Effective Jan. 1, the state's corporate tax rate has dropped from 8.75 percent to 8.25 percent, marking the second year in a row the rate has declined. An estimated 35,000 Massachusetts-based businesses will benefit from this reduction, making it easier for companies to expand and hire right here in the Commonwealth.
On Jan. 1, 2010, the corporate tax rate declined from 9.50 percent to 8.75 percent. The curent rate of 8.25 percent is scheduled to decline again on Jan. 1, 2012, to 8.0 percent.
"Our number one priority is job creation and continued economic growth," said Governor Deval Patrick. "The reduction in the corporate tax rate puts real money into the hands of Massachusetts corporations, providing resources that can be used for job creation and business development in communities across the Commonwealth."
DOR estimates the tax relief to corporations will amount to $411 million spread over fiscal years 2010, 2011 and 2012. In FY10, the reduced rate saved corporations $78.2 million, while in the current fiscal year DOR estimates a savings of $148.5 million. In FY12, DOR estimates corporate taxpayers will save $185.1 million from the rate reduction.
These rate reductions are the result of corporate tax reform signed into law by Gov. Patrick in July 2008. The law set in motion corporate rate reductions at the same time that the state adopted combined reporting and check-the-box tax reforms, both of which were designed to close loopholes that multi-state corporations have used to shelter income from the state's corporate income tax.
The result was that Massachusetts-based businesses are paying a lower corporate tax while several thousand multi-state or multi-national companies are also paying at a lower rate, but reporting more in taxable income because they can no longer shift taxable profits to low-tax or no-tax jurisdictions.
"Multi-state corporations are now paying their fair share of Massachusetts taxes, and for 35,000 Massachusetts-based businesses, corporate tax reform is delivering a lower rate," said Secretary for Administration and Finance Jay Gonzalez. "Even in the midst of unprecedented fiscal challenges, we are committed to following through with corporate tax reform and reducing costs for businesses so they can grow and create jobs in Massachusetts."