Tool | November 2017

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Map of Massachusetts

Not Tax-Friendly

The Bay State offers a couple of breaks to retirees. Massachusetts does not tax Social Security and most government employee pension income. But all other income is taxed at a flat rate of 5.15%. Property taxes run high, although there is a refundable tax credit available to eligible homeowners 65 or older. Massachusetts also has its own estate tax.

State Sales Tax

State levy of 6.25%. Most clothing and footwear priced at under $175 per item are exempt.

Income Tax Range

Massachusetts has a flat rate of 5.1% of federal adjusted gross income. State legislators are debating a constitutional amendment that would create a 4% surtax on all income over $1 million. The process of passing an amendment is lengthy, and a final decision may not be made until 2018.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Civil-service and Massachusetts state and local government pensions are exempt. Also exempt: pension income from other state or local governments that do not tax Massachusetts public pensions. Railroad Retirement benefits are exempt.


Taxable at ordinary income tax rates.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Taxable at ordinary income tax rates.

Private Pensions

Taxable at ordinary income tax rates.

Public Pensions

Civil service and state and local public pensions are fully exempt. Pension income from other state or local governments that do not tax Massachusetts public pensions are also exempt.

Property Taxes

Massachusetts does not have a general homestead exemption, but it does have a Homestead Act, which permits a homeowner who occupies a house as his or her principal residence to shield up to $500,000 in equity in that house from creditors.

The median property tax on Massachusetts' median home value of $388,900 is $4,080.

Tax breaks for seniors: Massachusetts homeowners and renters who are 65 or older may qualify to claim a refundable tax credit on their state income taxes to offset real estate taxes paid during the year on their principal home. For 2015, the taxpayer's total income cannot exceed $57,000 for a single filer, $71,000 for a head of household or $85,000 for taxpayers filing jointly. For homeowners, the value of the residence cannot exceed $693,000 for 2015. For 2015, the maximum credit was $1,070.

Some Massachusetts cities and towns offer a "senior citizen property tax work-off program," which allows seniors to do volunteer work for their local governments in exchange for a reduction in their property taxes. Senior homeowners age 60 or older must meet local program requirements to participate.

Vehicle Taxes

Sales tax is due. Massachusetts levies an annual excise tax on vehicles. The rate is $25 per $1,000 of assessed value, and the value is set by taking the car’s sticker price (MSRP) and discounting it based on the age of the vehicle. Example: A three-year-old car that sold for $30,000 would have a tax bill of $300.

Inheritance and Estate Taxes

Estates valued at more than $1 million are subject to estate tax. Tax rates range from 0.8% to 16%. There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity. Massachusetts has no inheritance tax.