Massachusetts Income
Tax Rates & Rules

Massachusetts Income Tax at a Glance

Massachusetts imposes a flat 5 percent state income tax on most wages and other income, one of the simpler structures among states with an income tax. High earners face an additional layer: income above roughly $1.1 million is subject to an extra 4 percent surtax, pushing the marginal rate on income above that threshold to 9 percent. Short-term capital gains are taxed at a separate, higher 8.5 percent rate.

How Massachusetts Income Tax Works

Unlike states with graduated brackets, Massachusetts applies its 5 percent rate uniformly to most wages, business income, and interest and dividends, regardless of how much a taxpayer earns, up to the surtax threshold. Certain income categories, such as short-term capital gains and collectibles gains, are carved out and taxed at different statutory rates rather than folded into the flat rate.

The 4 Percent Surtax on High Earners

Voters approved the Fair Share Amendment in 2022, adding a 4 percent surtax on annual taxable income above a threshold that the Department of Revenue adjusts for inflation each year, reported at $1,107,750 for 2026. The surtax applies to the combined income of a household filing jointly, not per spouse, and captures capital gains and other income types that push total taxable income over the line. Revenue raised is constitutionally earmarked for education and transportation.

Massachusetts Personal Exemptions

Massachusetts allows a personal exemption that reduces taxable income before the 5 percent rate is applied: $4,400 for single filers or those married filing separately, $6,800 for head of household, and $8,800 for married couples filing jointly, plus a per-dependent exemption of $1,000. These amounts are set by the Department of Revenue and have historically been adjusted periodically rather than every single year.

How Massachusetts Income Tax Is Withheld From a Paycheck

Employers withhold Massachusetts income tax based on the employee's Form M-4, which functions like the state's own version of a federal W-4. Employees who want their state exemptions to differ from their federal elections must file Form M-4 directly with their employer, and the form must be resubmitted annually; if it lapses, the employer defaults to single-status withholding with no exemptions starting mid-February. The effect on take-home pay is easier to see through a Massachusetts paycheck calculator.

Who Has to File a Massachusetts State Income Tax Return?

Full-year and part-year Massachusetts residents must file a state return if their gross income exceeds $8,000 in a year, regardless of source. Nonresidents must file if their Massachusetts-source income exceeds $8,000 or their prorated personal exemption, whichever is smaller. Filing can also be required below these thresholds for a taxpayer to claim a refundable credit.

Does Massachusetts Tax Remote Workers?

Massachusetts taxes nonresidents only on income sourced to work physically performed in the state. A nonresident who lives elsewhere and works fully remotely for a Massachusetts employer generally is not taxed by Massachusetts on those wages, since the temporary pandemic-era rule that once taxed such telecommuters has expired. Nonresidents and part-year residents apportion income using the days actually worked in Massachusetts versus elsewhere.

How Are Capital Gains Taxed in Massachusetts?

Long-term capital gains are taxed at the standard 5 percent rate. Short-term capital gains, from assets held one year or less, are taxed at 8.5 percent, effective for tax years beginning on or after January 1, 2023. Long-term gains from collectibles are taxed at 12 percent with a 50 percent deduction.

Massachusetts Income Tax vs. Payroll Taxes

Massachusetts income tax is only one tax connected with a paycheck. Employees can also have federal income tax, Social Security, and Medicare associated with their wages. A Massachusetts pay stub can show gross earnings, Massachusetts income tax withholding, federal payroll taxes, other deductions, and net pay for the relevant pay period.

Need to Organize Your Payroll Records?

Accurate payroll records make it easier to review gross wages, tax withholding, deductions, and net pay. If you need to turn genuine payroll information into an itemized document, you can use our paystub maker to organize the information and create a professional pay stub. Online PayStub is intended for lawful payroll, business, and recordkeeping purposes.