Section 3: Taxable income: adjusted gross income less deductions and exemptions
Section 3. A. In determining the Part A taxable income, the Part A adjusted gross income shall be reduced by the following deductions and exemptions.
(a) There shall be deducted from the Part A adjusted gross income in determining the Part A taxable income:--
(1) Such net amount of the Part A adjusted gross income of trustees or other fiduciaries subject to taxation under sections nine or ten as is payable to or accumulated for persons not inhabitants of the commonwealth to the extent that such income would not be subject to taxation under section five A if received by a non-resident.
(2) Such net amount of the Part A adjusted gross income of trustees, executors or administrators as is pursuant to the terms of the will, deed or other instrument governing the estate or trust currently payable to or irrevocably set aside for public charitable purposes, or to or for the benefit of any organization or organizations established and operated exclusively for charitable purposes.
(b) An exemption shall be allowed under this section equal to the amount by which the total exemptions allowable under Part B of section three exceed the Part B adjusted gross income less the deductions allowable under paragraph (a) of Part B of section three. No exemption shall be allowed hereunder to any married person, other than a married person who qualifies as head of household under section two (b) of the Code, unless a joint return is filed.
B. In determining the Part B taxable income, the Part B adjusted gross income shall be reduced by the following deductions and exemptions:
(a) There shall be deducted from the Part B adjusted gross income in determining the Part B taxable income:
(1) Such net amount of the Part B adjusted gross income of trustees or other fiduciaries subject to taxation under sections nine or ten as is payable to or accumulated for persons not inhabitants of the commonwealth to the extent that such income would not be subject to taxation under section five A if received by a non-resident.
(2) Such net amount of the Part B adjusted gross income of trustees, executors or administrators as is pursuant to the terms of the will, deed or other instrument governing the estate or trust currently payable to or irrevocably set aside for public charitable purposes, or to or for the benefit of any organization or organizations established and operated exclusively for charitable purposes.
(3) Taxes paid to the United States under the provisions of the Federal Insurance Contributions Act or the Federal Railroad Retirement Act. In no event shall the aggregate of the otherwise allowable deductions of this subparagraph and of all sums deducted from wages as contributions to an annuity, pension, endowment or retirement fund of the United States government, the commonwealth or any political subdivision thereof, attributable to any one taxpayer exceed two thousand dollars.
(4) All sums deducted from wages as contributions to any annuity, pension, endowment or retirement fund of the United States government, the commonwealth or any political subdivision thereof including the optional retirement system established by section forty of chapter fifteen A, provided, that the deduction for such contributions and the deductions otherwise allowable under subparagraph (3) hereof attributable to any one taxpayer shall not in the aggregate exceed two thousand dollars, and any income from any contributory annuity, pension, endowment or retirement fund of the United States government or the commonwealth or any political subdivision thereof, to which the employee has contributed, or any income from a contributory annuity, pension, endowment or retirement fund of any other state or any political subdivision thereof, to the extent that income from any such similar fund established under the laws of the commonwealth is not subject to taxation in such other state or political subdivision.
[ There is no subparagraph (5).]
(6) Interests and dividends in the amount of one hundred dollars for a single person, head of household or a married person filing a separate return or two hundred dollars for a husband and wife filing a joint return from savings deposits, savings accounts, shares or share savings accounts included in Part B gross income.
[ There is no subparagraphs (7) or (8).]
[ Subparagraph (9) of paragraph (a) of part B effective until January 2, 2024. For text effective January 2, 2024, see below.]
(9) In the case of an individual who pays rent for his principal place of residence and such residence is located in the commonwealth, an amount equal to 50 per cent of such rent; provided, however, that such deduction shall not exceed $3,000 for a single person, for a person that qualifies as a head of household under section two (b) of the Code, or for a husband and wife.
[ Subparagraph (9) of paragraph (a) of part B as amended by 2023, 50, Sec. 4 effective January 2, 2024 for taxable years beginning on or after January 1, 2023. See 2023, 50 Sec. 49. For text effective until January 2, 2024, see above.]
(9) In the case of an individual who pays rent for his principal place of residence and such residence is located in the commonwealth, an amount equal to 50 per cent of such rent; provided, however, that such deduction shall not exceed $4,000 for a single person, for a person that qualifies as a head of household under section two (b) of the Code, or for a husband and wife.
[ Subparagraph (10) of paragraph (a) of part B effective for tax years beginning on January 1, 2019. See 2018, 228, Sec. 72.]
(10) An amount equal to 10 per cent of the cost of renovating any abandoned building that is part of a certified project as defined in section 3A of chapter 23A.
