New Massachusetts Child Tax Credit Is Much More Generous

After months of discussion, the Massachusetts tax relief bill is finally nearing being signed into law. The proposed $1 billion bill has something for everyone, including renters, individuals, families and seniors. The new Massachusetts child tax credit is the centerpiece of this massive tax relief bill. It not only raises the amount of the child tax credit but also removes the existing cap to ensure more families receive the benefit.

What Does The New Massachusetts Child Tax Credit Offer?

Among other things, Massachusetts’ tax relief bill overhauls the child and dependent tax credit. It is the package’s largest item, worth about $165 million this year and up to $307 million once fully implemented.

Currently, the state allows parents and guardians to claim a tax credit of up to $240 for each child younger than 13, all dependents over the age of 65, and disabled dependents of any age.

The new Massachusetts child tax credit raises this amount to $310 per dependent for tax year 2023 and up to $440 for tax year 2024 and beyond.

The new bill also removes the current limit of two qualifying dependents. Now, eligible families will be allowed to claim the credit for any number of qualifying dependents. For example, a couple with four children will be able to claim $1,280 more per year, starting in 2024.

According to the summary report, the new Massachusetts child tax credit will benefit over 565,000 families. Once implemented fully, it will be the most generous universal child and dependent tax credit in the country.

What Else Does The Massachusetts Tax Relief Bill: Offer?

The Massachusetts tax relief bill also raises the earned income tax credit (EITC) for low-income residents from 30% to 40% of the federal credit. For lower-income seniors aged 65 and older, the bill doubles the “senior circuit breaker credit” from $1,200 currently to $2,400.

Additionally, Massachusetts currently allows renters to write off 50% of their rent (up to $3,000) from their taxes annually. The new bill raises the maximum deduction to $4,000.

The new bill also reduces estate taxes on all estates with a value of less than $2 million by offering a uniform credit of $99,600. Additionally, the bill reduces the short-term capital gains tax rate from 12% to 8.5% — rather than 5%, as proposed by the House.

Further, the bill also updates Chapter 62F, a 1986 law that requires the state to return excess money to residents if its revenue exceeds the allowable amount for the year. Specifically, the new bill replaces the proportional system with an equal payment for all taxpayers, irrespective of how much money they paid in taxes that year.

The bill also sets aside more money for programs supporting the development of new housing. Finally, it triples the maximum credit (up to $18,000) for homeowners wanting to replace or repair a septic tank.

This article originally appeared on ValueWalk

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