| TAX EXPENDITURE | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|---|---|---|---|---|
| Credits Against Tax | 450.6 | 449.5 | 538.4 | 561.9 | 578.1 |
| item | description | amount |
|---|---|---|
| Credits Against Tax | 578.1 | |
| 2.602 |
Investment Tax Credit
Manufacturing corporations and corporations engaged primarily in research and development, agriculture or commercial fishing are allowed to take a credit of 3% of the cost or other basis for federal income tax purposes of qualifying tangible property acquired, constructed, reconstructed, or erected during the taxable year, after deduction of any federally authorized tax credit taken with respect to such property. Such property must have a useful life of four years or more. The property must be used and located in Massachusetts on the last day of the taxable year. A corporation cannot take the credit on property which it leases to another. A corporation can take the credit on property which it leases from another (for property leased and placed in service on or after July 1, 1994). Generally, eligible corporate lessees making qualifying leasehold improvements may claim the credit. A corporation may carry over to the next succeeding 3 years any unused portion of its Investment Tax Credit (ITC). The credit is neither transferable nor refundable. Origin: M.G.L. c. 63, S. 31A (i), (j) Estimate: $66.4 |
66.4 |
| 2.603 |
Vanpool Credit
Domestic and foreign corporations are allowed to take a credit of 30% of the cost incurred during the taxable year for the purchase or lease of company shuttle vans used in the Commonwealth as part of an employer-sponsored ridesharing program. The shuttle vans must be used for transporting employees. This credit is neither transferable nor refundable, and cannot be carried forward. Origin: M.G.L. c. 63, S. 31E Estimate: Negligible |
Negligible |
| 2.604 |
Research Credit
A credit is allowed for corporations which made basic research payments and/or incurred qualified research expenses conducted in Massachusetts during the taxable year. A corporation taking the research credit is limited in the amount that can be taken against the excise in any year. The credit cannot reduce the tax to less than $456. The amount of credit is equal to: 100% of the first $25,000 of excise; and 75% of any amount of excise remaining after the first $25,000. The deduction allowed to a corporation for any research expenses generating a Massachusetts Research Credit must be reduced by the amount of the credit generated. This amount is added back to income. Any corporation which is a member of a combined group may share excess research credits with other members of the combined group. Corporations which are members of a controlled group or which are under common control with any trade or business (whether or not incorporated) are treated as a single taxpayer for purposes of determining the allowable Research Credit. The credit may be carried forward for up to 15 years with certain restrictions, but is neither transferable nor refundable. As a result of recent legislation, effective for tax years beginning on or after January 1, 2015, a business corporation may elect to calculate its research credit using one of two methods: The first method revises the existing research credit by changing two definitions that affect the calculation of the credit, i.e., the definitions of "base amount" and "fixed base rate". The "base amount" is now defined as "the product of (i) the average annual gross receipts of the taxpayer for the 4 taxable years preceding the credit year"; and (ii) a 'fixed base ratio'." The "fixed-base ratio" is no longer tied to a corporation's aggregate Massachusetts qualified research expenditures for a fixed 5 year period during the 1980s. It is now defined as "the percentage which the average aggregate qualified research expenses for the taxpayer for the third and fourth taxable years preceding the credit year is of the annual average gross receipts for those years, provided, however, that the fixed base ratio shall not exceed 16 per cent". The amount of the credit is equal to the sum of 10% of the excess, if any, of the qualified research expenses for the taxable year over the base amount plus 15% of the basic research expenses determined under I.R.C. S. 41(e)(1)(A). The second method, which a taxpayer may elect to use in lieu of the method described above, provides for an alternative simplified research credit, which generally conforms to the methodology of the federal alternative simplified credit provided by I.R.C. S. 41(c)(5), as amended and in effect for January 1, 2014. See TIR 14-13 and TIR 14-16 for more information. Origin: M.G.L. c. 63, S. 38M Estimate: $208.8 |
