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Massachusetts Tax Refund: Who Is Eligible and When Could Checks Go Out?

Massachusetts Tax Refund: Who Is Eligible and When Could Checks Go Out?

Gov. Charlie Baker's plan to send $250 checks to middle-income residents fell apart last month, but Massachusetts taxpayers will still probably get a healthy tax rebate this year.

The $250 payout was making headway but a bill failed to pass before the July 31 deadline, in part because legislators suddenly remembered a 35-year-old voter referendum that could mean nearly $3 billion in surplus taxes will be returned to taxpayers this fall.

The 1986 statute --  which has only ever been triggered once, in 1987 -- mandates that, if the money collected in income tax reaches a predetermined dollar amount above and beyond the state budget, the excess must be returned to taxpayers.

Baker insisted there was enough in the coffers to support both his original $250 payout and any mandatory refunds.  

"The tax breaks that are currently pending before the legislature are eminently affordable," he told reporters, WBUR reported. "I mean, you're talking about a tax year, this past year, in which tax revenue went up by over 20 percent."

Legislators on Beacon Hill didn't necessarily agree.

"The fiscally responsible thing to do is to hit pause right now on all of this spending," Sen. Michael Rodrigues, chair of the Senate Ways and Means Committee, told reporters on Aug. 1, The Boston Globe reported.

"We want to make sure we get it right," Rodrigues added. "We are committed to getting some real, long-term permanent tax relief done."

Here's what Massachusetts residents need to know about the tax rebate, including who is eligible, how much it could be for and when it may go out.

For more on tax relief, find out which states are mailing out tax rebates, pausing their gas tax and instituting sales tax "holidays."

How much will the Massachusetts tax rebate be?

The original refund proposed in Baker's budget was for $250, intended for individual filers who earned between $38,000 and $100,000 last year and joint filers who made up to $150,000.

The exact dollar amount that could go out now is still to be determined: State Auditor Suzanne Bump has to calculate what, if any, tax surplus there is, using a formula based on annual wage and salary growth.

Baker's office has predicted taxpayers would get 7% of their 2021 income taxes returned, according to MassLive. For an individual earning $75,000, that would work out to about $250.

While the state auditor hasn't determined whether tax revenue has triggered a refund yet, Gov Baker predicts that thanks to a 1986 voter referendum, taxpayers will get 7% of their 2021 income taxes returned.

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Who qualifies for the Massachusetts tax rebate?

Theoretically, anyone who paid 2021 income tax in Massachusetts would be eligible to be paid back. Residents with outstanding state tax bills may not see a check, though.

When will the Massachusetts tax rebate be sent out?

Baker's original plan would have had $250 checks in the hands of eligible taxpayers by October. The tax cap won't be calculated by the state auditor until September, though the Department of Revenue could start issuing tax credits on Sept. 21, MassLive reported.

"We're looking at what's the quickest and most efficient way to get that money back to the taxpayers," Michael Heffernan, state secretary of administration and finance, told reporters Thursday, WBZ news radio reported.

Lawmakers don't want to rush any decisions and overextend the budget with multiple rounds of tax rebates.

Pausing the economic development and tax relief package forged the "wisest choice," House Speaker Ron Mariano said at a press conference, WGBH reported.  

"We wanted to make sure to be fiscally prudent that we know what we're getting into," Mariano added. "The economy is going through some strange things with a big inflation rate [and] oil and gas fluctuations that may lead to a recession."

What other tax breaks could Massachusetts residents receive?

Lawmakers want to increase the earned income tax credit from the 30% match of the federal credit to 40%, raise the child care credit from $180  per child to $310 and increase the rental deduction cap from $3,000 to $4,000. 

Certain seniors who own or rent their primary properties in Massachusetts get a "circuit breaker" tax credit, and Democrats want to bump the maximum from $1,170 to $2,340.

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