AN ACT TO IMPROVE THE COMMONWEALTH’S COMPETITIVENESS, AFFORDABILITY, AND EQUITY
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Section 2H of chapter 29 of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by striking out, in line 29, the figure “15” and inserting in place thereof the following figure:- 25.5.
SECTION 2. Section 5K of chapter 59 of the General Laws, as so appearing, is hereby amended by striking out, in lines 14 and 39, the figure “$1,500” and inserting in place thereof, in each instance, the following figure:- $2,000.
SECTION 3. Said chapter 59 is hereby further amended by inserting after section 5N the following section:-
Section 5O. (a) In any city or town that accepts this section, the board of selectmen or select board of the town, the town council of a municipality having a town council form of government, the city manager, with the approval of the city council, in the case of a city with a plan D or plan E form of government, or the mayor, with the approval of the city council, in all other cities, may establish a property tax exemption for real property classified as Class One, residential in the city or town. To qualify for the exemption, the property shall be: (i) rented at an affordable housing rate, as determined by the city or town and in accordance with the United States Department of Housing and Urban Development guidance and regulations; (ii) rented on a yearly basis; and (iii) occupied year-round by a person or persons whose household income does not exceed an amount to be set by the city or town; provided, however, that said income shall not be more than 200 per cent of the area median income. The property tax exemption shall be for an amount determined by the city or town; provided, however, that the amount shall not be more than the tax otherwise due on the parcel based on the full and fair assessed value multiplied by the square footage of the housing units rented and occupied by a person or persons whose household income is not more than the income limit set pursuant to clause (iii), divided by the total square footage of a structure located on the parcel. Assessment of property seeking an exemption under this section, if by an income approach to value, shall assume fair market rent for all units. The property owner seeking the exemption shall submit to the city or town any documentation the city or town deems necessary, including, but not limited to, a signed lease and proof of the occupying person or persons’ household income, to confirm the eligibility of the property for the exemption under this section.
(b) A municipality may adopt ordinances or by-laws to implement this section.
SECTION 4. Section 3 of chapter 62 of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by striking out, in line 72, the figure “$3,000” and inserting in place thereof the following figure:- $4,000.
SECTION 5. Said section 3 of said chapter 62, as so appearing, is hereby further amended by striking out, in lines 121 and 122, the words “weekly or monthly transit commuter passes” and inserting in place thereof the following word:- fares.
SECTION 6. Said section 3 of said chapter 62, as so appearing, is hereby further amended by inserting after the word “boat”, in line 123, the following words:- , 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.
SECTION 7. Paragraph (a) of part B of said section 3 of said chapter 62, as so appearing, is hereby amended by adding the following subparagraph:-
(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.
SECTION 8. Section 4 of said chapter 62 is hereby amended by inserting after the word “cent”, in line 5, as so appearing, the following words:- ; provided, however, that any gain from the sale or exchange of capital assets held for 1 year or less shall be taxed at the rate of 8.5 per cent.
SECTION 9. Subsection (e) of section 6 of said chapter 62, as so appearing, is hereby amended by striking out, in line 75, the words “one thousand five hundred dollars” and inserting in place thereof the following figure:- $3,000.
SECTION 10. Said subsection (e) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out, in line 86, the words “five hundred dollars” and inserting in place thereof the following figure:- $1,000.
SECTION 11. Subsection (h) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out, in lines 245 and 250, the figure “30”, each time it appears, and inserting in place thereof, in each instance, the following figure:- 40.
SECTION 12. Subsection (i) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out, in line 269, the figure “40” and inserting in place thereof the following figure:- 60.
SECTION 13. Said subsection (i) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out, in lines 271 and 272, the words “as promulgated by the department of environmental protection in 1995” and inserting in place thereof the following words:- of the State Environmental Code.
SECTION 14. Said subsection (i) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out, in line 273, the figure “$15,000” and inserting in place thereof the following figure:- $30,000.
SECTION 15. Said subsection (i) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out, in line 277, the figure “$1,500” and inserting in place thereof the following figure:- $4,000.
SECTION 16. Said subsection (i) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out, in lines 279 to 282, inclusive, the words “$6,000. The amount of any such credit shall be reduced by an amount equal to the total interest subsidy or grant received from the commonwealth, whether directly or indirectly, toward the cost of said expenditures” and inserting in place thereof the following figure:- $18,000.