208.8 |
| 2.605 |
EDIP/Economic Development Incentive Program Credit
Under the provisions of the Economic Development Incentive Program (EDIP) established pursuant to M.G.L. Ch. 23A, the Economic Assistance Coordination Council (EACC) may authorize taxpayers participating in certified projects to claim tax credits for a percentage of the cost of the property under M.G.L. Ch. 62 S. 6(g) and M.G.L. Ch. 63 S. 38N. The credit is a key component of the Economic Development Incentive Program (EDIP) established pursuant to G.L. c. 23A. To be eligible, a project must be certified by the Economic Assistance Coordinating Council (EACC). The total dollar amount of the EDIPC that may be used in a calendar year is $30 million. Included in the $30 million annual cap are amounts (up to $10 million) awarded pursuant to the certified housing development program authorized by G.L. c. 40V. The total dollar amount that the EDIPC may use is scheduled to decrease to $25 million. For projects certified prior to January 1, 2010: The project must be in an economic opportunity area and the credit is 5% of the cost of qualifying property. To qualify for the 5% credit, the property must be used exclusively in a certified project in an Economic Opportunity Area. The credit may be carried forward for up to 10 years with certain restrictions. The credit is neither transferable nor refundable. For projects certified after January 1, 2010: Sections 21 to 24 and 47 of chapter 166 of the Acts of 2009 made significant changes to EDIP. Under the amended provisions of the EDIP, the EACC may authorize taxpayers participating in certified projects to claim tax credits up to 40% of the cost of qualifying property. The EDIPC for manufacturing retention projects, if authorized by the EACC, may be refundable at the option of the taxpayer. If the credit balance is refunded to the taxpayer, the carryover provisions shall not apply. This credit is not transferable. For certified job creation projects after January 1, 2015: Effective for tax years beginning on or after January 1, 2015, the EDIP credit provisions have been expanded to include certified job creation projects. Individuals and entities pursuing certified job creation projects may be awarded a credit of up to $1,000 per job created (up to $5,000 in a Gateway Community as defined in section 3A of chapter 23A or within a city or town whose average seasonally adjusted unemployment rate, as reported by the executive office of labor and workforce development, is higher than the average seasonally adjusted unemployment rate of the commonwealth). The total award per project may not exceed $1,000,000. The credit for a certified job creation project is allowed for the year subsequent to that in which the jobs are created. Origin: M.G.L. c. 63, S. 38N Estimate: $19.2 |
19.2 |
| 2.606 |
Credit for Employing Former Full-Employment Program Participants
Employers who continue to employ former participants of the S.110(1) full employment program in non-subsidized positions are eligible to receive a tax credit equal to $100 per month for each month of non-subsidized employment, up to a maximum of $1,200 per employee, per year. For further discussion, see 830 CMR 118.1. Origin: St. 1995, c. 5, S. 110(m) Estimate: Not Active |
Not Active |
| 2.607 |
Harbor Maintenance Tax Credit
Domestic and foreign corporations are allowed to take a credit against the corporate excise for certain harbor maintenance taxes paid to the U.S. Customs Service pursuant to IRC sec. 4461. A corporation is eligible for the credit if the tax paid is attributable to the shipment of break-bulk or containerized cargo by sea and ocean-going vessels through a Massachusetts harbor facility. The credit is not subject to the 50% limitation; however, it may not reduce the tax liability to less than the minimum excise of $456. The credit may be carried forward for up to 5 years, but is neither refundable nor transferable. Origin: M.G.L. c. 63, S. 38P Estimate: $1.2 |
1.2 |
| 2.608 |
Brownfields Credit