[ Subparagraph (11) of paragraph (a) of part B effective for tax years beginning on or after January 1, 2017. See 2016, 219, Sec. 139.]
(11) An amount equal to the amount by which tuition payments by the taxpayer to a two or four-year college in which the taxpayer or a dependent of said taxpayer, pursuant to subparagraph three of paragraph b of subsection B, is enrolled, less any scholarships, grants or financial aid received, exceeds twenty-five percent of the taxpayer's Massachusetts adjusted gross income, exclusive of this deduction but, the deduction shall be limited in the manner provided in section 222(d)(3) of the Code as amended and in effect for the taxable year. An individual who is a nonresident for all or part of the taxable year shall not be eligible to claim this deduction.
(12) An amount equal to the amount of interest payments paid by the taxpayer on education debt during the taxable year. For the purposes of this subparagraph, the term "education debt'' shall mean any loan which was or is administered by the financial aid office of a two-year or four-year college at which the taxpayer, or a dependent of such taxpayer, pursuant to subparagraph (3) of paragraph (b) of Part B of this section, was enrolled as an undergraduate student and which loan has been secured through a state student loan program, a federal student loan program or a commercial lender and which loan was obtained and expended solely for the purposes of paying tuition and other expenses directly related to such undergraduate student enrollment. A taxpayer who claims a deduction under this section shall not be eligible for a deduction for the same expenses under subparagraph (1) of paragraph (d) of section 2 of this chapter.
(13) An amount equal to the amount of the charitable contribution deduction allowed or allowable to the taxpayer under section 170 of the Code; provided, however, that, in taxable years beginning on or after January 1, 2002, no such deduction shall be allowed in any taxable year unless the rate of tax on Part B taxable income in section 4 in the prior taxable year was equal to 5 per cent; and provided, further, that notwithstanding said section 170 of the Code, no deduction shall be allowed for contributions of household goods or used clothing, as those items are recognized under said section 170 of the Code. All requirements, conditions and limitations applicable to charitable contributions under the Code shall apply for purposes of determining the amount of the deduction under this subparagraph, except that taxpayers shall not be required to itemize their deductions in their federal income tax returns.
(14) The amount as is described in section 1341(a)(2) of the Code, to the extent, if any, that that amount (i) was previously included in Massachusetts taxable income and (ii) is not otherwise deductible under section 2(d)(1) of this chapter.
[ Subparagraph (15) of paragraph (a) of part B effective until January 2, 2024. For text effective January 2, 2024, see below.]
(15) Amounts expended by an individual for tolls paid for through a Fast Lane account or for weekly or monthly transit commuter passes for Massachusetts Bay Transit Authority transit, bus, commuter rail or commuter boat, not including amounts reimbursed by an employer or otherwise. In the case of a single person or a married person filing a separate return or a head of household, this deduction shall apply only to the portion of the expended amount that exceeds $150, and the total amount deducted shall not exceed $750. In the case of a married couple filing a joint return, this deduction shall apply only to the portion of the amount expended by each individual that exceeds $150, and the total amount deducted shall not exceed $750 for each individual. The commissioner of revenue shall adopt regulations necessary for the implementation of this section.
[ Subparagraph (15) of paragraph (a) of part B as amended by 2023, 50, Secs. 5 and 6 effective January 2, 2024 for taxable years beginning on or after January 1, 2023. See 2023, 50 Sec. 49. For text effective until January 2, 2024, see above.]
(15) Amounts expended by an individual for tolls paid for through a Fast Lane account or for fares for Massachusetts Bay Transit Authority transit, bus, commuter rail or commuter boat, or for regional transit authority fares, or for bikeshare memberships, or for bicycles, including electric bicycles, or for bicycle improvements, repair and storage, or for any fare for a commuter boat owned, operated or contracted by a municipality, public or quasi-public entity, agency or authority, not including amounts reimbursed by an employer or otherwise. In the case of a single person or a married person filing a separate return or a head of household, this deduction shall apply only to the portion of the expended amount that exceeds $150, and the total amount deducted shall not exceed $750. In the case of a married couple filing a joint return, this deduction shall apply only to the portion of the amount expended by each individual that exceeds $150, and the total amount deducted shall not exceed $750 for each individual. The commissioner of revenue shall adopt regulations necessary for the implementation of this section.
(16) In the case of an individual who donates an organ to another person for human organ transplantation, the individual may claim an amount equal to the following expenses that are incurred by the individual and related to the individual's organ donation: (i) travel expenses; (ii) lodging expenses; and (iii) lost wages not to exceed $10,000. For the purposes of this subparagraph, "human organ'' shall mean all or part of human bone marrow, liver, pancreas, kidney, intestine or lung. An individual who is a nonresident for all or part of the taxable year shall not be eligible to claim this deduction.