SECTION 17. Subsection (k) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out, in line 447, the figure “$750” and inserting in place thereof the following figure:- $1,500.
SECTION 18. Subsection (o) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out, in line 732, the figure “$6,000,000” and inserting in place thereof the following figure:- $8,000,000.
SECTION 19. Subsection (q) of said section 6 of said chapter 62, as amended by sections 218 to 220, inclusive, of chapter 7 of the acts of 2023, is hereby further amended by striking out paragraph (5) and inserting in place thereof the following paragraph:-
(5) EOHLC may authorize not more than $30,000,000 in credits annually under this subsection and section 38BB of chapter 63. EOHLC may authorize annually any credits under this subsection or said section 38BB of said chapter 63 returned to EOHLC by a certified housing development project. The total amount of credits authorized during a year shall include: (1) credits granted during the year pursuant to this subsection or said section 38BB of said chapter 63; and (2) carry forwards of credits from prior years pursuant to this subsection or said section 38BB of said chapter 63, to the extent that such credit carry forwards are estimated by the commissioner to offset tax liabilities during the year. Any portion of the $30,000,000 annual cap not awarded by EOHLC in a calendar year shall not be applied to awards in a subsequent year. EOHLC shall provide the commissioner of revenue with any documentation that the commissioner deems necessary to confirm compliance with the annual cap and the commissioner shall provide a report confirming compliance with the annual cap to the secretary of administration and finance and the secretary of housing and livable communities.
SECTION 20. Subsection (v) of said section 6 of said chapter 62, as appearing in the 2022 Official Edition, is hereby amended by inserting after the figure “31-33”, in line 1158, the following words:- or other expansion industries the secretary of labor and workforce development identifies as critical to a regional labor market economy.
SECTION 21. Said section 6 of said chapter 62 is hereby further amended by striking out subsections (x) and (y), as so appearing, and inserting in place thereof the following subsection:-
(x) For the purposes of this subsection, “maintains a household” shall have the same meaning as in section 21 of the Code. With respect to a taxpayer who is a non-resident for part of the taxable year, the credit shall be further limited to the amount of allowable credit multiplied by a fraction, the numerator of which shall be the number of days in the taxable year the person resided in the commonwealth and the denominator of which shall be the number of days in the taxable year. A taxpayer who maintains a household that includes as a member at least 1 individual: (i) under the age of 13 who qualifies for exemption as a dependent under section 151 of the Code; (ii) who is a qualifying individual as defined in said section 21 of the Code; or (iii) who (A) is not less than 65 years of age or is disabled and (B) qualifies as a dependent under section 152 of the Code, shall be allowed a credit in an amount equal to $310 for each such dependent or qualifying individual with respect to the taxpayer; provided, however, that if the taxpayer is married at the close of the taxable year, the credit provided in this subsection shall be allowed if: (a) the taxpayer and the taxpayer’s spouse file a joint return for the taxable year; or (b) the taxpayer qualifies as a head of household under section 2(b) of the Code. A person who is a non-resident for the entire taxable year shall not qualify for the credit. If the amount of the credit allowed under this subsection exceeds the taxpayer’s tax liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the entire amount of the excess without interest.
SECTION 22. Subsection (x) of said section 6 of said chapter 62, as appearing in section 21, is hereby further amended by striking out the figure “$310” and inserting in place thereof the following figure:- $440.
SECTION 23. Section 6I of said chapter 62, as appearing in the 2022 Official Edition, is hereby amended by striking out, in line 70, the figure “$40,000,000” and inserting in place thereof the following figure:- $60,000,000.
SECTION 24. Section 6 of chapter 62C of the General Laws, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-
(a)(1) Every individual inhabitant of the commonwealth who receives or accrues during the taxable year Massachusetts gross income, as defined in section 2 of chapter 62, in excess of $8,000 shall make a return of such income.
Every nonresident whose Massachusetts gross income, determined in accordance with section 5A of chapter 62, exceeds $8,000 or the personal exemption to which such nonresident may be entitled under section 3 of said chapter 62, whichever is the lesser, and every partnership, association or trust whose federal gross income, as defined in section 1 of said chapter 62, exceeds $100, shall make a return of such income.