Taxpayers are allowed to take a credit for amounts expended to rehabilitate contaminated property owned or leased for business purposes and located within an economically distressed area. Recent legislation extends the Brownfields credit to nonprofit organizations, extends the time frame for eligibility for the credit, and permits the credit to be transferred, sold, or assigned. Under prior law, net response and removal costs incurred by a taxpayer between August 1, 1998 and August 5, 2005, were eligible for the credit provided that the environmental response action before August 5, 2005. As a result of the recent legislation, the environmental response action commencement cut-off date is changed from August 5, 2005 to August 5, 2018, and the time for incurring eligible costs that qualify for the credit is extended to January 1, 2019. See TIR 13-15 for more information. The credit may be carried forward for up to 5 years. The amount of the credit varies according to the extent of the environmental remedy. If the taxpayer's permanent solution or remedy operation status includes an activity and use limitation, then the amount of the credit is 25% of the net response and removal costs incurred by the taxpayer. However, if there is no activity and use limitation, then the amount of the credit is 50% of the net response and removal costs. Origin: M.G.L. c. 63, S. 38Q Estimate: $36.6 |
36.6 |
| 2.609 |
Low Income Housing Credit
The Low-Income Housing Credit is administered through the Massachusetts Department of Housing and Community Development (DHCD). The Low Income Housing Credit is available to taxpayers for the construction or development of low income housing. The amount of credit that a taxpayer may claim for a qualified Massachusetts project is allocated by the DHCD and is based on a total pool of money awarded to the Commonwealth. The LIHC is not subject to the 50% limitation rule for corporate taxpayers. If the taxpayer disposes of the property generating the LIHC, a portion of the credit may be subject to recapture. Under prior law, the Massachusetts low-income housing tax credits were available only to taxpayers who had been allocated federal low-income housing tax credits. Effective August 1, 2010, the Act allows the Department of Housing and Community Development to grant state low-income housing credits (within the annual cap) to otherwise eligible projects that do not receive a federal low-income housing credit. Note that the annual cap increases from $50 million per year to $100 million per year for tax years 2013 through 2019, but will return to $50 million per year starting January 1, 2020. The credit may be carried forward for up to 5 years and may be transferred or sold to another taxpayer, but it is not refundable. Origin: M.G.L. c. 63, S. 31H Estimate: $89.0 |
89.0 |
| 2.610 |
Historic Buildings Rehabilitation Credit
To claim this credit, a historic rehabilitation project must be complete and have been certified by the Massachusetts Historical Commission, which determines the amount of qualifying expenditures. Filers may claim up to 20% of their qualified rehabilitation expenditures. Unused portions of the credit may be carried forward for up to 5 years and transferred or sold to another taxpayer, but are not refundable. The Historic Rehabilitation Credit (HRC) is not subject to the 50% limitation rule for corporate taxpayers. If the taxpayer disposes of the property generating the HRC, a portion of the credit may be subject to recapture. The expenditure for this item (combined with the Historic Rehabilitation Credit for personal income tax filers, item 1.610) was originally capped at $15 million per year, with a start date for the credit of January 1, 2005 and an end date of December 31, 2009. Chapter 123 of the Acts of 2006 extended the availability of the credit for an additional 2 years, to December 31, 2011. Again, Chapter 131 of the Acts of 2010 extended the availability of the credit for an additional 6 years to December 31, 2017, with an annual cap of $50 million. Chapter 165 of the Acts of 2014, further extends this credit, including the $50 million annual limit, for an additional five years to December 31, 2022.For further discussion, see TIR 14-11. Origin: M.G.L. c. 63, S. 38R Estimate: $46.6 |
46.6 |
| 2.614 |
Film (or Motion Picture) Credit
