Origin: For tax years beginning on or after January 1, 2023, employees may deduct employer payments of principal or interest on a qualified education loan during the taxable year that has not already been excluded from their federal gross income. The deduction is substantially identical to the federal exclusion from gross income provided by IRC § 127(c)(1), which Massachusetts follows as amended on January 1, 2022 and in effect for the taxable year. However, while IRC § 127(c)(1) is limited to $5,250 per employee and applies only to employer payments made before January 1, 2026, the new Massachusetts deduction is not subject to a dollar limit nor does it have a sunset date. Employees claiming the deduction may not claim any other deduction, such as for student loan interest, for the same amounts paid by their employer.
Origin: M.G.L. c. 62, § 3(B)(a)(20)
Personal Income Tax
Deductions from Adjusted Gross Income
1.430
Deduction for Student Loan Payment Assistance
For tax years beginning on or after January 1, 2023, employees may deduct employer payments of principal or interest on a qualified education loan during the taxable year that has not already been excluded from their federal gross income. The deduction is substantially identical to the federal exclusion from gross income provided by <a href="https://www.law.cornell.edu/uscode/text/26/127" target="_blank">IRC § 127(c)(1)</a>, which Massachusetts follows as amended on January 1, 2022 and in effect for the taxable year. However, while <a href="https://www.law.cornell.edu/uscode/text/26/127" target="_blank">IRC § 127(c)(1)</a> is limited to $5,250 per employee and applies only to employer payments made before January 1, 2026, the new Massachusetts deduction is not subject to a dollar limit nor does it have a sunset date. Employees claiming the deduction may not claim any other deduction, such as for student loan interest, for the same amounts paid by their employer.
M.G.L. <a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section3" target="_blank">c. 62, § 3(B)(a)(20)</a>
N.A.
N.A.
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2.2
3.4