Every individual, not otherwise required to file a return under this subsection, who is a resident for a portion of a 12-month period beginning on the first day of a taxable year and a nonresident for a portion of the same 12-month period and whose Massachusetts gross income, as defined in section 2 of chapter 62, exceeds $8,000 shall make separate returns as a resident and a nonresident of his income subject to taxation under said chapter 62.
A husband and wife may make a single return jointly of income taxes under chapter 62, even though one of the spouses has neither income nor deductions, provided that their taxable years begin on the same day and either end on the same day or on different days solely because of the death of either or both. Such return shall be known as a joint return and shall include the income, exemptions and deductions of both spouses. Each spouse shall be jointly and severally liable for the entire tax.
(2) A married couple shall file a joint return for any year in which they file a joint federal income tax return. In cases where 1 spouse or both spouses are non-residents of the commonwealth and have items of income, exemptions or deductions unrelated to their Massachusetts income, the department shall provide, by regulation, for appropriate adjustments or for exemption from the requirement to file a joint return.
SECTION 25. Section 5 of chapter 62F of the General Laws, as so appearing, is hereby amended by adding the following subsection:-
(e) Monthly, the commissioner shall submit a report to the clerks of the senate and the house of representatives, the joint committee on revenue and the senate and house committees on ways and means on net state tax revenue for the current fiscal year, projections for net state tax revenue for the remainder of said fiscal year and an estimate of if, and when, net state tax revenue may exceed allowable state tax revenue for said fiscal year.
SECTION 26. The first paragraph of section 6 of said chapter 62F, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following 3 sentences:- The credit shall be applied against the then current personal income tax liability of each taxpayer who files an income tax return in both the then current and the previous taxable year in an amount determined by dividing the total amount of excess revenues by the total number of taxpayers filing an income tax return in the previous taxable year. For the purposes of this section, a married couple filing a joint return shall be counted as 2 taxpayers. If the amount of the credit allowed under this section exceeds the taxpayer’s liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the amount of the excess without interest.
SECTION 27. Section 2A of chapter 63 of the General Laws, as so appearing, is hereby amended by striking out subsections (b) and (c) and inserting in place thereof the following 2 subsections:-
(b) If the financial institution has income from business activity which is taxable both within and without the commonwealth, its net income shall be apportioned to the commonwealth by multiplying its net income by its receipts factor. If the receipts factor is missing, the whole of the financial institution’s net income shall be taxable pursuant to section 2. The receipts factor shall be missing if both its numerator and denominator are zero, but it shall not be missing merely because its numerator is zero.
(c) The receipts factor shall be computed according to the method of accounting, cash or accrual basis, used by the taxpayer for federal income tax purposes for the taxable year.
SECTION 28. Subsection (d) of said section 2A of said chapter 63, as so appearing, is hereby amended by striking out paragraph (xii) and inserting in place thereof the following paragraph:-
(xii)(A) Interest, dividends, net gains, but not less than zero, and other income from investment assets and activities and from trading assets and activities shall be included in the receipts factor. Investment assets and activities and trading assets and activities include but are not limited to: investment securities; trading account assets; federal funds; securities purchased and sold under agreements to resell or repurchase; options; futures contracts; forward contracts; notional principal contracts such as swaps; equities; and foreign currency transactions. With respect to the investment and trading assets and activities described in clauses ( (1) and (2), the receipts factor shall include the amounts described in said clauses (1) and (2).
(1) The receipts factor shall include the amount by which interest from federal funds sold and securities purchased under resale agreements exceeds interest expense on federal funds purchased and securities sold under repurchase agreements.
(2) The receipts factor shall include the amount by which interest, dividends, gains and other income from trading assets and activities, including, but not limited to, assets and activities in the matched book, in the arbitrage book and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and losses from such assets and activities.
(B) The amount of interest, dividends, net gains, but not less than zero, and other income from investment assets and activities and from trading assets and activities to be attributed to the commonwealth and included in the numerator shall be determined by multiplying all such income from such assets and activities by a fraction, the numerator of which shall be the total receipts included in the numerator pursuant to paragraphs (i) through (x), inclusive, and paragraph (xii) and the denominator of which shall be all total receipts of the taxpayer included in the denominator other than interest, dividends, net gains, but not less than zero, and other income from investment assets and activities and from trading assets and activities.
