Several advocacy organizations representing Massachusetts seniors have called for passage of the Baker-Polito Administration Comprehensive Tax Relief Plan.
The administration’s proposal would provide $700 million in tax relief to support those hardest hit by rising prices and inflation, such as seniors on fixed incomes, renters and residents who care for elderly or children. State tax revenue continues to significantly exceed expectations, with a recent deposit of $2 billion in excess capital gains revenue into the Stabilization Fund, leading to a record balance of $6.6 billion. of dollars. Even with this historic deposit, the Commonwealth is on track for a significant year-end surplus, and advocacy organizations today urged legislative action to return some of that surplus to taxpayers.
“Seniors, many of whom are on fixed incomes, have been particularly hard hit by inflation and rising prices, and our tax cut plan would provide significant relief to seniors and their families,” said the Governor Charlie Baker. “With state tax revenues continuing to be well above benchmark, the state government can more than afford to provide tax relief to senior citizens and other residents affected by inflation. We hope our colleagues in the Legislative Assembly will join us in enacting these tax cuts that would help those hardest hit in these difficult times.
“Inflation and rising prices are impacting everyone in Massachusetts, but especially seniors on fixed incomes,” Lieutenant Governor Karyn Polito said. “Our tax cut plan takes advantage of Massachusetts’ large expected surplus and targets relief to people and communities that have been hardest hit by both the pandemic and ongoing economic pressures.”
“The Commonwealth remains in a historically strong fiscal position and has sufficient resources to continue investing in critical areas that need it, while implementing significant tax relief measures for everyone in Massachusetts – in especially the elderly,” Secretary of Administration and Finance Michael J. Heffernan said. “We look forward to working with the Legislature over the coming weeks to pass these benefits on to hundreds of thousands of hard-working taxpayers and help ensure the continued strength of Massachusetts’ economy over the long term.”
“At no time in our history has the Commonwealth had such a revenue surplus,” said Mike Festa, state manager, AARP Massachusetts. “Since Governor Baker tabled these proposed reforms on January 27, 2022, we have seen very large revenue surpluses. AARP urges action now. Measures such as tax credits and other financial assistance, or both, to Massachusetts’ 844,000 family caregivers; double the maximum credit for senior circuit breakers; and increasing the rent deduction limit helps low- and middle-income residents and their families improve their health and financial security and facilitates their ability to age in their own homes and communities. In addition, we continue to urge lawmakers to use a portion of excess state revenue to provide a family caregiver tax credit.
“The Mass Councils on Aging encourages the Legislature to act now and pass measures that can improve the economic security and well-being of older adults, such as doubling the maximum credit for senior circuit breakers, which will allow many older people to stay in their homes and maintain the essential and, in many cases, lasting connections they have built in their communities and will help improve their economic security,” said Betsy Connell, Acting Executive Director of Massachusetts Association of Councils on Aging.
“Through AgeFriendly.org, the Age-Friendly Institute hears from older people across the Commonwealth and across the country every day,” said Tim Driver, President of the Age-Friendly Institute. “We collect and organize these voices and opinions through online ratings, reviews and conversations on a variety of topics. It is very clear that these older taxpayers want and need other forms of income and other means of saving. The tax relief that will be passed on to older Massachusetts residents through these proposals will make it easier for residents to make ends meet. The Age-Friendly Institute supports moves.
The plan includes several tax relief measures:
• Double the maximum cut-out credit for seniors to reduce the overall tax burden of more than 100,000 low-income homeowners aged 65 and over, resulting in annual savings of $60 million for seniors. low-income seniors.
• Raise the rent deduction cap from $3,000 to $5,000, allowing about 881,000 Massachusetts renters to keep about $77 million more per year
• Double the dependent care credit to $480 for one eligible person and $960 for two or more people, and double the household dependent care credit to $360 for one eligible person and $720 for two or more people. more to benefit more than 700,000 families, representing $167 million in annualized savings for eligible taxpayers
• Increase the Massachusetts Adjusted Gross Income (AGI) thresholds for “non-tax status” to $12,400 for single filers, $24,800 for joint filers, and $18,650 for heads of families, which will eliminate the income tax for over 234,000 low-income filers.
• Double the inheritance tax threshold and eliminate the current “cliff edge effect” which taxes the full amount below the threshold
• Change the short-term capital gains tax rate to the personal income tax rate of 5% to bring the Commonwealth in line with most other states
The plan would have an outsized impact on the communities hardest hit by the COVID-19 pandemic. For example, increasing the rent deduction would provide $34 million in annual tax relief to tenants of the 20 “action communities” whom the Department of Public Health has identified as having been hardest hit by the pandemic (based on factors such as the social determinants of health and the disproportionate racial impact of the pandemic). Changing “non-tax status” to eliminate income tax for more low-income people would result in annual savings of nearly $12 million in these same communities.