Massachusetts’ House of Representatives passed a hotly debated series of tax cuts this week.
Following months of legislative back-and-forth on the package’s provisions, state representatives voted 55-1 Wednesday to pass a series of tax cuts expected to provide $561 billion in breaks across its first year.
The bill has seen revision after revision since Gov. Maura Healey first pitched it in February with her fiscal 2024 budget proposal.
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Debate on the plan continued past the June 30 close of the fiscal year, requiring lawmakers to cleave the relief package away from the state’s general budget to avoid a government shutdown.
House Speaker Ron Mariano said the package provided “an awful lot of tax credits” to a wide array of state taxpayers, while Senate President Sen. Karen Spilka called it “the largest bipartisan tax relief proposal in over a generation,” in a recent press conference.
The final product maintains many of the breaks Healey called for, albeit at a smaller price tag.
Under the new plan, state residents across income ranges will see a total of $561 million in breaks in 2024, expected to increase to $1 billion by 2027 — a reduction from the $742 million for the first year originally proposed by the governor.
The priciest piece of Healey’s proposed relief package, a bump of the state’s child tax credit from $180 to $600, which would have cost $458 million, has been dialed back to an increase to $310 for 2023, and $440 for 2024 and beyond.
The new plan eliminates the state’s tax on estates smaller than $2 million. Healey had called for a $3 million cutoff.
The Massachusetts House also agreed on a 3.5% reduction in the state’s short-term capital gains tax, to 8.5% from 12%. The new rate is still higher than the 5% sought by the governor, settled on after the provision became a focus of negotiations in April after the State Department of Revenue announced in its yearly report that annual tax revenue collection fell by 4.7% in fiscal year 2023, linked in large part to a reduction in capital gains tax revenues.
Lawmakers did follow suit with the governor’s proposal in doubling a senior circuit breaker tax credit, increasing the cap on tax deductions for rent $3,000 to $4,000, and reforming a state tax rebate system that returns excess revenues to taxpayers in proportion to what they paid in favor of a flat rebate.
The plan now waits for a vote from a supportive state Senate before making its way to the governor’s desk, where it’s expected to be approved without issue.