Accountants in Massachusetts say high taxes are still driving people and businesses out of the state..A group representing wealthy residents renewed their push for tax changes this week. The group wants to fix what it sees as several problems, in order to reduce the number of people leaving the Bay State.A new report from the Massachusetts Society of CPAs says 70 percent of certified public accountants had at least one client move their official tax home out of Massachusetts last year. Most of them left to find lower taxes and cheaper places to live.At the start of 2025, 27 percent of business clients told their certified public accountant they were thinking about leaving the state. That’s up from 22 percent in 2023.The top things hurting business growth in Massachusetts, according to the report, are the sting tax, the state income tax rate, and the estate tax.“This year’s survey echoes what we hear regularly from firms and financial leaders across the state: Massachusetts is losing its competitive edge,” Zach Donah president and chief executive officer of the Massachusetts Society of CPAs said in a press release. “While the findings in this report are concerning, what’s even more troubling is what’s not captured, the individuals and businesses who won’t ever consider Massachusetts because of policies that make us an outlier. State leaders have a real opportunity to build on the momentum from the 2023 tax reform initiative to position Massachusetts for long-term success.” MassCPAs want the state to get rid of or change the sting tax. It currently hits S-corporations with an extra 2 percent excise tax if they make between $6 million and $9 million annually; it increases to 3 percent if they make more.The group says those income levels haven’t been updated since the 1980s. Their report says more small businesses are getting hit by this tax, even though it was supposed to help small businesses and make things fair between big S-corporations and C-corporations.S-corporations are smaller businesses that pass their profits to owners to avoid double taxation, unlike C-corporations, which pay corporate taxes and then get taxed again when profits go to shareholders. The sting tax was meant to level the playing field between the two, but MassCPAs says it's now unfair to many small businesses."The recent addition of a 4% surtax has further compounded the issue, pushing many S-corporation shareholders into a tax burden that exceeds Massachusetts' s corporate tax rate of 8%, directly contradicting the law's original intent," the report says. "This additional tax on S-corporations acts as a significant deterrent to business growth and investment in the Commonwealth."Additionally, MassCPAs wants Massachusetts to increase its estate tax threshold from $2 million to $5 million to help the Commonwealth retain what it calls "high-net-worth individuals." Massachusetts Governor Maura Healey signed legislation that increased the threshold from $1 million to $2 million in 2023, but MassCPAs wants more."To prevent continued outmigration of wealth and investment, Massachusetts must remain proactive in modernizing its estate tax policies," the report says. "Raising the exemption further and indexing it for inflation would make the state a more attractive place to live, retire, and pass down generational wealth, ensuring long-term economic stability and competitiveness."
Accountants in Massachusetts say high taxes are still driving people and businesses out of the state..A group representing wealthy residents renewed their push for tax changes this week. The group wants to fix what it sees as several problems, in order to reduce the number of people leaving the Bay State.A new report from the Massachusetts Society of CPAs says 70 percent of certified public accountants had at least one client move their official tax home out of Massachusetts last year. Most of them left to find lower taxes and cheaper places to live.At the start of 2025, 27 percent of business clients told their certified public accountant they were thinking about leaving the state. That’s up from 22 percent in 2023.The top things hurting business growth in Massachusetts, according to the report, are the sting tax, the state income tax rate, and the estate tax.“This year’s survey echoes what we hear regularly from firms and financial leaders across the state: Massachusetts is losing its competitive edge,” Zach Donah president and chief executive officer of the Massachusetts Society of CPAs said in a press release. “While the findings in this report are concerning, what’s even more troubling is what’s not captured, the individuals and businesses who won’t ever consider Massachusetts because of policies that make us an outlier. State leaders have a real opportunity to build on the momentum from the 2023 tax reform initiative to position Massachusetts for long-term success.” MassCPAs want the state to get rid of or change the sting tax. It currently hits S-corporations with an extra 2 percent excise tax if they make between $6 million and $9 million annually; it increases to 3 percent if they make more.The group says those income levels haven’t been updated since the 1980s. Their report says more small businesses are getting hit by this tax, even though it was supposed to help small businesses and make things fair between big S-corporations and C-corporations.S-corporations are smaller businesses that pass their profits to owners to avoid double taxation, unlike C-corporations, which pay corporate taxes and then get taxed again when profits go to shareholders. The sting tax was meant to level the playing field between the two, but MassCPAs says it's now unfair to many small businesses."The recent addition of a 4% surtax has further compounded the issue, pushing many S-corporation shareholders into a tax burden that exceeds Massachusetts' s corporate tax rate of 8%, directly contradicting the law's original intent," the report says. "This additional tax on S-corporations acts as a significant deterrent to business growth and investment in the Commonwealth."Additionally, MassCPAs wants Massachusetts to increase its estate tax threshold from $2 million to $5 million to help the Commonwealth retain what it calls "high-net-worth individuals." Massachusetts Governor Maura Healey signed legislation that increased the threshold from $1 million to $2 million in 2023, but MassCPAs wants more."To prevent continued outmigration of wealth and investment, Massachusetts must remain proactive in modernizing its estate tax policies," the report says. "Raising the exemption further and indexing it for inflation would make the state a more attractive place to live, retire, and pass down generational wealth, ensuring long-term economic stability and competitiveness."
