Massachusetts Income Tax Calculator
Massachusetts taxes most income at a flat 5%, but income above $1,053,750 faces an additional 4% Millionaire’s Surtax for a combined 9% rate. This take-home pay calculator covers your Massachusetts state tax, federal tax, and FICA in one place, plus a dedicated surtax threshold tool.
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Millionaire’s Surtax Threshold Estimator
See exactly how close your total Massachusetts taxable income is to the $1,053,750 surtax threshold, and what crossing it would cost.
Short-Term vs. Long-Term Capital Gains
Massachusetts taxes short-term gains (assets held one year or less) at 8.5%, far above the 5% rate on long-term gains and ordinary income. Here’s the cost difference on a hypothetical gain.
Massachusetts vs. New Hampshire (Border Comparison)
A common search for Massachusetts border-town residents and remote workers: how does crossing into income-tax-free New Hampshire actually compare?
| Factor | Massachusetts | New Hampshire |
|---|---|---|
| Tax on wages earned in MA | 5% (applies even to NH residents working in MA) | N/A for MA-sourced wages |
| Tax on investment/dividend income | 5% flat | 0% (repealed 2025) |
| Millionaire’s Surtax | 4% above $1,053,750 | None |
| Statewide sales tax | 6.25% flat | 0% |
| Avg. effective property tax | ~1.23% | ~2.05% |
Understanding the Massachusetts Flat Tax and Millionaire’s Surtax
Massachusetts runs one of the simpler state income tax systems in the country for the vast majority of residents: a single flat 5% rate applies to wages, salaries, interest, dividends, long-term capital gains, business income, and most pension income, with no tax brackets to climb as your income rises. That simplicity is relatively recent history. The rate sat at 5.95% through most of the 1990s and was gradually reduced through a series of voter-mandated cuts, finally settling at 5% in 2020.
The picture changed for high earners in November 2022, when Massachusetts voters approved the Fair Share Amendment as a constitutional amendment, commonly nicknamed the Millionaire’s Tax. Effective for the 2023 tax year and every year since, it adds a 4% surtax on top of the standard 5% rate for any taxable income above an annually inflation-adjusted threshold — $1,053,750 for the 2026 tax year. Only the slice of income above that line is taxed at the combined 9% rate; the first $1,053,750 still gets the regular 5% treatment, so there’s no sudden “cliff” that taxes your entire income at the higher rate once you cross the threshold.
Why Short-Term Capital Gains Are a Special Case
Most states tax capital gains the same way they tax ordinary income, but Massachusetts singles out short-term gains — profits from assets held one year or less — for a separate, higher 8.5% rate. Long-term gains, from assets held more than a year, fall back into the standard 5% bucket. Combine a large short-term gain with income that pushes you over the Millionaire’s Surtax threshold, and the effective rate on that gain can reach 12.5%, which by most measures is the highest short-term capital gains tax rate of any U.S. state. Investors and traders who actively manage portfolios in Massachusetts have real financial reasons to favor holding periods longer than a year when it’s practical to do so.
What’s Exempt From Massachusetts Income Tax
- Social Security benefits: Fully exempt regardless of income level.
- Massachusetts public pensions: Fully exempt for state, municipal, and teacher retirement system payouts.
- Federal and military pensions: Also fully exempt from Massachusetts tax.
- Private 401(k)/IRA distributions: Generally still taxed at the standard 5% rate, unlike Social Security and public pensions.
How Massachusetts Compares to Its Neighbors
Massachusetts sits in an interesting middle ground in the Northeast. Its 5% flat rate, and even its 9% top combined rate for million-dollar-plus earners, is meaningfully lower than California’s 13.3% top bracket or New York’s 10.9%, which helps explain why Massachusetts remains competitive for attracting talent in biotech, finance, and technology despite not being a no-tax state. At the same time, neighboring New Hampshire charges $0 on wages and, as of 2025, $0 on investment and dividend income too, which is why so many Massachusetts border-town residents and remote workers research whether relocating across the state line actually saves money. The honest answer is nuanced: Massachusetts taxes wages based on where work is performed, not where you live, so an NH resident commuting into or working remotely for a Massachusetts-based role typically still owes the 5% Massachusetts tax on those wages. The real NH advantage shows up on investment income and avoiding the Millionaire’s Surtax, while New Hampshire’s higher average property tax rate eats into some of that benefit.
Sales Tax: One Flat Rate, No Local Add-Ons
Unlike most U.S. states, Massachusetts charges a single flat 6.25% sales tax statewide with zero local city or county additions, which makes budgeting simpler no matter where in the state you shop. Unprepared groceries, prescription and over-the-counter medication, and clothing items priced under $175 are exempt (only the portion of price above $175 is taxed on clothing). Prepared restaurant food, however, is taxed at the full 6.25% rate with no reduced “meals tax” carve-out beyond that statewide figure.
Frequently Asked Questions
Massachusetts applies a flat 5% tax rate to most income, including wages, salaries, interest, dividends, long-term capital gains, and most pension income. This rate has gradually declined from 5.95% in the 1990s through a series of voter-approved cuts, reaching 5% in 2020.
Officially the Fair Share Amendment, it adds a 4% surtax on top of the standard 5% rate for taxable income above an inflation-adjusted threshold of $1,053,750 for 2026. Only the portion of income above the threshold is taxed at the combined 9% rate. Voters approved it as a constitutional amendment in November 2022, with revenue constitutionally dedicated to education and transportation.
Short-term capital gains, from assets held one year or less, are taxed at 8.5%, well above the standard 5% rate. Long-term gains, from assets held more than a year, are taxed at the regular 5% flat rate. If total income exceeds the surtax threshold, the 4% Millionaire’s Tax can push the effective rate on short-term gains as high as 12.5%.
No. Social Security benefits are completely exempt from Massachusetts state income tax. Massachusetts public employee pensions are also fully exempt, while private retirement income such as 401(k) and IRA distributions is generally taxed at the standard 5% rate.
No. Massachusetts has no city or county income taxes anywhere in the state, so the 5% flat rate (plus the 4% surtax above the threshold, where applicable) is the entire state-level income tax burden regardless of which Massachusetts city or town you live in.
Massachusetts charges a flat 6.25% sales tax statewide with no local additions. Unprepared groceries, prescription drugs, and clothing items under $175 are exempt, but prepared restaurant food is taxed at the full 6.25% rate.
Related Calculators & Guides
This calculator provides estimates for general informational purposes only and is not tax, legal, or financial advice. Federal tax brackets and FICA wage bases reflect 2025 tax year figures (returns filed in 2026); Massachusetts uses personal exemptions rather than a standard deduction, and the Millionaire’s Surtax threshold is adjusted annually for inflation. Always verify current rules with the Massachusetts Department of Revenue, the Internal Revenue Service (IRS.gov), or a licensed tax professional before making financial decisions.