Technical Information Release

Technical Information Release TIR 08-24: Changes in the Income Tax Personal Exemption Amounts Effective January 1, 2008

Date: 12/12/2008
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax

 

This Technical Information Release ("TIR") explains increases to the personal exemption amounts for taxable years beginning on or after January 1, 2008. General Laws chapter 62, section 3, as amended, provides that personal exemptions may increase for tax years beginning on or after January 1, 2004 if tax revenues increase. Although there was insufficient tax growth to trigger an increase for the 2004 taxable year, the personal exemptions were increased for the 2005 [1], 2006 [2] and 2007 [3] taxable years based on application of the statutory formula and will increase for the 2008 taxable year and for subsequent taxable years.
 

For taxable years beginning on or after January 1, 2002, the personal exemptions were as follows: $3,300 [4] for a single person or a married person filing a separate return; $5,100 [5]for a head of household; and $6,600 [6] for a married couple filing a joint return. [7] For taxable years beginning on or after January 1, 2005, the personal exemptions were as follows: $3,575 for a single person or a married person filing a separate return; $5,525 for a head of household; and $7,150 for a married couple filing a joint return. For taxable years beginning on or after January 1, 2006, the personal exemptions were as follows: $3,850 for a single person or a married person filing a separate return; $5,950 for a head of household; and $7,700 for a married couple filing a joint return. For taxable years beginning on or after January 1, 2007, the personal exemptions were as follows: $4,125 for a single person or a married person filing a separate return; $6,375 for a head of household; and $8,250 for a married couple filing a joint return.
 

The Commissioner of Revenue has determined that the inflation-adjusted growth in baseline taxes for the 2007 fiscal year will cause the exemptions to increase for the 2008 taxable year. The personal exemption increases are triggered if inflation-adjusted growth in the baseline tax collections ( i.e., tax collections adjusted for the impact of tax law and administrative changes and annual growth in the Boston Consumer Price Index) for the prior fiscal year exceeds +2.5% and the inflation-adjusted change in baseline taxes for each consecutive 3 month period between August and December of the previous year is greater than 0%. The exemption for a single person or a married person filing a separate return will increase by $275; the exemption for a head of household will increase by $425; and the exemption for a married couple filing a joint return will increase by $550. The new personal exemption amounts, effective for the 2008 taxable year, are as follows:
 

$4,400 for a single person or a married person filing a separate return;
$6,800 for a head of household; and
$8,800 for a married couple filing a joint return.
 

The personal exemption amounts will remain at the 2008 level unless there are statutory enactments that change the personal exemption amounts. The Department will announce future changes. Updated withholding tables are published in the updated Circular M and are available on the Department's website: www.mass.gov/dor.
 

/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue
 

NKB:MTF:sg
 

December 12, 2008
 

TIR 08-24

 

[1] See TIR 04-34, Changes in the Income Tax Personal Exemption Amounts Effective January 1, 2005.

[2] See TIR 05-23, Changes in the Income Tax Personal Exemption Amounts Effective January 1, 2006.

[3] See TIR 06-25, Changes in the Income Tax Personal Exemption Amounts Effective January 1, 2007.

[4] G.L. c. 62, § 3. B. (b)(1)(A) as amended by St. 2002, chapter 186.

[5] G.L. c. 62, § 3. B. (b)(1A)(A) as amended by St. 2002, chapter 186.

[6] G.L. c. 62, § 3. B. (b)(2)(A) as amended by St. 2002, chapter 186.

[7]Beginning May 16, 2004, same-sex married couples may file as married persons, either jointly or separately, for Massachusetts state income tax purposes. See TIR 04-17, Massachusetts Tax Issues Associated with Same-sex Marriages.

Referenced Sources:

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