(17) Distributions from a fund established pursuant to the ABLE program, under section 29 of chapter 15C, to the extent otherwise included in income, when such distributions are used to pay qualified disability expenses.
(18) Losses from wagering transactions, that were incurred at a gaming establishment licensed in accordance with chapter 23K or at any racing meeting licensee or simulcasting licensee, only to the extent of the gains from such transactions.
[ Subparagraph (19) of paragraph (a) of Part B effective for tax years beginning on or after January 1, 2017. See 2016, 219, Sec. 138 as amended by 2021, 24, Sec. 70.]
(19) An amount equal to the amount expended in the taxable year for the purchase of an interest in, or the amount contributed in the taxable year to an account in, a prepaid tuition program or college savings program established by the commonwealth or an instrumentality or authority of the commonwealth; provided, however, that in the case of a single person or a married person filing a separate return or as head of household, the total amount deducted in the taxable year shall not exceed $1,000; and provided further, that in the case of a married couple filing a joint return, the total amount deducted in the taxable year shall not exceed $2,000.
Notwithstanding a statute of limitations on the assessment of an income tax under this chapter, a deduction taken under this subparagraph shall be subject to recapture in the taxable years in which a distribution or a refund is made for a reason other than: (i) to pay qualified higher education expenses as defined in 26 U.S.C. 529(e)(3); or (ii) the beneficiary's death, disability or receipt of a scholarship. For the purposes of this subparagraph, "purchaser'' or "contributor'' shall mean the person shown as the purchaser or contributor on the records of the qualifying prepaid tuition or college savings program as of December 31 of the taxable year. In the case of a transfer of ownership of a prepaid tuition contract or savings trust account, the transferee shall succeed to the transferor's tax attributes associated with the prepaid tuition contract or savings trust account including, but not limited to, carryover and recapture of a deduction.
Annually, not later than October 15, the commissioner shall submit a report to the secretary of administration and finance, the chairs of the senate and house committees on ways and means and the senate and house chairs of the joint committee on revenue that provides the following information: (i) the number of prepaid tuition contracts or savings trust accounts entered into or opened by residents of the commonwealth during the prior year; (ii) the amount of the allowable deductions claimed under this subparagraph during the prior year; and (iii) the adjusted gross income of each taxpayer qualifying for the deduction allowed under this subparagraph.
[ Subparagraph (20) of paragraph (a) of part B as added by 2023, 50, Sec. 7 effective January 2, 2024 for taxable years beginning on or after January 1, 2023. See 2023, 50 Sec. 49.]
(20) An amount equal to the amount of student loan payment assistance received by an individual from their employer during the taxable year not already excluded under section 127 of the Code. For the purposes of this subparagraph, "student loan payment assistance'' shall mean the payment of principal or interest on a qualified education loan, as defined in section 221 of the Code.
(b) The following exemptions shall be allowable to individuals against Part B income:
(1) In the case of a single person or a married person filing a separate return,
(A) a personal exemption of $3,300 for tax years beginning on or after January 1, 2002,
For taxable years beginning on or after January 1, 2004, the personal exemption shall be: (i) the exemption in the previous year plus $275 if the inflation-adjusted growth in baseline taxes in the fiscal year ending the June 30 of the previous year exceeds 2.5 per cent and the inflation-adjusted change in baseline taxes for each consecutive 3 month period reported by the commissioner between August and December of the previous year is greater than 0; or (ii) the personal exemption in effect for the prior year. On or before October 15 of each year, the commissioner shall submit a report to the secretary of administration, the house and senate committees on ways and means and the joint committee on taxation providing a preliminary statement of the personal exemption for taxable years beginning on or after the following January 1. On or before December 15, the commissioner shall make a final statement of the personal exemption for the following year to the same recipients.
The personal exemption shall not exceed $4,400.
(B) an additional exemption of two thousand two hundred dollars if the taxpayer was totally blind at the close of his taxable year, and
(C) an additional exemption of seven hundred dollars if the taxpayer had attained the age of sixty-five before the close of his taxable year.
(1A) In the case of a head of household, as defined under the provisions of section two (b) of the Code, filing a separate return,
(A) a personal exemption of $5,100 for tax years beginning on or after January 1, 2002,
For taxable years beginning on or after January 1, 2004, the personal exemption shall be: (i) the exemption in the previous year plus $425 if the inflation-adjusted growth in baseline taxes in the fiscal year ending the June 30 of the previous year exceeds 2.5 per cent and the inflation-adjusted change in baseline taxes for each consecutive 3 month period reported by the commissioner between August and December of the previous year is greater than 0; or (ii) the personal exemption in effect for the prior year. On or before October 15 of each year, the commissioner shall submit a report to the secretary of administration, the house and senate committees on ways and means and the joint committee on taxation providing a preliminary statement of the personal exemption for taxable years beginning on or after the following January 1. On or before December 15, the commissioner shall make a final statement of the personal exemption for the following year to the same recipients.