SECTION 29. Said section 2A of said chapter 63, as so appearing, is hereby further amended by striking out subsections (e) to (g), inclusive, and inserting in place thereof the following subsection:-
(e) If the provisions of subsections (a) to (d), inclusive, are not reasonably adapted to approximate the net income derived from business carried on within the commonwealth, a financial institution may apply to the commissioner, or the commissioner may require the financial institution, to have its income derived from business carried on within the commonwealth determined by a method other than that set forth in subsections (a) to (d), inclusive. Such application shall be made by attaching to its duly-filed return a statement of the reasons why the financial institution believes that subsections (a) to (d), inclusive, are not reasonably adapted to approximate its net income derived from business carried on within the commonwealth and a description of the method sought by it. A financial institution which so applies shall, upon receipt of a request therefor from the commissioner, file with the commissioner, under oath of its treasurer, a statement of such additional information as the commissioner may require.
If, after such application by the financial institution, or after the commissioner’s own review, the commissioner determines that the provisions of subsections (a) to (d), inclusive, are not reasonably adapted to approximate the financial institution’s net income derived from business carried on within the commonwealth, the commissioner shall by reasonable methods determine the amount of net income derived from business activity carried on within the commonwealth. The amount thus determined shall be the net income taxable under section 2 and the foregoing determination shall be in lieu of the determination required by subsections (a) to (d), inclusive. If an alternative method is used by the commissioner hereunder, the commissioner, in their discretion, with respect to the 2 next succeeding taxable years, may require similar information from such financial institution if it shall appear that the provisions of subsections (a) to (d), inclusive, are not reasonably adapted to approximate for the applicable year the financial institution’s net income derived from business carried on within the commonwealth and may again by reasonable methods determine such income.
SECTION 30. Section 31H of said chapter 63, as so appearing, is hereby amended by striking out, in line 71, the figure “$40,000,000” and inserting in place thereof the following figure:- $60,000,000.
SECTION 31. Said chapter 63 is hereby further amended by striking out section 38, as so appearing, and inserting in place thereof the following section:-
Section 38. The commissioner shall determine the part of the net income of a business corporation derived from business carried on within the commonwealth as follows:
(a) Net income, as defined in section 30, adjusted as follows shall constitute taxable net income:
(1) 95 per cent of dividends, exclusive of distributions in liquidation, included therein shall be deducted other than dividends from or on account of the ownership of:
(i) shares in a corporate trust, as defined in section 1 of chapter 62, to the extent such dividends represent tax-free earnings and profits, as defined in section 8 of said chapter 62, as in effect on December 31, 2008;
(ii) deemed distributions and actual distributions, except actual distributions out of previously taxed income, from a domestic international sales corporation, as defined in 26 U.S.C. § 992, which is not a wholly owned domestic international sales corporation; or
(iii) any class of stock, if the corporation owns less than 15 per cent of the voting stock of the corporation paying such dividend.
(2) Long-term capital gains realized and long-term capital losses sustained from the sale or exchange of intangible property affected under the provisions of the Federal Internal Revenue Code, as amended, and in effect for taxable years that ended on or before December 31, 1962, shall not be included in any part therein.
(b) If the corporation does not have income from business activity which is taxable in another state, the whole of its taxable net income, determined pursuant to subsection (a), shall be allocated to the commonwealth. For purposes of this section, a corporation is taxable in another state if: (1) in that state such corporation is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business or a corporate stock tax; or (2) that state has jurisdiction to subject such corporation to a net income tax regardless of whether, in fact, the state does or does not. Notwithstanding any other provision of this section, the portion of the taxable net income of a corporation that a non-domiciliary state is prohibited from taxing under the Constitution of the United States shall be allocated in full to the commonwealth if the commercial domicile of the corporation is in the commonwealth.
(c) If a corporation has income from business activity which is taxable both within and without the commonwealth, its taxable net income, as determined pursuant to subsection (a), shall be apportioned to the commonwealth by multiplying such taxable net income by the sales factor.
(d) The sales factor is a fraction, the numerator of which is the total sales of the corporation in the commonwealth during the taxable year, and the denominator of which is the total sales of the corporation everywhere during the taxable year.
