Governor Charles D. Baker's Budget Recommendation - House 1 Fiscal Year 2016

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Exclusions from Gross Income

Fiscal Year 2016 Resource Summary (in Millions)
TAX EXPENDITURE FY2012 FY2013 FY2014 FY2015 FY2016
Exclusions from Gross Income 3,592.5 3,844.3 3,909.2 4,072.5 4,242.6

View tax item language

item description amount
Exclusions from Gross Income 4,242.6
1.001 Exemption of Premiums on Accident and Accidental Death Insurance 1 26.1
1.002 Exemption of Premiums on Group-Term Life Insurance 1 21.0
1.003 Exemption of Interest on Life Insurance Policy and Annuity Cash Value 216.6
1.004 Exemption of Employer Contributions for Medical Insurance Premiums and Medical Care 1 968.7
1.005 Exemption of Annuity or Pension Payments to Fire and Police Personnel N.A.
1.006 Exemption of Distributions from Certain Contributory Pension and Annuity Plans 2 351.9
1.007 Exemption of Railroad Retirement Benefits 4.8
1.008 Exemption of Public Assistance Benefits 192.7
1.009 Exemption of Social Security Benefits 913.7
1.010 Exemption of Workers' Compensation Benefits 7.2
1.011 Exemption for Dependent Care Expenses 1 15.2
1.012 Exemption of Certain Foster Care Payments 3.0
1.013 Exemption of Payments Made to Coal Miners Negligible
1.014 Exemption of Rental Value of Parsonages 1 2.8
1.015 Exemption of Scholarships and Fellowships 21.6
1.016 Exemption of Certain Prizes and Awards N.A.
1.017 Exemption of Cost-Sharing Payments Negligible
1.018 Exemption of Meals and Lodging Provided at Work 1 13.1
1.019 Treatment of Business-Related Entertainment Expenses 1 13.7
1.020 Exemption of Income from the Sale, Lease, or Transfer of Certain Patents N.A.
1.021 Exemption of Capital Gains on Home Sales 367.6
1.022 Nontaxation of Capital Gains at Death 886.8
1.023 Exemption of Interest from Massachusetts Obligations 54.5
1.024 Exemption of Benefits and Allowances to Armed Forces Personnel 1 30.5
1.025 Exemption of Veterans' Pensions, Disability Compensation and G.I. Benefits 40.3
1.026 Exemption of Military Disability Pensions 0.7
1.027 Exemption of Compensation to Massachusetts-Based Nonresident Military Personnel 9.0
1.028 Exemption for Taxpayers Killed in Military Action or by Terrorist Activity N.A.
1.029 Exemption for Retirement Pay of the Uniformed Services 25.2
1.030 Parking, T-Pass and Vanpool Fringe Benefits 37.3
1.031 Health Savings Accounts included in 1.422
1.032 Employer-Provided Adoption Assistance $0.0
1.033 Employer-Provided Educational Assistance 11.1
1.035 Department of Defense Homeowners Assistance Plan N.A.
1.036 Survivor Annuities of Fallen Public Safety Officers N.A.
1.037 Survivor Annuities of Fallen Astronauts N.A.
1.039 Discharge of Indebtedness for Health Care Professionals Negligible
1.040 Archer Medical Savings Accounts included in 1.420
1.041 Earnings of Pre-paid and Tuition Savings ("529" plans) 7.3


IRCFederal Internal Revenue Code (26 U.S.C.)
U.S.C United States Code
M.G.L. Massachusetts General Laws
Rev. Rul.; C.B. Revenue Ruling; Cumulative Bulletin of the U.S. Treasury
ESTIMATES All estimates are in $ millions.


1 1 This item and others citing this endnote cover employee fringe benefits. We accept as standard the following treatment of these benefits: the expense incurred by the employer in providing the benefit is properly deductible as a business expense and the benefit is taxed as compensation to the employee as if the employee had received taxable compensation and then used it to purchase the benefit. Of course, there are problems with this analysis. In some cases, the "benefit" is more a condition of employment than a true benefit. For example, a teacher required to have lunch in the school cafeteria may prefer to eat elsewhere even if the school lunch is free. On the other hand, in many cases the provision of tax-free employee benefits is clearly a substitution for taxable compensation.

2 2 This item and others citing this endnote cover contributory pension plans. The standard tax treatment of these plans is as follows: Component Standard Treatment Contributions: Made out of income that is currently taxed to employees. Investment Income: Taxed to the employee as "earned" income. Distributions from Pension Funds: Tax-free to the extent they are made out of dollars previously taxed to the employees as contributions or investment income. The non-standard treatment of contributions, investment income, or distributions as described in items 1.006, 1.101, 1.104, and 1.402, results in either nontaxation or deferrals of tax.

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