Blog Post  4% Surtax on Taxable Income Over $1,000,000: The Basics

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: 

• Individuals 

• Trusts 

• Estates and 

• Unincorporated associations.  

Keep in mind: 

• 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.  

• For tax year 2024, the surtax threshold is $1,053,750.  

• 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: 

• Report the additional taxable income amount when you file your returns and  

• 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. 

• Form 1 (residents) – line 28b 

• Form 1-NR/PY (nonresidents and part-year residents) – line 32b 

• Form 2 (trusts and estates) – line 41b 

• Form M-990T-62 (exempt trusts and unincorporated associations) – line 29b 

• 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:  

• Forms and e-filing requirements 

• Form 3M 

• Special rules for nonresident composite filers 

• The impact of the surtax on elective pass-through entity excise 

• Withholding 

• Estimated payments 

• Extensions and penalties 

• Special rules for withholding and estimated tax penalties for tax year 2023 

• The impact of the surtax on the Other Jurisdiction Credit (OJC).