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Official Tax Guide

Massachusetts Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Massachusetts state taxes. Income tax (5% (9% on Capital Gains)), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Massachusetts

Moving to Massachusetts offers rich history, top-tier education, and vibrant cities like Boston. However, understanding the tax landscape is crucial for financial planning. This guide provides a comprehensive overview of Massachusetts taxes for 2025.

Disclaimer: This guide is for informational purposes only and does not constitute financial or legal advice. Tax laws change frequently; always consult a Certified Public Accountant (CPA) or tax professional for advice specific to your situation.

1. Income Tax

Massachusetts utilizes a flat tax structure for most income, making it relatively simple compared to states with complex progressive brackets.

  • Standard Income Tax Rate: 5% on most types of income (wages, interest, dividends, and business income).
  • Short-Term Capital Gains: Taxed at a higher rate of 9%. This applies to assets held for one year or less (e.g., stocks, bonds, and cryptocurrency).
  • Long-Term Capital Gains: Generally taxed at the standard 5% rate if the asset is held for more than one year.

Key Considerations for New Residents

  • No "Carry-Forward" Losses: Unlike the federal system, Massachusetts generally does not allow the carry-forward of capital losses to future years.
  • Residency Status: You are considered a full-year resident if you maintain a permanent place of abode in Massachusetts and spend more than 183 days in the state during the tax year.

2. Sales Tax

The statewide sales tax is moderate compared to some neighboring states, but it applies to a broad range of goods and services.

  • State Rate: 6.25%
  • Local Taxes: Massachusetts does not allow cities or towns to levy additional local sales taxes. The rate is uniform across the state at 6.25%.

What is Taxable?

  • Tangible Personal Property: Most retail goods (clothing, electronics, furniture).
  • Meals: Restaurant meals and prepared foods are subject to the 6.25% tax.
  • Lodging: Hotel rooms and short-term rentals (like Airbnb) are taxable.

Exemptions

  • Clothing: Items under $175 per item are exempt from sales tax. Items over $175 are taxable on the amount exceeding $175.
  • Groceries: Most grocery food items are exempt from sales tax.
  • Other Exemptions: Prescription drugs, newspapers, and some services are generally exempt.

3. Property Tax

Property taxes in Massachusetts are administered at the local level (by cities and towns) and are a primary source of revenue for municipalities.

  • General Context: Massachusetts property tax rates vary significantly by municipality. While there is no state-wide rate, they are generally higher than the national average.
  • Typical Range: Effective tax rates (total tax paid divided by market value) typically range from 0.8% to 1.5%, though some areas may be higher.
  • Assessment: Property taxes are based on the assessed value of the property, which is determined by local assessors.

Residential Exemption (Boston & Select Cities)

Some cities, notably Boston, offer a residential exemption that reduces the taxable value of a primary home for owner-occupants. This effectively lowers the tax bill for qualifying residents.

4. Other Taxes

Beyond income, sales, and property taxes, new residents should be aware of the following:

  • Gas Tax: Massachusetts imposes a tax on gasoline. As of 2025, the rate is approximately 24 to 27 cents per gallon (often adjusted annually for inflation).
  • "Sin" Taxes:
    • Alcohol: Excise taxes apply to alcohol; however, these are generally embedded in the retail price rather than added at the register.
    • Tobacco: Cigarettes are taxed at $3.51 per pack. Other tobacco products are taxed at 75% of the wholesale price.
    • Cannabis: A state excise tax of 10.75% applies to retail marijuana sales, in addition to the standard 6.25% sales tax.
  • Inheritance/Estate Tax: Massachusetts has an Estate Tax, not an inheritance tax. It applies to estates valued over $2,000,000. This is distinct from the federal estate tax and is a significant consideration for estate planning.

5. Retiree Taxes

Massachusetts offers several exemptions that make it relatively friendly for retirees.

  • Retirement Income: Up to $14,040 (for tax year 2024, subject to inflation adjustment in 2025) of retirement income is exempt from state income tax for residents aged 65 or older. This includes income from pensions, annuities, and IRAs.
  • Social Security: Social Security benefits are not taxed by the state of Massachusetts.
  • Senior Circuit Breaker Credit: A tax credit is available for senior citizens with low-to-moderate income who own or rent their primary residence.

6. Comparison to Neighbors

How does Massachusetts stack up against its New England neighbors?

  • New Hampshire:
    • Income: No tax on earned income (wages). However, NH taxes interest and dividends (though this is being phased out).
    • Sales: No sales tax.
    • Property: Generally high property taxes.
    • Verdict: NH is attractive for income earners but lacks sales tax revenue for services.
  • Rhode Island:
    • Income: Progressive tax (top rate 5.99%).
    • Sales: 7% (higher than MA).
    • Verdict: Generally slightly higher tax burden overall compared to Massachusetts.
  • Connecticut:
    • Income: Progressive tax (top rate 6.99%).
    • Sales: 6.35%.
    • Verdict: Higher income tax rates for higher earners compared to MA's flat 5%.
  • Vermont:
    • Income: Progressive tax (top rate 8.75%).
    • Sales: 6%.
    • Verdict: Higher income tax burden, especially for high earners.

Summary: Massachusetts offers a stable, flat 5% income tax rate (with a higher 9% rate on short-term capital gains) and a moderate sales tax. While property taxes can be high, the lack of local sales tax variations and generous retirement income exemptions provide a balanced tax environment for many residents.