Questions On Massachusetts 4% “Millionaire’s” Surtax

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In November of 2022, Massachusetts voters overwhelmingly approved a constitutional amendment that requires a 4% surtax on the portion of income above $1 million for the stated purpose of providing funds for public education, roads and bridges, and public transportation. The surtax took effect on January 1, 2023 and has become known as the Massachusetts millionaire’s tax. The result for Massachusetts’ taxpayers with income over the threshold is a total tax rate of 9% and a capital tax gains rate up to 16% on income above $1 million.

The Department of Revenue has not yet issued guidance on the implementation of the Massachusetts millionaire's tax.

Questions abound as to how the Massachusetts millionaire’s tax will be implemented, and almost immediately upon its passage concerns over specific income scenarios began to cascade in the minds of taxpayers and their tax advisors.

What happens if you have a one-time event that pushes your income over the threshold in one year? Can a married couple file separately to reduce being affected by the surtax? What happens if you want to move out of state?

While future actions of the Massachusetts legislature could impact all of these scenarios, below is a brief look at the current treatment under the new surtax.

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