Blog Post  Save on Taxes: Tax Credits for Massachusetts Taxpayers

This tax season, you might qualify for credits to save on taxes. Here's an overview of popular options, including the Earned Income Tax Credit and the Massachusetts Child and Family Tax Credit.

Personal Income Tax Credits

Earned Income Tax Credit (EITC)

The EITC is a tax credit for people with low or moderate earned income. The EITC helps reduce your tax bill and gives you a refund.

You may be eligible for the Massachusetts EITC if:

• You had a qualifying child during the taxable year or
• You did not have a qualifying child during the taxable year, and you meet the following criteria
• You lived in the United States for more than one-half of the taxable year
• You or your spouse had attained age 25 but had not attained age 65 before the close of the taxable year, and
• You were not a dependent of another taxpayer during the tax year.

As of January 1, 2023, EITC:

• increased from 30% to 40% of the federal credit
• is available if you (and your family) qualify for the federal EITC

Learn more:

Massachusetts Earned Income Tax Credit

Massachusetts Child and Family Tax Credit 

When filing your state tax return, you may be eligible to claim the child and family credit if your household has any of the following individuals at the end of the tax year:

• A dependent child under age 13;
• A disabled dependent or spouse and/or
• A dependent age 65 or over. The dependent cannot be you or your spouse at the end of the tax year.

A dependent or spouse with a disability is an individual who:

• is physically or mentally incapable of caring for himself or herself and
• who principally lives with the taxpayer for over half of the taxable year.

Beginning in 2024, families can claim $440 per dependent. In addition, there’s no longer a two-dependent cap on this credit.

Learn more:

Massachusetts Child and Family Tax Credit

Massachusetts Senior Circuit Tax Breaker  

Suppose you are a senior citizen (age 65 or older by December 31 of the tax year).  The Circuit Breaker tax credit is based on the actual real estate taxes or rent paid on the Massachusetts residential property you own or rent and occupy as your principal residence.

The maximum credit amount for tax year 2024 is $2,730. If the credit you're owed exceeds the total tax payable for the year, you'll be refunded the additional amount of the credit without interest.

Learn more:

Massachusetts Senior Circuit Breaker Tax Credit

Community Investment Tax Credit (CITC)

The CITC is also available to taxpayers who contribute cash to community development corporations (CDCs). CDCs partner with and invest in nonprofit, public, and private entities engaged in improving economic opportunities for low- and moderate-income households.  

• Individual taxpayers must make a minimum donation of $1,000 to a CDC to be eligible.
• Eligibility and amounts are administered by the Executive Office of Housing and Livable Communities (EOHLC). The current yearly cap is $12,000,000.

Learn more:

Community Investment Tax Credit (CITC)

2024 Tax Law Changes

Several credit changes and increases have been implemented in tax year 2024.

Increases:

• Estate Tax – increases threshold from $1 million to $2 million   
• Short-Term Capital Gains – reduction in rate from 12% to 8.5%   
• Rental Deduction – increases cap from $3,000 to $4,000   
• Low-Income Housing Tax Credit (LIHTC) – increases annual program cap from $40 million to $60 million   
• Housing Development Incentive Program (HDIP) – increases annual program cap from $10 million to $57 million in 2023 and thereafter to $30 million annually   
• Dairy Tax Credit – increases annual program cap from $6 million to $8 million   
• Lead Paint Abatement Credit – doubles credit to $3,000 for full abatement and $1,000 for partial abatement   
• Title V (Septic) Tax Credit – triples maximum credit to $18,000, increases the percentage of eligible expenses from 40% to 60%, and allows taxpayers to claim up to $4,000 in any year, versus $1,500 in current law   
• Property Tax Liability Reduction for Senior Volunteer Services – permits municipalities to increase the maximum property tax abatement available to seniors who perform volunteer services from $1,500 to $2,000   
• Stabilization Fund Cap – increases the cap on Stabilization Fund deposit from 15% to 25.5% of budgeted revenues. 

Changes:

• Single Sales Factor – shifts from three-factor apportionment system based on the business’s share of sales, payroll, and property to apportionment based solely on sales   
• Student Loan Repayment Assistance – exempts employer assistance for student loan repayment from taxable income   
• Cider Tax Rate – applies lower tax rates to a broadened class of beverages   
• Deductible Commuter Transit Benefits – adds public transit fares, RTA fares, and bicycle expenses to deductible commuter expenses   
• Apprenticeship Tax Credit – expands eligible occupations    
• Municipal Affordable Housing Property Tax Exemption – permits municipalities to adopt local property tax exemption for affordable real estate   

Learn more:

• Tax Year 2024 Personal Income (Chapter 62) Changes
• Tax Year 2024 Corporate Excise (Chapter 63) Changes