. Chairperson Forter mentioned that qualifying expenses for the Massachusetts credit are tied to the qualified expenses for purposes of the federal credit. About 10 years ago the IRS revised their regulations on qualifying expenses and significantly expanded them to include fintech research and other types of research not traditionally thought of as eligible for the research credit. David Emer proposed adding these details to the comment section of the evaluation template. Chairperson Forter agreed. Sue Perez stated that the intention is to not flag this tax expenditure for legislative review, but it is to be mentioned in the final report due to the recent expansion of qualified expenses and the tax expenditure’s significant cost. David Emer agreed. Sue Perez mentioned that during the last evaluation of this expenditure the Commission voted “somewhat agree” on the question of whether the tax expenditure is easily administered, during this evaluation of the expenditure the Commission voted “somewhat disagree” as administration of this credit presents challenges and it reviewed as a part of DOR’s corporate excise audit process. Chairperson Forter agreed with this change and asked whether there were any questions or comments. Kazim Ozyurt highlighted that the amount of credit generated but not yet claimed has increased significantly over the years since it was adopted. There were no other comments from members. Chairperson Forter made a motion to approve the evaluation template with additional comments noting the expansion of the credit. Tom Downes seconded the motion. Members voted to approve the evaluation template for 2.604 Research Credit with the additional comment noted above.
Chris Carlozzi led a discussion on 1.018 Exemption of Meals and Lodging Provided at Work. This a personal income tax expenditure that was adopted in 1973 and has an annual cost of $67 – 75.9 million with no sunset date. This tax expenditure is a result of conformity to the federal code. The goal of the expenditure is job creation and maintenance as well as to simplify filing. The Commission voted “somewhat disagree” on the question of whether we can measure the overall benefit toward achieving the goals. The Commission voted “strongly agree” on the questions of whether (i) the tax expenditure’s benefit justifies its fiscal cost and (ii) the tax expenditure is claimed by its intended beneficiaries. The Commission voted “somewhat agree” on the questions of whether (i) the tax expenditure is claimed by a broad group of taxpayers, (ii) the tax expenditure is primarily beneficial to smaller businesses, and (iii) the tax expenditure is primarily beneficial to lower income individuals. This tax expenditure was not flagged for legislative review. Chris Carlozzi noted that no other state decouples from this federal Code item and that it simplifies filing. Chairperson Forter noted that this is the income tax exclusion on the employee side and suggested moving the rating on the question of whether the tax expenditure is primarily beneficial to lower income individuals from “somewhat agree” to “somewhat disagree”. Chris Carlozzi agreed with this change. Chairperson Forter asked members if they had any other comments. No comments from members. Chairperson Forter made a motion to approve the evaluation template. Jamie Oppedisano seconded the motion. Members voted to approve the evaluation template for 1.018 Exemption of Meals and Lodging Provided at Work with the change noted above.
Chairperson Forter led a discussion on 2.602 Investment Tax Credit. Corporations engaged in manufacturing, research and development, agriculture or commercial fishing are allowed a credit of 3% of the cost of qualifying tangible property. Qualifying tangible property generally includes buildings and components of buildings. The credit can be claimed by owners and lessees of qualifying property, and the property has to be depreciable for federal tax purposes. Chairperson Forter noted that the ratings did not change much since the last time the tax expenditure was evaluated. This tax expenditure is not a result of conformity to the federal Code. This tax expenditure was not flagged for legislative review. The Commission voted “somewhat disagree” on the questions of whether (i) the tax expenditure is claimed by a broad group of taxpayers and (ii) the tax expenditure is primarily beneficial to smaller businesses. Only a couple thousand taxpayers claim the credit annually, but this may be due to the narrow scope of the credit. Chairperson Forter noted that there isn’t anything particular about this tax expenditure that should be called out to the Legislature. Chairperson Forter made a motion to approve the evaluation template. Lindsay Janeczek seconded the motion. Members voted to approve the evaluation template for 2.602 Investment Tax Credit as presented.
