Massachusetts Millionaire’s Tax

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On Election Day, November 8th, Massachusetts voters approved Question 1 to amend the state constitution and establish an additional 4% surtax on taxable income in excess of $1 million dollars.

Millionaire’s Tax Facts

  1. This additional income tax will be effective for tax years beginning January 1, 2023, which will be reported on returns due in April 2024.
  2. The $1,000,000 taxable income threshold will be adjusted annually for inflation using the same method that the IRS follows.
  3. Only the taxable income that exceeds $1,000,000 is subject to the additional 4%. For example, if your Massachusetts taxable income is $1,500,000 then $1,000,000 will be subject to tax at 5% and $500,000 will be subject to tax at 9%.
  4. This is a tax on income and not the value of a particular asset. So, if your 401(k) or IRA has a value over $1,000,000 this does not matter unless your annual distribution exceeds this amount.
  5. Similarly, only the taxable gain from the sale of a home or business would be subject to this tax, and not the gross selling price.

We expect more information from the Department of Revenue in the coming weeks.

How May We Help?

There are several situations that may subject you to this tax. Please contact your AAFCPAs Tax Advisor to discuss your situation. We have proactive tax planning strategies to mitigate the impact of this new 4% surtax on income greater than $1,000,000, such as income spreading, expense deferral, entity structure, and more.

If you have questions, please contact Ernest Carruthers, CPA, MST at 774.512.4122, ecarruthers@nullaafcpa.com; Dan Seaman, CPA, at 774.512.4025, dseaman@nullaafcpa.com; or your AAFCPAs Partner.

AAF Wealth Management is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where AAF Wealth Management and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by AAF Wealth Management unless a client service agreement is in place.


About the Authors

Daniel Seaman

Daniel Seaman, CPA

Dan is a leader in AAFCPAs’ Tax Practice advising select clients, including high-net-worth individuals along with their families and business interests. He works extensively with AAF Wealth Management clients, helping to ensure the seamless execution of their holistic financial plans. He navigates the intricacies of compliance, taxation, wealth optimization, asset protection & privacy. Since joining the firm in 2007, Dan has embraced AAFCPAs’ integrated service model as key to client success. He recognizes that this combination …
Ernest Carruthers

Ernest Carruthers, CPA, MST

Ernie provides proactive tax planning & compliance solutions for high-net-worth individuals, families, and trusts. He engages AAFCPAs’ clients in discussions to identify evolving personal circumstances and goals and determines how these impact short and long-term strategic tax planning efforts. He is fully committed to staying on top of the constant changes to federal and state tax codes to ensure clients do not have to pay a penny more than what is required. Ernie helps clients anticipate …