A lawmaker on Beacon Hill wants to raise the state's income tax on income earned under $1 million..State Representative Erika Uyterhoeven (D-Somerville), a self-identified democratic socialist, proposed a bill (HD.989) to raise the state's income tax rate by one percentage point -- from 5 percent to 6 percent.Massachusetts Fiscal Alliance spokesman Paul Craney said the bill embodies what he thinks is wrong with Beacon Hill.“The only surprising thing about this is that it’s not higher," Craney told NewBostonPost via email. "The mentality at the State House is to tax their way out of a spending problem. The state is on a crash course.”No projections exist showing how much revenue this tax increase would raise.Massachusetts previously had a state income tax closer to Uyterhoeven's proposal, but voters changed it.In 2000, Bay State voters also approved a decrease in the state income tax from 5.9 percent to 5 percent. About 59 percent of voters supported it while 41 percent opposed it.However, lawmakers decided that instead of immediately giving the voters what they wanted, the state income tax would drop gradually by small increments — 0.05 percentage points per year — if certain conditions were met. Due to this provision, the state income tax didn't reach 5 percent until January 1, 2020 — nearly 20 years after voters approved it.Thanks to the anti-tax side, people can voluntarily pay a higher rate, if they wish. Chip Ford, formerly of Citizens for Limited Taxation, proposed an idea in December 2000: a box people could check on their taxes to indicate they wanted to pay the older rate.In 2001, the House minority leader of the time, Fran Marini (R-Hanson), proposed the two-option system as a state budget amendment. The state House of Representatives adopted it on May 10, 2002, according to State House News Service. At that time, the state income tax rate was 5.85 percent, so the voluntary check box on state income tax returns lets people pay the 5.85 percent rate.Well under 1 percent of the state chooses to pay the higher rate, as NewBostonPost has previously reported.If enacted, Uyterhoeven's bill would mark the third time in the last few years that the Bay State has effectively increased its income tax.Massachusetts voters approved a 4 percent surtax on income earned over $1 million at the ballot box in 2022; 52 percent supported the proposal, while 48 percent opposed it. That put the top tax bracket in Massachusetts at 9 percent.While that tax increase didn't affect most Bay Staters, a smaller one had a broader impact. The fiscal year 2025 budget included a provision that repealed a Massachusetts bank interest deduction.Previously, if state residents earned bank interest from a bank that had at least one location in Massachusetts, they could deduct up to $100 ($200 for couples) of those earnings. That translated to up to $5 for individuals and up to $10 for couples. People with high-yield savings accounts and certificates of deposit were most likely to qualify for that deduction.Tax year 2024 is the first year where people cannot use the bank interest deduction; these are the tax returns that are due by Tuesday, April 15, 2025.Uyterhoeven could not be reached for comment on Sunday.
A lawmaker on Beacon Hill wants to raise the state's income tax on income earned under $1 million..State Representative Erika Uyterhoeven (D-Somerville), a self-identified democratic socialist, proposed a bill (HD.989) to raise the state's income tax rate by one percentage point -- from 5 percent to 6 percent.Massachusetts Fiscal Alliance spokesman Paul Craney said the bill embodies what he thinks is wrong with Beacon Hill.“The only surprising thing about this is that it’s not higher," Craney told NewBostonPost via email. "The mentality at the State House is to tax their way out of a spending problem. The state is on a crash course.”No projections exist showing how much revenue this tax increase would raise.Massachusetts previously had a state income tax closer to Uyterhoeven's proposal, but voters changed it.In 2000, Bay State voters also approved a decrease in the state income tax from 5.9 percent to 5 percent. About 59 percent of voters supported it while 41 percent opposed it.However, lawmakers decided that instead of immediately giving the voters what they wanted, the state income tax would drop gradually by small increments — 0.05 percentage points per year — if certain conditions were met. Due to this provision, the state income tax didn't reach 5 percent until January 1, 2020 — nearly 20 years after voters approved it.Thanks to the anti-tax side, people can voluntarily pay a higher rate, if they wish. Chip Ford, formerly of Citizens for Limited Taxation, proposed an idea in December 2000: a box people could check on their taxes to indicate they wanted to pay the older rate.In 2001, the House minority leader of the time, Fran Marini (R-Hanson), proposed the two-option system as a state budget amendment. The state House of Representatives adopted it on May 10, 2002, according to State House News Service. At that time, the state income tax rate was 5.85 percent, so the voluntary check box on state income tax returns lets people pay the 5.85 percent rate.Well under 1 percent of the state chooses to pay the higher rate, as NewBostonPost has previously reported.If enacted, Uyterhoeven's bill would mark the third time in the last few years that the Bay State has effectively increased its income tax.Massachusetts voters approved a 4 percent surtax on income earned over $1 million at the ballot box in 2022; 52 percent supported the proposal, while 48 percent opposed it. That put the top tax bracket in Massachusetts at 9 percent.While that tax increase didn't affect most Bay Staters, a smaller one had a broader impact. The fiscal year 2025 budget included a provision that repealed a Massachusetts bank interest deduction.Previously, if state residents earned bank interest from a bank that had at least one location in Massachusetts, they could deduct up to $100 ($200 for couples) of those earnings. That translated to up to $5 for individuals and up to $10 for couples. People with high-yield savings accounts and certificates of deposit were most likely to qualify for that deduction.Tax year 2024 is the first year where people cannot use the bank interest deduction; these are the tax returns that are due by Tuesday, April 15, 2025.Uyterhoeven could not be reached for comment on Sunday.
