- Massachusetts Department of Revenue
What is the 4% surtax on taxable income over $1 million, and do I owe it?
In 2022, Massachusetts voters approved the 4% surtax. Personal income taxpayers must pay an additional 4% surtax on taxable income over $1,000,000 for the tax year 2023.
The surtax applies to:
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Individuals
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Trusts
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Estates and
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Unincorporated associations.
Keep in mind:
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Only the portion of a taxpayer’s taxable income that exceeds the surtax threshold for a tax year will be subject to the 4% surtax.
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For tax year 2024, the surtax threshold is $1,053,750.
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Only the difference between taxable income and the surtax threshold of $1,000,000 is subject to the 4% surtax.
How do I calculate my taxable income?
To calculate any additional tax, multiply the difference between your total taxable income and $1,000,000 by 4%.
Additional tax = Total Taxable Income minus 1,000,000 X .04 (4%).
How is taxable income calculated?
Your taxable income for determining the 4% surtax is the sum of your Part A, Part B, and Part C taxable income for a tax year. Visit this page to learn more about calculating taxable income.
Keep in mind:
If you are subject to the 4% surtax, you must:
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Report the additional taxable income amount when you file your returns and
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Make all payments electronically.
How will I report the 4% surtax?
The return for tax year 2023 allows you to include the 4% surtax in the calculation of total tax.
The line items below reflect specific changes to the tax forms impacted by the 4% surtax.
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Form 1 (residents) – line 28b
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Form 1-NR/PY (nonresidents and part-year residents) – line 32b
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Form 2 (trusts and estates) – line 41b
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Form M-990T-62 (exempt trusts and unincorporated associations) – line 29b
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Form 3M (clubs and other organizations not engaged in business for profit) –line 9b
Nonresident taxpayers participating in a composite return must file a Form 1-NR/PY if their annual taxable income exceeds the surtax threshold.
More Information
There are FAQs to help answer your questions about:
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Forms and e-filing requirements
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Form 3M
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Special rules for nonresident composite filers
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The impact of the surtax on elective pass-through entity excise
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Withholding
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Estimated payments
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Extensions and penalties
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Special rules for withholding and estimated tax penalties for tax year 2023
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The impact of the surtax on the Other Jurisdiction Credit (OJC).