Effective January 1, 2010, the corporate tax rate in Massachusetts will drop from 9.5 percent to 8.75 percent, while the financial institution tax rate will drop from 10.5 percent to 10 percent.
Those reductions, combined with the effective lowering of the tax rate for S corporations, will deliver about $56 million in tax savings to businesses in fiscal year 2010.
The reductions are scheduled to continue in tax years 2011 and 2012. The corporate rate is scheduled to go down to 8.25 percent in 2011 and 8 percent in 2012, while the financial institution tax rate is scheduled to drop to 9.5 percent in 2011 and 9 percent in 2012.
How, in the middle of a revenue downturn, is it possible to reduce business tax rates?
You may recall that Gov. Patrick and the Legislature created a tax code study commission in 2007. The commission's recommendations led to reforms in the corporate tax code signed in July 2008, most importantly, the introduction of combined reporting and so-called "check-the-box" reform. Combined reporting is designed to stop corporations from shifting taxable profits to low-tax or no-tax jurisdictions by requiring them to combine the reporting of profits from all locales and then to apportion a share of the total to Massachusetts. Check-the-box means corporations can no longer choose a tax status for Massachusetts that is different from the one they choose for the IRS.
But part of the new law was also a reduction in corporate tax rates. The argument was that while large, multi-state corporations could wind up pay more as a result of these reforms –even with a reduced tax rate — Massachusetts-based businesses would get a boost from lowering the rate. And that is about to happen. Some 35,000 or so Massachusetts-based businesses will see tax rate reductions.
Something worth celebrating at the start the New Year.
DOR + Social Media — #CheckUsOut posted on Jul 28
State tax administration might not deliver such seismic news events as LeBron’s eagerly-awaited announcement of his return to his old Cleveland team, but knowing what’s going on at any given moment in the tax world could save you some time and effort, and maybe …Continue Reading DOR + Social Media — #CheckUsOut
Commute to work on the T, Commuter Rail or Turnpike? You may be eligible for a Massachusetts Commuter Deduction on your tax return! posted on Jul 16
The Commuter Deduction was enacted by the Legislature to cover specific commuter expenses. To help understand the deduction, the Department of Revenue’s DOR University has released an e-learning module explaining what qualifies for a deduction, real-life examples and how you can claim your commuter deduction …Continue Reading Commute to work on the T, Commuter Rail or Turnpike? You may be eligible for a Massachusetts Commuter Deduction on your tax return!
DOR Offers FREE E-Learning Course on Fraternal Organization Tax Responsibilities posted on Jul 9
Help get the word out! The Department of Revenue’s online DOR University has recently developed a new free e-learning course on the tax responsibilities of fraternal organizations. Fraternal organizations are considered a type of Chapter 180 Corporation, which are formed for charitable or other purposes. …Continue Reading DOR Offers FREE E-Learning Course on Fraternal Organization Tax Responsibilities