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.
Courage at Work posted on Sep 1
“I was amazed that Mark and so many senior staffers took time out of their busy and hectic schedules to be supportive of me and the ALS cause,” she said. “It proves that no matter how challenging work is, there’s always time to show a little love.”
VIDEO: Introducing MassTaxConnect! posted on Aug 24
Take a look at our newest video introducing you to MassTaxConnect, our new, modernized online tax system. Hear from Commissioner Mark Nunnelly and several DOR employees about what to expect come November 30th when we launch MassTaxConnect for business taxpayers, practitioners, and professionals. Get an …Continue Reading VIDEO: Introducing MassTaxConnect!
What’s New with MassTaxConnect? posted on Aug 13
MassTaxConnect for Massachusetts Business Taxpayers Available November 30, 2015! Things are about to get easier and faster for Massachusetts business taxpayers. MassTaxConnect will replace WebFile for Business later this year and will feature the best of what WFB offers plus state-of-the-art enhancements to make tax …Continue Reading What’s New with MassTaxConnect?