Senate completes override to delay charitable tax break

Boston Statehouse
Massachusetts State House bill_639218

BOSTON (SHNS) – A tax deduction for charitable donations that Massachusetts voters approved in 2000 will not go into effect until at least 2023 after the Senate voted Thursday to override Gov. Charlie Baker’s veto and postpone the tax break’s implementation.

The Senate’s 34-6 vote, which came one day after the House voted 124-35 in favor of the delay, pushes the start date until Jan. 1, 2023 for the deduction designed to encourage donations to non-profit organizations. Sens. Diana DiZoglio of Methuen, Marc Pacheco of Taunton and Walter Timilty of Milton, all Democrats, sided with Baker and voted to allow the deduction to begin this year, as did the chamber’s three Republicans, Sens. Ryan Fattman, Patrick O’Connor and Bruce Tarr. After years of delays tied to various economic triggers, the deduction was set to return to action in 2021, but lawmakers have twice now postponed it.

The deduction would be worth an estimated $64 million in the current budget and $300 million annually in subsequent years, and Democrat legislative leaders said they did not want to risk losing that state revenue amid the specter of a COVID-19 resurgence.

“While it is true that our fiscal situation has recently improved, we are not out of the woods yet, and the charitable deduction as currently designed may not be the best use of our resources going forward,” Senate Ways and Means Committee Chair Michael Rodrigues said during Thursday’s session.

Voters approved the deduction in 2000 with 72 percent in support, but it was only available for a single year before lawmakers suspended it. Non-profit leaders and other supporters of the deduction hoped to see it return in 2022 to spark a flurry of giving and buoy their financial outlooks after significant strain during the COVID-19 pandemic. Baker and other Republicans criticized Democrats for the vote, arguing the state’s surging tax revenues and billions in unspent federal aid eliminate the need for the additional cushion.

“We shouldn’t delay another year, not another year when we’re projecting billions of dollars in surplus and we have non-profit organizations reporting the distress that they’re experiencing after the work that they have done that has been so important to our collective response to the COVID-19 pandemic,” Tarr, the Senate minority leader, said on the floor.

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