As used in this section, unless specifically stated otherwise, “sales” shall mean all gross receipts of the corporation, including deemed receipts from transactions treated as sales or exchanges under the Code, except interest, dividends and gross receipts from the maturity, redemption, sale, exchange or other disposition of securities; provided, however, that “sales” shall not include gross receipts from transactions or activities to the extent that a non-domiciliary state would be prohibited from taxing the income from such transactions or activities under the Constitution of the United States.
(e) Sales of tangible personal property are in the commonwealth for purposes of this section if: (1) the property is delivered or shipped to a purchaser within the commonwealth regardless of the f.o.b. point or other conditions of the sale; or (2) the corporation is not taxable in the state of the purchaser and the property was not sold by an agent or agencies chiefly situated at, connected with or sent out from premises for the transaction of business owned or rented by the corporation outside the commonwealth. “Purchaser”, as used in clauses (1) and (2) shall include the United States government.
(f) Sales, other than sales of tangible personal property, are in the commonwealth for purposes of this section if the corporation’s market for the sale is in the commonwealth. The corporation’s market for a sale is in the commonwealth and the sale is thus assigned to the commonwealth for the purpose of this section:
(1) in the case of sale, rental, lease or license of real property, if and to the extent the property is located in the commonwealth;
(2) in the case of rental, lease or license of tangible personal property, if and to the extent the property is located in the commonwealth;
(3) in the case of sale of a service, if and to the extent the service is delivered to a location in the commonwealth;
(4) in the case of lease or license of intangible property, including a sale or exchange of such property where the receipts from the sale or exchange derive from payments that are contingent on the productivity, use or disposition of the property, if and to the extent the intangible property is used in the commonwealth; and
(5) in the case of the sale of intangible property, other than as provided in clause (4), where the property sold is a contract right, government license or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area, if and to the extent that the intangible property is used in or otherwise associated with the commonwealth; provided, however, that any sale of intangible property, not otherwise described in this clause or clause (4), shall be excluded from the numerator and the denominator of the sales factor.
(g) If the sales factor is missing, the whole of the corporation’s net income shall be taxable net income allocated to the commonwealth. The sales factor shall be missing if both its numerator and denominator are zero, but it shall not be missing merely because its numerator is zero.
(h) For the purposes of this section:
(1) in the case of sales, other than sales of tangible personal property, if the state or states to which sales should be assigned cannot be determined, it shall be reasonably approximated;
(2) in the case of sales other than sales of tangible personal property if the taxpayer is not taxable in a state to which a sale is assigned, or if the state or states to which such sales should be assigned cannot be determined or reasonably approximated, such sale shall be excluded from the numerator and denominator of the sales factor;
(3) the corporation shall be considered to be taxable in the state of the purchaser if tangible personal property is delivered or shipped to a purchaser in a foreign country;
(4) sales of tangible personal property to the United States government or any agency or instrumentality thereof for purposes of resale to a foreign government or any agency or instrumentality thereof are not sales made in the commonwealth;
(5) in the case of sale, exchange or other disposition of a capital asset, as defined in paragraph (m) of section 1 of chapter 62, used in a taxpayer’s trade or business, including a deemed sale or exchange of such asset, “sales” shall be measured by the gain from the transaction;
(6) “security” shall mean any interest or instrument commonly treated as a security as well as other instruments which are customarily sold in the open market or on a recognized exchange, including, but not limited to, transferable shares of a beneficial interest in any corporation or other entity, bonds, debentures, notes and other evidences of indebtedness, accounts receivable and notes receivable, cash and cash equivalents including foreign currencies and repurchase and futures contracts;
(7) in the case of a sale or deemed sale of a business, “sales” shall not include receipts from the sale of the business “goodwill” or similar intangible value, including, without limitation, “going concern value” and “workforce in place”;
(8) in the case of a business deriving receipts from operating a gaming establishment or otherwise deriving receipts from conducting a wagering business or activity, income-producing activity shall be considered to be performed in the commonwealth to the extent that the location of wagering transactions or activities that generated the receipts is in the commonwealth;
(9) in the case of a business deriving receipts from operating a marijuana establishment or otherwise deriving receipts from conducting a marijuana business or activity, income-producing activity shall be considered to be performed in the commonwealth to the extent that the location of marijuana transactions or activities that generated the receipts is in the commonwealth; and
(10) dividends that are deemed to be received from an entity, including amounts included in federal gross income pursuant to sections 951 or 951A of the Code, shall not be considered “sales”.