For taxable years beginning on or after January 1, 2006 and before January 1, 2023, Massachusetts allows two credits for motion picture production companies who meet certain qualification requirements. Production companies who incur at least $50,000 of production costs in Massachusetts are eligible for income and corporate excise tax credits equal to 25% of the total Massachusetts payroll for the production, excluding salaries of $1 million and higher. In addition, production companies whose Massachusetts production expenses exceed 50% of the total production cost receive an income and corporate excise tax credit of 25% of the total Massachusetts production expense. Supporting documentation is available to the Department of Revenue upon request. This tax credit is refundable at 90% of the approved credit amounts by the written election of the taxpayer or may be carried forward for up to 5 years. In addition, all or any portion of tax credits issued may be transferred, sold or assigned to other taxpayers with tax liabilities under chapter 62 (the individual income tax) or chapter 63 (the corporate or other business excise taxes). For applications submitted prior to January 1, 2007, film tax credits were capped at $7,000,000 for any one motion picture production; for applications submitted on or after January 1, 2007, there is no cap. Also, the sunset date for the film incentives statute has been extended from January 1, 2013 to January 1, 2023. See TIR 07-15 for more details. Origin: M.G.L. c. 63, S. 38X Estimate: $77.9 |
77.9 |
| 2.615 |
Medical Device User Fee Credit
The Medical Device Credit is equal to 100% of the user fees actually paid to the United States Food and Drug Administration (USFDA) by a medical device company during the taxable year for which the tax is due for pre-market submissions (e.g., applications, supplements, or 510(k) submissions) to market new technologies or upgrades, changes, or enhancements to existing technologies, developed or manufactured in Massachusetts. The credit may be carried forward for up to 5 years. Also the credit may be transferred or sold to another taxpayer, but is not refundable. Origin: M.G.L. c. 63, S. 31L Estimate: $1.1 |
1.1 |
| 2.617 |
Life Sciences Tax Incentive Program
On June 16, 2008, "An Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth" was passed. The Act established the Life Sciences Tax Incentive Program which initially included, among other things, the following credits: the life sciences research credit, the life sciences refundable research credit, the life sciences refundable investment tax credit, and the life sciences FDA user fees credit, effective from January 1, 2009 through December 31, 2018. Effective January 1, 2011, the life sciences refundable jobs credit was added to this program. Since the tax expenditures under this line item will be subject to approval and their composition will differ from year-to-year, it is not known what proportion will be in the form of corporate tax credits as opposed to income tax credits. However, because the Department of Revenue believes that the largest portion of the tax expenditures described in this line item will be in the form of corporate tax credits, it has placed it in this section of the tax expenditure budget. Except for the life sciences research credit, the other credits are refundable up to 90%. Origin: M.G.L. c. 62, S. 6(m), (n), and (r) and c.63, S.38M (j), 38U, 38W and 38CC Estimate: $20.8 |
20.8 |
| 2.618 |
Dairy Farmers Credit
The Massachusetts dairy farmer tax credit was established to offset the cyclical downturns in milk prices paid to dairy farmers and is based on the U.S. Federal Milk Marketing Order for the applicable market, such that when the U.S. Federal Milk Marketing Order price drops below a trigger price anytime during the taxable year the taxpayer will be entitled to the tax credit. The total cumulative value of the credits authorized pursuant to this section combined with section 6(o) of chapter 62 of the General Laws shall not exceed $4,000,000 annually. A taxpayer who holds a certificate of registration as a dairy farmer pursuant to M.G.L. Ch. 94, sec. 16A is allowed to take a refundable tax credit based on the amount of milk produced and sold. These credits may not be sold or transferred to another taxpayer, but are refundable at 100% of face value. Origin: M.G.L. c. 63, S. 38Z Estimate: $0.0 |
$0.0 |
| 2.619 |
Conservation Land Credit
A tax credit is allowed for qualified donations of certified land to a public or private conservation agency. The credit is equal to 50% of the fair market value of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation cannot exceed $75,000. Approval of the donation is required from the Secretary of the Office of Energy & Environment Affairs. The credits may not be sold or transferred to another taxpayer, but are refundable. The total credits that may be approved are capped at $2.0 million annually for the combined amount from personal income tax filers and chapter 63 taxpayers. Origin: M.G.L. c. 63, S. 38AA Estimate: $0.0 |
$0.0 |