Andrew DeFalco led a discussion on 1.042 & 1.501 Favorable Tax Treatment of Qualified Small Business Stock (QSBS) Gain. Under federal law, certain gains derived from sales of QSBS are excluded from income. Because Massachusetts generally follows the Code “as amended on January 1, 2024 and in effect for the taxable year” for personal income tax purposes, the Commonwealth follows this expenditure as it applied to 2024 tax years. Under those rules, the value threshold is $50 million, and the stock must be held for five years, after which a 100% exclusion applies. The lifetime exclusion limit is $5 million. Additionally, under Massachusetts law certain gains on the sale of QSBS are taxed at a reduced rate of 3% if the corporation is domiciled in Massachusetts. The Code has been amended several times since it was enacted. Most recently, effective for stock acquired after July 4, 2025, Congress expanded the scope of this expenditure by raising the threshold value for stock to $75 million (from $50 million) and allowing an exclusion of 50% of the gain if the stock is held for at least three years, 75% if held for four years, and 100% if held for five years. Massachusetts does not conform to those changes because they were not in the Code as in effect on January 1, 2024. The annual cost of this tax expenditure is $28.2 – $43.9 million. The goal of this tax expenditure is to incentivize investment in certain small businesses. Andrew DeFalco noted that the evaluation ratings changed slightly since this tax expenditure was last evaluated to account for earlier changes to the Code to which Massachusetts does conform. The Commission voted “somewhat agree” on the questions of whether (i) we can measure the overall benefit toward achieving the goal, (ii) the amount claimed per taxpayer is meaningful as an incentive/benefit, (iii) the tax expenditure is relevant today, and (iv) the tax expenditure is easily administered. The Commission voted “strongly agree” on the questions of whether (i) the tax expenditure’s benefit justifies its fiscal cost and (ii) the tax expenditure is claimed by its intended beneficiaries. The Commission voted “somewhat disagree” on the question of whether the tax expenditure is claimed by a broad group of taxpayers. Tom Baronowski noted that in recent years the number of claimants decreased from several hundred to about 50. The Commission speculated that this may be due to current economic conditions. Kazim Ozyurt mentioned that 2021 was a peak year for capital gains and is unsure of the exact reason for the decline. David Emer talked about an article from November 2025 about taxation and economic policy that reported a growing trend of states decoupling from this federal expenditure, including Alabama, California, Mississippi, and Pennsylvania. Andrew DeFlaco questioned whether states were decoupling as a result of the recent federal change or for other reasons. Tom Chappell suggested that there may not be much of an investment climate in those states. Kazim Ozyurt proposed that states may have decoupled due to decreasing popularity and increasing costs. Chairperson Forter noted that this would be worthwhile to mention in the comment section of the evaluation template. Andew DeFalco agreed. Chairperson Forter also suggested adding to the comments that while the expenditure is a result of federal conformity to the Code, Massachusetts provides for a reduced tax rate of 3% on the gain that is not excluded if the corporation is domiciled in Massachusetts which is not provided at the federal level. Andrew DeFalco agreed. Chairperson Forter asked members if there were any other comments. Natasha Varyani flagged that there appears to be differences between Massachusetts and federal tax expenditures even when the Massachusetts expenditure is a result of conformity to the Code. Chairperson Forter made a motion to approve the template. Jamie Oppedisano seconded the motion. Members voted to approve the evaluation template for 1.042 & 1.501 Favorable Tax Treatment of QSBS Gain with the additional comments noted above.
Chris Carlozzi led a discussion on 3.106 Exemption for Newspapers and Magazines. The annual cost of this expenditure is $25 million and is expected to diminish over time. This sales tax exemption was adopted in 1967 and is not a result of conformity to the Code. The Commission assumes that the goal of this tax expenditure is to encourage readership. The Commission voted “somewhat agree” on the questions of whether (i) we can measure the overall benefit toward achieving the goal, (ii) the tax expenditure’s benefit justifies its fiscal cost, (iii) the tax expenditure is claimed by its intended beneficiaries, (iv) the amount claimed per taxpayer is meaningful as an incentive/benefit, (v) the tax expenditure is relevant today, and (vi) the tax expenditure is easily administered. Chris Carlozzi noted that the benefit of this expenditure can be measured by observing sales and that we see a reduction in people buying print or hard copy versions of newspapers and magazines with the growing trend of publications moving to an online platform. The Commission voted “somewhat disagree” on the questions of whether (i) the tax expenditure is claimed by a broad group of taxpayers, (ii) the tax expenditure is primarily beneficial to smaller businesses, and (iii) the tax expenditure is primarily beneficial to lower income taxpayers. Chris Carlozzi noted that fewer taxpayers benefit from this expenditure today compared to previous years and that many large supermarkets and chains sells newspapers and magazines. This tax expenditure was not flagged for legislative review. Chris Carlozzi reviewed the comment section of the evaluation template which highlights the reasons for not flagging this expenditure for review. Chairperson Forter asked members for any comments. Chris Carlozzi mentioned that online subscriptions for newspapers and magazines are not taxed. Tom Chappell noted that when this exemption was adopted online versions of newspapers and magazines did not exist. Chairperson Forter suggested adding a sentence to the comment section stating the online versions of newspapers and magazines are not subject to tax. Members agreed with this change. Chairperson Forter made a motion to approve the template. Chris Carlozzi seconded. Members voted to approve the evaluation template for 3.106 Exemption for Newspapers and Magazines with the additional comment noted above.