(i)(1) As used in this subsection, the following words shall, unless the context requires otherwise, have the following meanings:
“Administration services”, include, but are not limited to, clerical, fund or shareholder accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal and tax services performed for a regulated investment company, but only if the provider of such service or services during the taxable year in which such service or services are provided also provides or is affiliated with a person that provides management or distribution services to any regulated investment company.
“Affiliated person”, the meaning as set forth in 15 USC section 80a-2(a)(3)(C), as may be amended from time to time.
“Distribution services”, include, but are not limited to, the services of advertising, servicing, marketing or selling shares of a regulated investment company, but, in the case of advertising, servicing or marketing shares, only where such service is performed by a person who is, or in the case of a close end company, was, either engaged in the services of selling regulated investment company shares or affiliated with a person that is engaged in the service of selling regulated investment company shares. In the case of an open end company, such service of selling shares shall be performed pursuant to a contract entered into pursuant to 15 USC section 80a-15(b), as from time to time amended.
“Domicile”, presumptively the shareholder’s mailing address on the records of the regulated investment company. If, however, the regulated investment company or the corporation has actual knowledge that the shareholder’s primary residence or principal place of business is different than the shareholder’s mailing address said presumption shall not control. If the shareholder of record is a company which holds the shares of the regulated investment company as depositor for the benefit of a separate account, then the shareholder shall be the contract owners or policyholders of the contracts or policies supported by the separate account, and it shall be presumed that the domicile of said shareholder is the contract owner’s or policyholder’s mailing address to the extent that the company maintains such mailing addresses in the regular course of business. If the regulated investment company or the corporation has actual knowledge that the shareholder’s principal place of business is different than the shareholder’s mailing address said presumption shall not control.
“Management services”, include, but shall not necessarily be limited to, the rendering of investment advice directly or indirectly to a regulated investment company, making determinations as to when sales and purchases of securities are to be made on behalf of the regulated investment company, or the selling or purchasing of securities constituting assets of a regulated investment company, and related activities, but only where such activity or activities are performed: (i) pursuant to a contract with the regulated investment company entered into pursuant to 15 USC section 80a-15(a), as amended; (ii) for a person that has entered into such contract with the regulated investment company; or (iii) for a person that is affiliated with a person that has entered into such contract with a regulated investment company.
“Mutual fund sales”, taxable net income derived within the taxable year directly or indirectly from the rendering of management, distribution or administration services to a regulated investment company, including net income received directly or indirectly from trustees, sponsors and participants of employee benefit plans, which have accounts in a regulated investment company.
“Regulated investment company”, the meaning as set forth in section 851 of the Code.
(2) Mutual fund sales, other than the sale of tangible personal property, shall be assigned to the commonwealth to the extent that shareholders of the regulated investment company are domiciled in the commonwealth as follows:
(i) By multiplying the taxpayer’s total dollar amount of sales of such services on behalf of each regulated investment company by a fraction, the numerator of which shall be the average of the number of shares owned by the regulated investment company’s shareholders domiciled in the commonwealth at the beginning of and at the end of the regulated investment company’s taxable year that ends with or within the taxpayer’s taxable year and the denominator of which shall be the average of the number of shares owned by the regulated investment company shareholders everywhere at the beginning of and at the end of the regulated investment company’s taxable year that ends with or within the taxpayer’s taxable year.
(ii) A separate computation shall be made to determine the sale for each regulated investment company, the sum of which shall equal the total sales assigned to the commonwealth.
(3) Nothing in this subsection shall limit the commissioner’s authority under subsection (k).
(j) If a corporation maintains an office, warehouse or other place of business in a state other than the commonwealth for the purpose of reducing its tax under this chapter, the commissioner shall, in determining the amount of taxable net income apportionable to the commonwealth, adjust the sales factor to properly reflect the amount which the factor ought reasonably to assign to the commonwealth.
(k) If the apportionment provisions of this section are not reasonably adapted to approximate the net income derived from business carried on within the commonwealth by any type of industry group, the commissioner may, by regulation, adopt alternative apportionment provisions to be applied to such an industry group in lieu of the foregoing provisions.
