BOSTON (WWLP) – On Monday, a number of advocacy groups working on behalf of Massachusetts’ senior citizens asked lawmakers to approve the Baker-Polito administration’s extensive tax relief plan.
To support those impacted by rising prices and inflation, the Administration’s proposal provided $700 million in tax relief. Those that would benefit are seniors on fixed incomes, renters, and residents who care for older adults or children.
The Stabilization Fund now has an all-time high balance of $6.6 billion after a recent deposit of $2 billion in surplus capital gains money. State tax receipts continue to vastly exceed projections.
FY22 Period 3 – Capital Gains Tax Certification
Even with the historic deposit, the Commonwealth is expected to end the fiscal year with a sizable surplus, and the advocacy groups today urged lawmakers to take steps to return some of that surplus to taxpayers.
“Older adults, many of whom are on fixed incomes, have been especially hard-hit by inflation and rising prices, and our tax cut plan would provide meaningful relief for seniors and their families,” said Governor Charlie Baker. “With state tax revenues continuing to come in far above benchmark, state government can more than afford to give seniors and other residents hurt by inflation a tax break. We hope our colleagues in the Legislature will join us to enact these tax cuts which would help those who are hardest hit by these tough times.”
“Inflation and rising prices are impacting everyone in Massachusetts, but especially seniors on fixed incomes,” said Lt. Governor Karyn Polito. “Our tax cut plan takes advantage of Massachusetts’ large expected surplus and targets relief to populations and communities who have been hardest-hit by both the pandemic and ongoing economic pressures.”
“The Commonwealth remains in a historically strong fiscal position and has ample resources to continue investing in critical areas of need, while also implementing important tax relief measures for everyone in Massachusetts – particularly seniors,” said Secretary of Administration and Finance Michael J. Heffernan. “We look forward to working with the Legislature over the coming weeks to pass these benefits onto hundreds of thousands of hardworking taxpayers and help ensure the continued strength of the Massachusetts economy in the long-term.”
“At no time in our history has the Commonwealth had such excess revenue,” said Mike Festa, State Director, AARP Massachusetts. “Since Governor Baker filed these proposed reforms on January 27, 2022, we have seen very significant revenue surpluses. AARP strongly urges action now. Measures such as tax credits and other financial assistance, or both, to Massachusetts’ 844,000 family caregivers; doubling the maximum Senior Circuit Breaker Credit; and increasing the rental deduction cap help lower and middle-income residents and their families achieve increased health and financial security and facilitate their ability to age in their own home and community. In addition, we continue to urge legislators to use some of the excess state revenue to provide a family caregiving tax credit.”
“The Mass Councils on Aging encourages the Legislature to act now, and pass measures that can achieve greater economic security and well-being for seniors such as doubling the maximum Senior Circuit Breaker Credit which will allow many seniors to remain in their homes and maintain the essential and in many cases, life-long connections they have built in their communities and will help to improve their economic security,” said Betsy Connell, Interim Executive Director of the Massachusetts Association of Councils on Aging.
“Through AgeFriendly.org, the Age-Friendly Institute hears from older adults in the Commonwealth and around the country every day,” said Tim Driver, President of the Age-Friendly Institute. “We collect and curate these voices and opinions via online ratings, reviews and conversations on a variety of topics. It’s very clear these older taxpayers want and need alternative forms of income and other ways to save. The tax relief to be passed to older Massachusetts residents through these proposals will make it easier for residents to make ends meet. The Age-Friendly Institute supports the moves.”
There are numerous tax relief strategies under the plan:
- To reduce the overall tax burden for more than 100,000 low-income householders 65 years of age and older, double the Senior Circuit Breaker Credit limit. This will save low-income seniors $60 million annually.
Raising the limit on rental deductions from $3,000 to $5,000 will help Massachusetts renters to save an additional $77 million a year.
- To benefit more than 700,000 families, the dependent care credit will be doubled to $480 for one qualifying individual and $960 for two or more, and the household dependent care credit will be doubled to $360 for one qualifying individual and $720 for two or more. This will save eligible taxpayers an annualized $167 million.
- The income tax will be waived for more than 234,000 low-income filers if the Massachusetts adjusted gross income (AGI) criteria for “no tax status” are raised to $12,400 for single filers, $24,800 for joint filers, and $18,650 for head of households.
- Increase the exemption amount for estate taxes and do away with the “cliff effect” that now taxes amounts below the exemption at full rate.
- To bring the Commonwealth into line with the majority of other states, change the short-term capital gains tax rate to the personal income tax rate of 5%.
The proposal would significantly affect the communities most severely impacted by the COVID-19 pandemic. For instance, the increased rental deduction would save renters in the 20 “equity neighborhoods” that the Department of Public Health identified as being the severely afflicted by the pandemic $34 million in tax relief each year.
In those same communities, the “no tax status” modification to exempt additional low-income persons from paying income tax would result in annual savings of close to $12 million.