Massachusetts House Speaker unveils $654 million tax cut plan

• Ronald Mariano, Speaker of the Massachusetts Democratic House of Representatives, on Tuesday unveiled a $654 million tax cut proposal aimed at providing relief to seniors, renters, businesses and wealthier homeowners.
• The plan would increase to $1.1 billion by 2026.
• “This whole competitiveness issue is real as we face challenges from states like North Carolina,” Mariano said, noting the ongoing exodus of Americans from tax-heavy blue states.

Massachusetts House Speaker Ronald Mariano on Tuesday unveiled a $654 million tax cut proposal for fiscal 2024 aimed at helping seniors, renters, businesses and wealthier homeowners while also rewriting the law , which sent back about $3 billion to taxpayers last year.

The plan, which would increase to $1.1 billion in tax breaks for fiscal 2026, includes a number of proposals that the Democrat spokesman said will help make Massachusetts more affordable and competitive.

“We wanted to have something that we believe would affect all segments of the economy, all segments of our constituency with some fairness and some justice,” Mariano told reporters Tuesday.

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The package would change a number of tax policies, including raising the estate tax threshold from $1 million to $2 million.

Massachusetts is one of only 12 states with an inheritance tax and, along with Oregon, has the lowest estate tax exemption threshold in the country. Democratic Gov. Maura Healey, who released a $742 million tax break package in February, would eliminate the tax on up to $3 million worth of estates.

The House proposal would also make changes to the 1986 law aimed at limiting the growth of state tax revenues and returning surpluses to taxpayers. The law triggered nearly $3 billion in refunds last year.

The credit is applied proportionately to personal income tax liability, resulting in higher credits for those who paid more taxes. The bill would credit each taxpayer an equal amount.

“This whole package is based on the success of the economy,” he said of the 1986 law. “It’s only triggered when the economy is very, very successful and we wanted everyone to share in that success.”

The House proposal would also combine the child care expense credit with the household dependent credit to create a refundable credit of $600 per dependent, doubling the senior circuit breaker tax credit from $1,200 to $2,400 to increase the rent deduction cap from $3,000 to $4,000 and increase the income tax credit from 30% to 40% of the federal credit.

The package proposes reducing the tax rate on short-term capital gains from 12% to 5% and phasing this change in over two years.

The bill would also make changes to the state’s stabilization fund — also known as the Rainy Day Fund.

According to current legislation, if the amount remaining in the State Stabilization Fund at the end of a fiscal year exceeds 15% of projected revenue, the excess funds must be transferred to taxpayers through a one-off increase in the personal allowance. The bill would adjust the cap to 25.5%, allowing the state’s savings account to keep more money.

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Mariano said some of the tax changes should attract workers and encourage people already living and working in the state not to flee.

“This whole competitiveness issue is real because we face challenges from states like North Carolina,” he said.

James Rooney, president and CEO of the Greater Boston Chamber of Commerce, said the group is pleased with the tax code changes that have put employers at a disadvantage compared to other states.

“Massachusetts needs to take proactive, meaningful actions to ensure employers and people start, stay and thrive here,” he said.

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The House of Representatives is expected to vote on the proposal on Thursday. The bill then goes to the Senate, which writes its own tax package before drafting a compromise proposal that it sends back to the governor for signature.