Exclusion for Primary Residences
If the home you are selling was a primary residence for you during 2 of the last 5 years, then you're in luck. You are excluded from paying capital gains tax when selling a home in Massachusetts if your profit is less than $250,000 (or $500,000 if married).The cuts would come from a reduction in the Part B individual income tax rate and long-term capital gains tax rate from the current 5.05 percent to 5 percent effective Jan. 1, 2020.
Capital Gains Taxes on Property
Your basis in your home is what you paid for it, plus closing costs and non-decorative investments you made in the property, like a new roof. You can also add sales expenses like real estate agent fees to your basis. Subtract that from the sale price and you get the capital gains.Massachusetts Inheritance Tax
Massachusetts does not have an inheritance tax. If you're inheriting money from someone who lived out of state, though, check the local laws. In Kentucky, all in-state property is subject to the inheritance tax, regardless of where the heir lives.If you sell rental or investment property, you can avoid capital gains and depreciation recapture taxes by rolling the proceeds of your sale into a similar type of investment within 180 days. This like-kind exchange is called a 1031 exchange after the relevant section of the tax code.
Selling as is does not relieve you from your legal obligation to answer questions honestly concerning the existing problems with the home per the rules of your state. In Massachusetts, sellers do not have to disclose defects, but they do have to answer any questions honestly about the condition of the home.
For tax year 2019, Massachusetts had a 5.05% tax on both earned (salaries, wages, tips, commissions) and unearned (interest, dividends, and capital gains) income. The tax rate was lowered to 5% for tax years beginning January 1, 2020, and after. Certain capital gains are taxed at 12%.
In 2019 and 2020 the capital gains tax rates are either 0%, 15% or 20% for most assets held for more than a year. Capital gains tax rates on most assets held for less than a year correspond to ordinary income tax brackets (10%, 12%, 22%, 24%, 32%, 35% or 37%).
Although Massachusetts still levies a 6.25 percent sales tax on most tangible items, there are quite a few exemptions, including food, healthcare items, and more. Periodicals: No sales tax is charged on newspapers and magazines, which is not all that unusual.
In Massachusetts, all clothing and footwear items at $175 or less are exempt from sales tax. Items above $175 are taxable at the statewide Massachusetts rate of 6.25%. But that's where things can get a little tricky for online sellers. Only the price of the item beyond the non-taxable $175 is taxable.
What is exempt from sales taxes in Massachusetts?
- Clothing. 6.25%
- Groceries. EXEMPT.
- Prepared Food. 7%
- Prescription Drugs. EXEMPT.
- OTC Drugs. 6.25%
In Massachusetts, all clothing and footwear items at $175 or less are exempt from sales tax. Items above $175 are taxable at the statewide Massachusetts rate of 6.25%. Only the price of the item beyond the non-taxable $175 is taxable.
The Massachusetts income tax rate of 5.05% is higher than all but one of the other eight states that levies a flat income tax. The statewide sales tax rate of 6.25% is among the 20 lowest in the country (when including the local taxes collected in many other states).
The five states with the highest average combined state and local sales tax rates are Tennessee (9.53 percent), Louisiana (9.52 percent), Arkansas (9.47 percent), Washington (9.21 percent), and Alabama (9.22 percent).
Massachusetts exempts “health care items” including tampons, diapers, and hearing aids. In fact, all but seven states tax toilet paper—when states without sales taxes are factored in—but “toilet paper tax” outrage doesn't garner nearly as much social media momentum as “tampon tax” petitions do, and perhaps rightly so.
You must file a Massachusetts tax return if you were a MA resident and your gross income was more than $8,000. Part Year Residents: If you are a part year resident with annual Massachusetts gross income of more than $8,000, you must file a Massachusetts tax return.
Wages are always treated as taxable income in the state where they are earned. Additionally, you will still need to file your Massachusetts resident income tax return (Form 1). Any taxes that you paid to Rhode Island in 2008 will treated as a tax credit in Massachusetts.
How can I file a Massachusetts state tax return?
- You can e-file and pay via the Massachusetts Department of Revenue's MassTaxConnect.
- You can file federal and single-state state tax returns for free through Credit Karma Tax®.
Here is a basic breakdown for filing: If you're single and under age 65, then you must file if your gross income was at least $10,400. If you're over age 65, this increases to $11,950. If you're married, both under age 65, and filing jointly, you must file if your gross income was at least $20,800.
Filing a State Income Tax Return. However, unlike the federal government, California does not require an annual tax report from those who made less than the minimum filing requirement or had no income at all. Individuals who earned less than the minimum filing requirement do not have to file.
Many states require that you file a state tax return if you filed a federal return, regardless of your anticipated refund amount. Select your state for info about their filing requirements (or state contact information if they don't provide their filing requirements online).
State Tax Filing Season Begins on January 23. (Boston, MA) The Massachusetts Department of Revenue (DOR) announced today that the state tax filing season opens on Monday, January 23, and the deadline to file is Tuesday, April 18, 2017.
This is primarily due to the sales tax and property tax, each of which has the effect of taxing lower-income people more heavily as a share of their household incomes than it does higher-income people. Sales taxes are the most regressive of the Commonwealth's major taxes.
Overview. A deduction is allowed for rent paid by the taxpayer during the tax year to a landlord for a principal residence located in Massachusetts. This deduction is limited to 50% of the rent paid and cannot exceed a total deduction of $3,000.
If you live in Massachusetts and have dividend income, it'll be taxable to MA instead of NH, even if you work in New Hampshire. If you do happen to earn more than those thresholds, New Hampshire imposes a 5% tax on those amounts. Wages from work are still not taxable, just the dividends and interest.
Massachusetts is moderately tax-friendly for retirees. It fully exempts Social Security retirement benefits and income from public pension funds from taxation. Income from an IRA, 401(k), 403(b) or any other type of retirement savings account is taxed at the state income tax rate of 5.05%.
If you file a
Massachusetts tax return, you're entitled to a personal
exemption regardless of whether you can
claim a personal
exemption on your federal return or not.
Personal exemption.
| Filing status | Exemption amount |
|---|
| Married filing separate | $4,400 |
| Head of household | $6,800 |
| Married filing joint | $8,800 |