(l) In any case in which a purchasing corporation makes an election under section 338 of the Code, the target corporation shall be treated as having sold its assets for purposes of this section.
(m) The commissioner shall adopt regulations to implement subsections (d) to (i), inclusive.
SECTION 32. Section 38Z of said chapter 63, as so appearing, is hereby amended by striking out, in line 28, the figure “$6,000,000” and inserting in place thereof the following figure:- $8,000,000.
SECTION 33. Section 38BB of said chapter 63 is hereby amended by striking out subdivision (5), as amended by sections 231 and 232 of chapter 7 of the acts of 2023, and inserting in place thereof the following subdivision:-
(5) EOHLC may authorize up to $30,000,000 in credits annually under this section and subsection (q) of section 6 of chapter 62. EOHLC may authorize annually any credits under this section or said subsection (q) of said section 6 of said chapter 62 returned to EOHLC by a certified housing development project. The total amount of credits authorized during a year shall include: (1) credits granted during the year under this section or said subsection (q) of section 6 of chapter 62; and (2) carry forwards of credits from prior years under this section or said subsection (q) of section 6 of chapter 62, to the extent that such credit carry forwards are estimated by the commissioner of revenue to offset tax liabilities during the year. Any portion of the $30,000,000 annual cap not awarded by EOHLC in a calendar year shall not be applied to awards in a subsequent year. EOHLC shall provide the commissioner of revenue with any documentation that the commissioner deems necessary to confirm compliance with the annual cap and the commissioner shall provide a report confirming compliance with the annual cap to the secretary of administration and finance and the secretary of housing and livable communities.
SECTION 34. Section 38HH of said chapter 63, as appearing in the 2022 Official Edition, is hereby amended by inserting after the figure “31-33”, in line 18, the following words:- or other expansion industries the secretary of labor and workforce development identifies as critical to a regional labor market economy.
SECTION 35. Section 42B of said chapter 63, as so appearing, is hereby amended by adding the following subsection:-
(e) For the purposes of this section, a “manufacturing corporation” shall be a corporation that is engaged in manufacturing; provided, however, that in order to be engaged in manufacturing, the corporation shall be engaged, in substantial part, in transforming raw or finished physical materials by hand or machinery, and through human skill and knowledge, into a new product possessing a new name, nature and adapted to a new use.
Any operation manufacturing, in substantial part, value-added agricultural products shall be considered a manufacturing corporation.
A manufacturing corporation’s activities will be considered to be substantial if any 1 of the following 5 tests are met:
(1) 25 per cent or more of its gross receipts are derived from the sale of manufactured goods that it manufactures;
(2) 25 per cent or more of its payroll is paid to employees working in its manufacturing operations and 15 per cent or more of its gross receipts are derived from the sale of manufactured goods that it manufactures;
(3) 25 per cent or more of its tangible property is used in its manufacturing operations and 15 per cent or more of its gross receipts are derived from the sale of manufactured goods that it manufactures;
(4) 35 per cent or more of its tangible property is used in its manufacturing operations; or
(5) the corporation’s manufacturing activities are deemed substantial under relevant regulations promulgated by the commissioner.
In determining whether a process constitutes manufacturing, the commissioner will examine the facts and circumstances of each case.
SECTION 36. Section 2A of chapter 65C of the General Laws, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-
(a) A tax is hereby imposed upon the transfer of the estate of each person dying on or after January 1, 1997 who, at the time of death, was a resident of the commonwealth. The amount of the tax shall be equal to the credit for state death taxes that would have been allowable to a decedent’s estate as computed under section 2011 of the Code, as in effect on December 31, 2000, hereinafter referred to as the “credit”. If the federal gross estate of a person includes real or tangible personal property located outside of the commonwealth at the time of death, the tax shall be reduced by an amount equal to the proportion of such allowable credit as the value of such real or tangible personal property located outside of the commonwealth bears to the value of the entire federal gross estate wherever situated, as determined under section 2011 of the Code, as in effect on December 31, 2000.
SECTION 37. Said section 2A of said chapter 65C, as so appearing, is hereby further amended by adding the following 2 subsections:-
(f) For the estates of decedents dying on or after January 1, 2023, a credit shall be allowed against the tax imposed by subsections (a) and (b) equal to the amount of such tax; provided, however, that the credit shall not exceed $99,600.
