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State Income Tax to Drop for Sixth Time This Decade

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BOSTON — Massachusetts residents are getting some income tax relief in the new year with individual rate dropping to its lowest in years thanks to a state law passed nearly two decades ago. 
 
Gov. Charlie Baker on Friday said the state's Part B individual income tax rate will be reduced from 5.05 percent to 5 percent effective Jan. 1, 2020. This upcoming tax cut represents the conclusion of the statutory process laid out in a 2002 state law to lower the income tax rate to 5 percent based on certain state revenue milestones, and will return $88 million in fiscal 2020 and approximately $185 million in fiscal 2021 to taxpayers.
 
"Starting in January, the income tax rate will be the lowest it has been in decades, allowing Massachusetts taxpayers to be able to keep more of their hard-earned money," said Baker in a statement. "Our administration is working to keep the commonwealth's economy strong while maintaining fiscal discipline and now we are finally making happen what voters called for almost 20 years ago."
 
The 2002 law provides that for each tax year in which certain inflation-adjusted baseline revenue growth requirements are met, the income tax rate will be reduced by increments of 0.05 percentage points until the rate reaches 5 percent. The legislation replaced a tax rate reduction schedule that had passed by ballot initiative in November 2000.
 
"We are pleased that the necessary revenue benchmarks have been met and the income tax rate is being fully reduced to 5 percent," said Lt. Gov. Karyn Polito. "This tax cut reflects steady economic growth and will provide a well-deserved break to Massachusetts workers."
 
Administration and Finance Secretary Michael J. Heffernan said the reduction was incorporated into the assumptions for fiscal 2021 so there is no change in our revenue outlook.
 
Part B income includes wages, salary, and many other forms of income, including self-employment income; business, professional and farm income; S corporation distributions; and rental income from personal property. The rate associated with Part B income is also applied to several other income categories, including interest and dividends and most long-term capital gains.
 
There are five revenue tests that determine whether a rate reduction is required, beginning with growth in revenue over the previous fiscal year, and including a series of four additional growth measures. If any one of the incremental tests is not met, the rate reduction does not proceed. With DOR's certification of the most recent revenue measure, all five tests in 2019 have now been met.
 
The rate reduction was last triggered on Jan. 1, 2019, when it dropped from 5.10 percent to 5.05 percent. Previous rate reductions included:
  • Jan. 1, 2012 (rate reduced from 5.3 percent to 5.25 percent)
  • Jan. 1, 2014 (rate reduced from 5.25 percent to 5.2 percent)
  • Jan. 1, 2015 (rate reduced from 5.2 percent to 5.15 percent)
  • Jan. 1, 2016 (rate reduced from 5.15 percent to 5.10)
By statute, the state charitable deduction will also be re-instituted effective the following tax year, or Jan. 1, 2021, because of this income tax rate reduction. The estimated cost is $64 million in fiscal 2021 due to this change, and approximately $300 million on a full fiscal year basis.

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Guest Column: Statement on Sentencing in Steele-Knudslien Murder

Guest Column
As the region's longest-serving LGBTQ organization, Berkshire Stonewall Community Coalition has closely followed the case of the murder of Christa Steele-Knudslien, the North Adams resident and founder of the Miss Trans New England Pageant. 
 
Today [Thursday], her murderer has been sentenced to life in prison with eligibility for parole after serving 25 years. In the two years since we lost Christa, the community has rallied around her memory and inspiration. In North Adams, a grassroots task force was founded in reaction to her death and those of other residents killed by their partners. This led to the Berkshire County Domestic and Sexual Violence Task Force, a coalition of community agencies such as Elizabeth Freeman Center, law enforcement, and the court system, currently working to end domestic violence in Berkshire County for good. 
 
On the brighter side, over the past two years the Berkshire Pride Festival has grown to be a major event, celebrating and uplifting the trans community that Christa cared about so much. An annual award for local LGBTQ leaders has been established in her name and with her spirit. Clothing swaps have happened where Berkshire residents shared the joy and beauty of being trans, the same goal Christa had in mind when founding her pageant. Rainbow Seniors and the Berkshire Trans Group expanded their meetings, providing support and connection from Williamstown to Great Barrington.
 
Politically, a local contingent spent hours organizing and fighting to pass the state ballot measure last year that made Massachusetts the first state to successfully defend an attack on a trans rights bill, setting a strong precedent for human rights across the nation. And we mourned, as a community, at each Trans Day of Remembrance, a national event that struck home when we read Christa's name amongst those murdered.
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