1.100
1.100 Deferrals of Gross Income
Tax Expenditure Name
Tax Expenditure Number
FY2020
FY2021
FY2022
FY2023
FY2024
Deferrals of Gross Income
1.100
3,473.6
3,908.7
4,479.7
5,067.3
5,691.8
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Tax Item
Description
Origin
FY2024
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)
3,794.7
1.102
Treatment of Incentive Stock Options
Treatment of Incentive Stock Options
Massachusetts adopts the federal tax treatment
of incentive stock options as provided in the
Internal Revenue Code (the "Code") as
amended on January 1, 2005. Under the
federal rules, and therefore for Massachusetts
purposes as well, no tax consequences result
when employees are granted or exercise
options to purchase company stock.
Employees are taxed only when they sell the
stock acquired through the exercise. This
results in a deferral of tax for both federal and
Massachusetts tax purposes which constitutes
a tax expenditure.
of incentive stock options as provided in the
Internal Revenue Code (the "Code") as
amended on January 1, 2005. Under the
federal rules, and therefore for Massachusetts
purposes as well, no tax consequences result
when employees are granted or exercise
options to purchase company stock.
Employees are taxed only when they sell the
stock acquired through the exercise. This
results in a deferral of tax for both federal and
Massachusetts tax purposes which constitutes
a tax expenditure.
M.G.L. c. 62 § 1(c) and (d); G.L. c. 62, § 2(a); Code
§§ 421, 422, and 424
§§ 421, 422, and 424
4.6
1.103
Exemption of Earnings on Stock Bonus Plans, Pensions or Profit-Sharing Trusts
Exemption of Earnings on Stock Bonus Plans, Pensions or Profit-Sharing Trusts
Employee stock bonus plans, employee
pension plans and employee profit-sharing
plans are exempt from the Massachusetts
personal income tax.
pension plans and employee profit-sharing
plans are exempt from the Massachusetts
personal income tax.
1,504.0
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.
352.7
1.106
Exemption for Capital Gains at Time of Gift
Exemption for Capital Gains at Time of Gift
Ordinarily, for federal income tax purposes,
capital gains are taxed at the time appreciated
property is transferred to a new owner.
However, the tax on capital gains on property
transferred by gift is deferred until the new
owner sells the property. If the new owner
dies holding the gifted property, the tax is
never imposed (see Evaluation Summary
1.022). Massachusetts generally follows the
federal rules for purposes of determining
taxable capital gains. This conformity results
in a deferral and potential exclusion of tax on
capital gains and therefore constitutes a state
tax expenditure.
capital gains are taxed at the time appreciated
property is transferred to a new owner.
However, the tax on capital gains on property
transferred by gift is deferred until the new
owner sells the property. If the new owner
dies holding the gifted property, the tax is
never imposed (see Evaluation Summary
1.022). Massachusetts generally follows the
federal rules for purposes of determining
taxable capital gains. This conformity results
in a deferral and potential exclusion of tax on
capital gains and therefore constitutes a state
tax expenditure.
35.8
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