The personal exemption shall not exceed $6,800.
(B) an additional exemption of two thousand two hundred dollars if the taxpayer was totally blind at the close of his taxable year, and
(C) an additional exemption of seven hundred dollars if the taxpayer had attained the age of sixty-five before the close of his taxable year.
(2) In the case of a husband and wife filing a joint return,
(A) a personal exemption of $6,600 for tax years beginning on or after January 1, 2002,
For taxable years beginning on or after January 1, 2004, the personal exemption shall be: (i) the exemption in the previous year plus $550 if the inflation-adjusted growth in baseline taxes in the fiscal year ending the June 30 of the previous year exceeds 2.5 per cent and the inflation-adjusted change in baseline taxes for each consecutive 3 month period reported by the commissioner between August and December of the previous year is greater than 0; or (ii) the personal exemption in effect for the prior year. On or before October 15 of each year, the commissioner shall submit a report to the secretary of administration, the house and senate committees on ways and means and the joint committee on taxation providing a preliminary statement of the personal exemption for taxable years beginning on or after the following January 1. On or before December 15, the commissioner shall make a final statement of the personal exemption for the following year to the same recipients.
The personal exemption shall not exceed $8,800.
(B) an additional exemption of two thousand two hundred dollars for each spouse who was totally blind at the close of his taxable year, and
(C) an additional exemption of seven hundred dollars for each spouse who had attained the age of sixty-five before the close of his taxable year.
(3) An exemption of one thousand dollars for each individual who qualifies for exemption as a dependent under section one hundred and fifty-one (c) of the Code.
(4) An amount equal to the deduction for medical, dental and other expenses allowed under section two hundred and thirteen of the Code; provided, however, that the individual itemizes deductions on his federal income tax return. No exemption shall be allowed under this subparagraph to an individual who files a joint federal income tax return with his spouse unless a joint return is also filed under this chapter.
(5) An amount equal to the fees paid by the taxpayer within the taxable year to any agency licensed to place children for adoption on account of the adoption process of a minor child.
(c) Except as hereinafter provided for a non-resident, if the taxable year of any person subject to tax under this chapter is a short taxable year, and such short taxable year is not due to the death of such person, any exemption or deduction under Part B relating or allocable in whole or in part, to any income not included in Massachusetts gross income shall not be allowed to the extent thereof; and any other exemption or deduction under Part B that is not so related or allocable shall be limited to an amount equal to the exemption or deduction otherwise allowable if the person has been a resident of the commonwealth throughout the full taxable year multiplied by a fraction the numerator of which is the number of days in the short taxable year and the denominator of which is three hundred and sixty-five.
If any person subject to tax under this chapter is a non-resident for all or any part of a taxable year, any exemption or deduction under Part B relating or allocable, in whole or in part, to any income not included in Massachusetts gross income shall not be allowed to the extent thereof; and any other exemption or deduction under Part B that is not so related or allocable shall be limited to an amount otherwise allowable under Part B if the person has been a resident of the commonwealth throughout the full taxable year multiplied by a fraction the numerator of which is his Massachusetts gross income and the denominator of which is the amount which would have been his Massachusetts gross income had he been a resident of the commonwealth throughout the full taxable year.
C. In determining the Part C taxable income, the Part C adjusted gross income shall be reduced by the following deductions and exemptions:
(a) There shall be deducted from the Part C adjusted gross income in determining the Part C taxable income:
(1) Such net amount of the Part C adjusted gross income of trustees or other fiduciaries subject to taxation under sections nine or ten as is payable to or accumulated for persons not inhabitants of the commonwealth to the extent that such income would not be subject to taxation under section five A if received by a non-resident.
(2) Such net amount of the Part C adjusted gross income of trustees, executors or administrators as is pursuant to the terms of the will, deed or other instrument governing the estate or trust currently payable to or irrevocably set aside for public charitable purposes, or to or for the benefit of any organization or organizations established and operated exclusively for charitable purposes.
(b) An exemption shall be allowed under this section equal to the amount by which the total exemptions allowable under Part B of section three exceed the Part B adjusted gross income less the deductions allowable under paragraph (a) of Part B of section three and the Part A adjusted gross income less the deductions allowable under paragraph (a) of Part A of section three. No exemption shall be allowed hereunder to any married person filing a separate return.