Massachusetts uses a flat state income tax rate of 5% on most income, plus a 4% surtax on income over $1 million. This "millionaire's tax" was approved by voters in 2022 and brings the top rate to 9% for the highest earners.
Massachusetts Tax Rates
| Taxable Income | Tax Rate |
|---|---|
| $0 - $1,000,000 | 5% |
| Over $1,000,000 | 9% (5% + 4% surtax) |
The 4% surtax applies only to income exceeding $1 million (adjusted annually for inflation). Most workers pay the flat 5% rate. Based on Massachusetts Department of Revenue guidelines.
What You'll See on Your Paystub
A Massachusetts worker's paystub includes federal income tax withholding plus state deductions and mandatory insurance:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit |
| MA State Income Tax | 5% | Flat rate (9% over $1M) |
| MA Paid Family & Medical Leave | 0.88% | Split between employer and employee |
Massachusetts Paid Family and Medical Leave
Massachusetts requires contributions to its Paid Family and Medical Leave (PFML) program:
- Total contribution rate: 0.88% of wages
- Employers with 25+ employees: Employer pays 60% of medical leave portion
- Employee portion: Approximately 0.32% of wages
- Provides up to 26 weeks of paid leave for qualifying events
You'll see "MA PFML" on your paystub. This funds paid leave for bonding with a new child, caring for family members, or your own medical needs.
Massachusetts Deductions and Exemptions
Massachusetts allows certain deductions:
| Deduction Type | Amount (2026) |
|---|---|
| Personal Exemption (Single) | $4,400 |
| Personal Exemption (Married) | $8,800 |
| Dependent Exemption | $1,000 per dependent |
Massachusetts does not conform to the federal standard deduction. You claim personal exemptions instead, which provide a smaller tax benefit.
No Local Income Taxes
Massachusetts does not allow cities or towns to impose local income taxes. Your state withholding covers all Massachusetts income tax obligations.
Boston Metro Workers
Greater Boston is the economic heart of New England:
- Healthcare (Mass General Brigham, Beth Israel Lahey)
- Biotech and pharma (Cambridge/Kendall Square)
- Technology (Route 128 corridor)
- Financial services and asset management
- Higher education (Harvard, MIT, BU, Northeastern)
- No city income tax
Cambridge and Biotech
Cambridge is a global biotech hub:
- Moderna, Biogen, Vertex, and hundreds of biotech companies
- MIT and Harvard research drive innovation
- High salaries but high cost of living
- Significant equity compensation (stock options, RSUs)
Stock compensation is taxable in Massachusetts. RSUs are taxed when they vest, and stock options are taxed when exercised. Plan for significant withholding on equity income.
Route 128 and Tech
The Route 128 corridor has a strong tech presence:
- Legacy tech companies and startups
- Defense contractors (Raytheon)
- Many workers commute from New Hampshire
- Competitive salaries
Border State Workers
Massachusetts has complex relationships with neighbors:
| Situation | Tax Obligation |
|---|---|
| Live in MA, work in MA | MA tax on all income |
| Live in MA, work in NH | MA tax on all income (residents taxed worldwide) |
| Live in NH, work in MA | MA tax on MA-source income |
| Live in RI, work in MA | MA tax on MA income; RI gives credit |
| Live in CT, work in MA | MA tax on MA income; CT gives credit |
Massachusetts taxes residents on worldwide income. If you live in Massachusetts but work in New Hampshire, you still owe Massachusetts tax on those earnings.
Remote Work Considerations
Remote work has complicated taxation for Massachusetts:
- Massachusetts generally taxes income based on where work is performed
- During COVID, MA attempted to tax remote workers in other states
- Court challenges have limited this practice
- If you work remotely from NH for a MA employer, the income is generally not taxable by MA
Keep records of where you physically work. If you're a New Hampshire resident working remotely for a Massachusetts company, document that you work from home in NH.
Retirement Income
Massachusetts taxes most retirement income:
- Social Security benefits are fully exempt
- Public pension income (federal, state, military) is exempt
- Private pension income is taxable
- 401(k) and IRA distributions are taxable
Massachusetts exempts public pensions (government and military) but taxes private retirement income. This creates different treatment for retirees depending on their career.
Military Personnel
Massachusetts has limited military presence:
- Hanscom Air Force Base
- Various National Guard facilities
- Active duty pay follows residence-based rules
- Military retirement is fully exempt from MA tax
Massachusetts vs. Neighboring States
| State | Tax Structure | Top Rate |
|---|---|---|
| Massachusetts | Flat + Surtax | 5% (9% over $1M) |
| New Hampshire | None | 0% |
| Rhode Island | Progressive | 5.99% |
| Connecticut | Progressive | 6.99% |
| Vermont | Progressive | 8.75% |
| New York | Progressive + NYC | 10.9% + NYC |
Comparing Take-Home Pay
Here's how a $100,000 annual salary compares in the region:
| State | Effective Rate | Annual State Tax |
|---|---|---|
| Massachusetts | ~4.8% | ~$4,800 |
| New Hampshire | 0% | $0 |
| Rhode Island | ~4.5% | ~$4,500 |
| Connecticut | ~5.5% | ~$5,500 |
Massachusetts's flat 5% rate is predictable and competitive with neighboring states (except NH). The state's high salaries often offset the tax burden.
Key Takeaways
- Massachusetts has a flat 5% income tax rate for most workers
- 4% surtax applies to income over $1 million (9% total)
- No local income taxes anywhere in the state
- Paid Family & Medical Leave (PFML) appears on paystubs (~0.32% employee share)
- Social Security and public pensions are exempt; private retirement is taxable
- Residents owe MA tax even if working in NH; NH residents working in MA owe MA tax