1.100
1.100 Deferrals of Gross Income
Tax Expenditure Name
Tax Expenditure Number
FY2017
FY2018
FY2019
FY2020
FY2021
Deferrals of Gross Income
1.100
1,757.0
2,105.0
2,290.0
2,553.3
2,755.8
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Tax Item
Description
Origin
FY2021
1.101
Net Exemption of Employer Contributions and Earnings of Private Pension Plans
Net Exemption of Employer Contributions and Earnings of Private Pension Plans
Employer contributions to private, qualified employee pension plans are deductible by the employer up to certain amounts and are not included in the income of the employees. Income earned by the invested funds is not currently taxable to the employees. Benefits in excess of any employee contributions previously taxed by Massachusetts are taxable when paid out. The value of the tax deferral on contributions and on the investment income is a tax expenditure.
IRC §§ 401-415 in effect January 1, 1985 and M.G.L. c. 62 §§ 2(a)(2)(F)
2,346.2
1.102
Treatment of Incentive Stock Options
Treatment of Incentive Stock Options
Massachusetts has adopted the federal rules for employee stock options. Generally, employers may offer employees options to purchase company stock at a later date at a price equal to the fair market value of the stock when the option was granted. At the time employees exercise the option, they do not include in income the difference between the fair market value and the price they pay. If they later sell the stock, they are taxed on the amount by which the price they receive for the stock exceeds the price they paid. Thus, income is deferred and is taxed as a capital gain instead of as compensation.
N.A.
1.103
Exemption of Earnings on Stock Bonus Plans or Profit Sharing Trusts
Exemption of Earnings on Stock Bonus Plans or Profit Sharing Trusts
Investment income earned by stock bonus plans or profit sharing trusts is not taxed currently for employees.
N.A.
1.104
Exemption of Earnings on IRA and Keogh Plans
Exemption of Earnings on IRA and Keogh Plans
This includes exclusions from income for gains on retirement contributions; these earnings are taxed upon distribution. The deferral of tax on the investment income is a tax expenditure.
316.0
1.106
Non-taxation of Capital Gains at the Time of Gift
Non-taxation of Capital Gains at the Time of Gift
Ordinarily, capital gains are taxed at the time appreciated property is transferred. However, no tax is imposed on a capital gain when appreciated property is transferred by gift. The taxation of appreciation is deferred until the recipient transfers the property.
Comment: See also item 1.022 above.
Comment: See also item 1.022 above.
93.6
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