| 2.620 |
Employer Wellness Program Tax Credit
The 2012 Health Care Act established an Employer Wellness Program Tax Credit that is effective for tax years beginning on or after January 1, 2013 and is set to expire on December 31, 2017. The Employer Wellness Program Tax Credit was created to provide incentives for business to recognize the benefits of wellness programs with the goal of providing smaller businesses with an expanded opportunity to implement these programs. The credit is available to both chapter 62 and chapter 63 taxpayers (personal income taxpayers and corporate & business excise taxpayers). The Department of Public Health (DPH) will administer the credit program by: 1) determining standards for an Employer Wellness Program that will qualify for the credit; 2) approving a dollar amount of credit for a qualifying taxpayer and issue a certificate to be filed with the appropriate tax return; 3) by developing regulations and procedures with the Department of Revenue to implement the credit program. A business will apply to the DPH describing the proposed wellness program to be implemented by the business and providing an estimated budget and applicable taxpayer identification number. The credit is set at 25 percent of the costs associated with implementing a "certified wellness program." The maximum amount of Employer Wellness Program Credits available to a taxpayer is $10,000 in any tax year. The total amount of Employer Wellness Program Credits authorized by the DPH is subject to a $15,000,000 annual cap starting calendar year 2013. The Employer Wellness Program Tax Credit is neither refundable nor transferrable. However, the portion of the Employer Wellness Program Tax Credit that exceeds the tax for the taxable year may be carried forward and applied against such taxpayer's tax liability in any of the succeeding 5 taxable years. DPH has promulgated a regulation, 105 CMR 216.000, entitled Massachusetts Wellness Tax Credit Incentive, which sets forth criteria for authorizing and certifying the credit. Origin: St. 2012, c. 224, S. 41, 41A, 56, 56A, 238, 239, 297, and 298; M.G.L. c. 62, S. 6N; M.G.L. c. 63, S. 38FF. Estimate: $7.5 |
7.5 |
| 2.621 |
Community Investment Tax Credit
The 2012 Jobs Act provides a Community Investment Tax Credit that is effective January 1, 2014 and is set to expire on December 31, 2019. It was created to enable local residents and stakeholders to work with and through community development corporations to partner with nonprofit, public and private entities to improve economic opportunities for low and moderate income households and other residents in urban, rural and suburban communities across the commonwealth. The credit is available to both chapter 62 and chapter 63 taxpayers (personal income taxpayers and corporate & business excise taxpayers). The Department of Housing and Community Development will administer the credit program by: 1) issuing a certification to a taxpayer after the taxpayer makes a qualified investment; 2) authorizing a dollar amount of credit for a qualified investment; 3) developing regulations and procedures with the Department of Revenue to implement the Community Investment Credit. The certification will be acceptable as proof that the expenditures related to such investment constitute qualified investments for purposes of the community investment credit. The Community Investment Credit is set at 50 percent of the total qualified investments made by a taxpayer in a "community partner," i.e., a "community development corporation" or a "community support organization," selected by the Department of Housing and Community Development through a competitive process. A qualified investment must be in the form of a cash contribution of at least $1,000. A taxpayer may invest in more than one community partner, but may not claim more than $1,000,000 of credits in any single taxable year. A taxpayer must claim the credit in the taxable year in which a qualified investment is made. The total amount of Community Investment Credits is subject to a $3,000,000 cap in 2014, and an annual cap of $6,000,000 in 2015 to 2019, inclusive. This credit is refundable, but not transferrable and it could be carried over up to five years. Origin: St. 2012, c. 238, S. 29, 30, 35, 36 ; M.G.L. c. 62, S. 6M; M.G.L. c. 63, S. 38EE Estimate: $3.0 |
3.0 |
| ORIGIN | |
| IRC | Federal Internal Revenue Code (26 U.S.C.) |
|---|---|
| M.G.L. | Massachusetts General Laws |
| U.S.C | United States Code |
| ESTIMATES | All estimates are in $ millions. |