Origin: Employer and employee contributions to employee stock bonus plans, pensions, and profit-sharing trusts are not subject to the Massachusetts personal income tax when made, if requirements under federal pension law are met. Distributions from such plans are generally taxable when received. Where employee contributions are not eligible for an exclusion, the distributions from those plans are excluded up to the amount of previously taxed contributions. Massachusetts conforms to federal tax law in this regard. This results in a deferral of tax on contributions to such plans and therefore constitutes a state tax expenditure.
Origin: IRC §§ 401-415; M.G.L. c. 62, §§ 2(a)(2)(F); 2(a)(3)(C); and M.G.L. c. 62, § 2(a)(1)(I).
Tax Type
Tax Expenditure
Item Number
Item Name
Description
Origin
FY2021
FY2022
FY2023
FY2024
FY2025
Personal Income Tax
Deferrals of Gross Income
1.101
Net Exemption of Contributions to Employee Stock Bonus Plans, Pensions, and Profit-Sharing Trusts
Employer and employee contributions to employee stock bonus plans, pensions, and profit-sharing trusts are not subject to the Massachusetts personal income tax when made, if requirements under federal pension law are met. Distributions from such plans are generally taxable when received. Where employee contributions are not eligible for an exclusion, the distributions from those plans are excluded up to the amount of previously taxed contributions. Massachusetts conforms to federal tax law in this regard. This results in a deferral of tax on contributions to such plans and therefore constitutes a state tax expenditure.
IRC §§ <a href="https://www.law.cornell.edu/uscode/text/26/401" target="_blank">401</a>-<a href="https://www.law.cornell.edu/uscode/text/26/415" target="_blank">415</a>; <a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section2" target="_blank">M.G.L. c. 62, §§ 2(a)(2)(F); 2(a)(3)(C); and M.G.L. c. 62, § 2(a)(1)(I)</a>.
833.5
862.5
959.5
1,082.3
1,201.7
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