Massachusetts FY 2025 Budget: Tax Amnesty Program, IRC Conformity, and Joint Filing Changes
By Joseph Feehan, Partner, Tax & Business Services
Massachusetts’s Fiscal Year 2025 Budget was signed into law by Governor Healey and Lieutenant Governor Driscoll on July 29, 2024. This budget represents an increase of $1.8 billion, or 3.5%, from last year’s spending, totaling $58 billion. There are several notable tax provisions.
Tax Amnesty Program
The budget included a tax amnesty program. There will be a two-month window for individuals and corporations to file past-due tax returns, expiring no later than June 30, 2025. Tax Amnesty Programs seek to incentivize taxpayers to come into compliance with their tax obligations by offering relief from penalties and limited look-back periods. The Commissioner of the Department of Revenue will determine the specifics of this Tax Amnesty, including the eligibility period. The program is available to taxpayers who failed to file required returns for tax periods on or before December 31, 2024.
Internal Revenue Code (IRC) Conformity
This section updates the state’s personal income tax laws to conform with the IRS code, effective January 1, 2024.
Joint Filer Requirement
The budget addresses concerns around the recently enacted “consistent filing requirement,” which mandates married couples to file jointly for state purposes if they file jointly at the federal level. The new provision states this requirement does not apply if at least one of the spouses would not otherwise be required to make a return because their Massachusetts gross income did not exceed $8,000. The legislative purpose is that the new exemption aims to alleviate the filing burden on low-income households.
Repeal of Deduction of Interest from Savings in Massachusetts Banks
This section repeals the deduction of interest from savings in banks within the Commonwealth, effective for taxable years beginning on January 1, 2024. Previously, the Commonwealth allowed up to $100 per taxpayer ($200 on a joint return) of interest from savings deposits or savings accounts in Massachusetts banks to be deductible from the gross income of residents and non-residents sourced to the Commonwealth.