Tom Downes led a discussion on 1.603 & 2.605 Economic Development Incentive Program Credit (EDIP). This credit was adopted in 1993 and is available to both corporate and individual taxpayers. The goal of the expenditure is job creation & maintenance, investment, and competitiveness/strategic. Tom noted that evaluation ratings for this tax expenditure have changed since it was last reviewed. The Commission voted “somewhat disagree” on the questions of whether (i) we can measure the over benefit toward achieving the goals, (ii) the tax expenditure’s benefit justifies its fiscal cost, (iii) the tax expenditure is claimed by its intended beneficiaries, (iv) the tax expenditure is claimed by a broad group, (v) and the amount claimed per taxpayer is meaningful as an incentive/benefit. The Commission voted “somewhat agree” on the questions of whether (i) the tax expenditure is relevant today and (ii) the tax expenditure is easily administered. Tom Downes noted that (i) there is growing evidence that these types of subsidies frequently go to firms/individuals who would have pursued the activities even if the subsidies were not available and (ii) while a number of small businesses benefit from this tax expenditure, over 91% of the claimants are large businesses and high income taxpayers with income of $1 million or more. For the individuals with income of more than $1 million, Chris Carlozzi asked whether there was a breakdown of how many were pass-through business versus actual individuals. Tom Downes noted that this specific data was not available in the report, but he assumes mostly pass-through businesses. Natasha Varyani suggested that this tax expenditure not be flagged for legislative review. Tom Downes and Chairperson Forter agreed. Chairperson Forter asked members whether there were any other comments or questions. No comment from members. Chairperson Forter made a motion to approve. Tom Downes seconded the motion. Members voted to approve the evaluation template for 1.603 & 2.605 Economic Development Incentive Program Credit (EDIP) as presented.
Chairperson Forter led a discussion on 3.309 Exemption for Vessels, Materials, Tools, Fuels, and Machinery Used in Commercial Fishing. This is a sales tax exemption. This tax expenditure is not a result of conformity to the code. The Commission voted “somewhat disagree” on the question of whether the tax expenditure is claimed by a broad group of taxpayers. There are only a few thousand beneficiaries of this expenditure since it is aimed at a particular industry. The Commission voted “somewhat disagree” on the question of whether the tax expenditure is primarily beneficial to smaller businesses. Chairperson Forter reviewed the comments section of the evaluation template. The Commission does not have data on who is claiming the exemption, smaller fishing outfits vs. large companies. The last time this expenditure was reviewed, the Commission noted that it has significant benefits outside the commercial fishing industry. It supports the Commonwealth’s tourism industry and contributes to the region’s cultural history. The size of the fishing industry is substantial and is important in several of the Massachusetts’ Gateway Cities. This tax expenditure helps to maintain the fiscal health of those cities. In addition, neighboring states have similar policies. Chairperson Forter asked members whether there were any other questions. No comment from members. Chairperson Forter made a motion to approve the template. Natasha Varyani seconded. Members voted to approve the evaluation template for 3.309 Exemption for Vessels, Materials, Tools, Fuels, and Machinery Used in Commercial Fishing as presented.
Chairperson Forter noted that the next Commission meeting is to be scheduled for February to review the next batch of expenditures and to review the draft annual report. A draft will be circulated to members in upcoming weeks. Chairperson Forter asked members whether there were any other comments or questions. No comments from members. Chairperson Forter thanked members for their participation and made a motion to conclude the meeting. The meeting was adjourned at 2:56 PM.
| Date published: | March 5, 2026 |
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