(g) The estates of decedents dying on or after January 1, 2023 shall not be required to pay any tax under subsections (a) and (b) if the value of the federal taxable estate is not more than $2,000,000.
SECTION 38. Section 21 of chapter 138 of the General Laws, as so appearing, is hereby amended by striking out, in lines 20 and 21, the words “six per cent of alcohol by weight” and inserting in place thereof the following words:- 8½ per cent of alcohol by volume.
SECTION 39. Said section 21 of said chapter 138, as so appearing, is hereby further amended by striking out, in line 25, the word “six” and inserting in place thereof the following figure:- 8 ½.
SECTION 40. Sections 46, 48, 61, 63 and 124A of chapter 287 of the acts of 2014 are hereby repealed.
SECTION 41. Chapter 358 of the acts of 2020 is hereby amended by striking out sections 59, 61 and 112.
SECTION 42. Notwithstanding any general or special law to the contrary, in calendar year 2023, the executive office of housing and livable communities may authorize not more than $57,000,000 in credits under subsection (q) of section 6 of chapter 62 of the General Laws and section 38BB of chapter 63 of the General Laws. Any portion of this amount that is not authorized in calendar year 2023 shall be added to the amount the executive office of housing and livable communities may authorize in subsequent years under said subsection (q) of said section (6) of said chapter 62 and said section 38BB of said chapter 63.
SECTION 43. The executive office for administration and finance shall conduct a study on the feasibility of creating a program of advance quarterly payments to taxpayers for credits that the department of revenue estimates would be treated as allowed for a taxpayer under subsection (x) of section 6 of chapter 62 of the General Laws for a taxable year. The study shall include, but not be limited to: (i) an operational plan for how the department of revenue could establish and maintain such a program; (ii) a description of the processes by which the department could collect information from taxpayers and from other agencies to maximize the accuracy of the department’s estimate of the amount that would be treated as allowed for a taxpayer under said subsection (x) of said section 6 of said chapter 62 for a taxable year; (iii) a description of the options for maximizing participation in such a program by taxpayers who are eligible for credits under said subsection (x) of said section 6 of said chapter 62; (iv) an analysis of any other credits against tax included in said section 6 of said chapter 62 that the department could include in an advance quarterly payment program; (v) potential challenges to the establishment of such a program and strategies by which the department could address those challenges; (vi) any legislative recommendations to support the establishment of such a program, if applicable; and (vii) an estimate of the funds that would be necessary for the department to establish and maintain such a program, if applicable.
The executive office shall submit a report of its findings to the house and senate committees on ways and means not later than January 1, 2024.
SECTION 44. (a) Notwithstanding any general or special law to the contrary, the department of revenue shall analyze the potential impact of implementing an additional, elective entity-level tax of up to 4 per cent on a portion of qualified taxable income in the commonwealth of eligible pass-through entities defined in section 1 of chapter 63D of the General Laws, coupled with a refundable tax credit. The analysis shall consider: (i) the impacts on the commonwealth’s taxpayers and tax revenue; (ii) the feasibility of administering the additional elective tax; (iii) the feasibility of determining the portion of qualified income taxable in the commonwealth pursuant to this section based on: (A) an annual threshold tied to the threshold under Article XLIV of the Amendments of the Constitution; or (B) the consent of each qualified member to have a portion of the member’s share of qualified income taxable in the commonwealth subject to the additional tax; (iv) passthrough entity tax regimes in other states; and (v) the impact of any tax on qualified members with taxable income below the annual threshold under said Article XLIV.
(b) The department of revenue shall submit a report of its findings to the clerks of the senate and house of representatives, the joint committee on revenue and the senate and house committees on ways and means not later than February 1, 2024.
SECTION 45. Sections 19, 22 and 33 shall take effect on January 1, 2024.
SECTION 46. Section 24 shall apply to tax years beginning on or after January 1, 2024.
SECTION 47. Sections 27 to 29, inclusive, and sections 31 and 35 shall take effect on January 1, 2025.
SECTION 48. Sections 36 and 37 shall take effect for the estates of decedents dying on or after January 1, 2023.
SECTION 49. Except as otherwise specified, this act shall take effect for taxable years beginning on or after January 1, 2023.
Approved, October 4, 2023.