Appendix A

Appendix A Recent Law Changes Affecting Tax Expenditures

The following tax expenditures have been revised or created due to recent law changes.

Personal Income Tax Changes:

“An Act Making Appropriations for the Fiscal Year 2023 for Supplementing Certain Existing Appropriations and for Certain Other Activities and Projects,” “An Act Making Appropriations for the Fiscal Year 2024 to Provide for Supplementing Certain Existing Appropriations and for Certain Other Activities and Projects,” the Fiscal Year 2025 (FY25) Budget, “An Act Relative to the Affordable Homes Act”, “An Act Honoring, Empowering, and Recognizing Our Servicemembers and Veterans”, and “An Act Relative to Strengthening Massachusetts’ Economic Leadership” enacted various changes to the personal income tax.

The following personal income tax expenditures have been revised or created due to recent law changes:

Repeal of the deduction of interest and dividends from Massachusetts banks (TE Item 1.413)
For taxable years beginning on or after January 1, 2024, personal income taxpayers can no longer deduct interest and dividends from savings deposits, savings accounts, shares or share savings accounts that are in a Massachusetts bank. Prior to the repeal, taxpayers could deduct such interest and dividends in the amount of $100 for a single person, head of household or a married person filing a separate return, or $200 for a husband and wife filing a joint return.

Expansion of wagering loss deduction to sports wagering losses (TE Item 1.428)
For taxable years beginning on or after January 1, 2023, the wagering loss deduction has been expanded to allow personal income taxpayers to deduct losses from sports wagering that are incurred from wagers placed through a licensed sports wagering operator. Taxpayers may claim this deduction for sports wagering losses incurred in a calendar year only if they had wagering winnings from any such sports wagering operator, gaming establishment, racing meeting licensee, or simulcasting licensee in the same calendar year. The deduction allowed for sports wagering losses may not exceed the amount of any wagering winnings included in gross income for the calendar year. See TIR 24-6 for more information.

Increase of the annual cap for and extension of the Massachusetts historic rehabilitation credit (TE Item 1.610)
For taxable years beginning on or after January 1, 2024, the Massachusetts historic rehabilitation credit’s annual cap has been increased from $55 million to $110 million. The credit was due to expire on December 31, 2027, but has been extended to taxable years ending on or before December 31, 2030.

Increase of the annual cap for and extension of the community investment credit (TE Item 1.617)
For taxable years beginning on or after January 1, 2025, the community investment credit’s annual cap has been increased from $12 million to $15 million. The credit was due to expire on December 31, 2025, but has been made permanent.

Increase to the Qualified Veterans Hire Tax Credit (TE Item 1.620)
For taxable years beginning on or after January 1, 2024, the amount of credit a business can claim for each qualified veteran it hires has been increased from $2,000 to $2,500.

Cranberry Bog Renovation Credit (TE Item 1.623)
Effective for tax years beginning on or after January 1, 2020, taxpayers primarily engaged in cranberry production may claim a nontransferable, refundable credit equal to 25% of expenses incurred in the renovation, repair, replacement, regrading or restoration of a cranberry bog for the cultivation, harvesting or production of cranberries. The Secretary for Energy and Environmental Affairs determines eligible costs and the amount of the credit. The amount of credit that can be claimed by a taxpayer for a taxable year cannot exceed $100,000. The annual total cap amount is $2 million. The credit is no longer available for taxable years beginning on or after January 1, 2030.

Temporary authorized training tax credit for emergency assistance (New TE Item 1.629)
Starting with taxable years beginning on or after January 1, 2024, partnerships, limited liability corporations, or other legal entities subject to the personal income tax that provide training to a qualified trainee through an authorized training program may claim a temporary authorized training tax credit for emergency assistance. A qualified individual is an individual receiving benefits through the emergency housing assistance program pursuant to G.L. c. 23B, § 30. To qualify for the credit, a taxpayer must (1) have a place of business in the Commonwealth; (2) conduct an authorized training program in the Commonwealth that is in compliance with recommendations of the Executive Office of Labor and Workforce Development (“EOLWD”); (3) enroll the qualified trainee in an authorized training program on or after April 30, 2024; and (4) meet any additional requirements determined by the Executive Office for Administration and Finance and EOLWD. The credit is equal to $2,500 for each qualified trainee that receives the training from the entity. The amount of the credit that exceeds the tax due for a taxable year may be carried forward to the subsequent taxable year. The credit is subject to an annual cap of $10 million.

The credit may no longer be claimed as of (1) January 1, 2026; or (2) the taxable year in which the end of the capacity limitation on the emergency shelter assistance program occurs, whichever is sooner. See TIR 24-7 for more information.

Massachusetts homeownership credit (New TE Item 1.630)
Starting with taxable years beginning on or after January 1, 2025, personal income taxpayers may claim a Massachusetts homeownership tax credit in relation to a qualified homeownership development project to the extent authorized by the Executive Director of the Massachusetts Housing Finance Agency (“MHFA”). The credit is non-refundable but is transferrable. The amount of the credit authorized by MHFA cannot exceed the maximum credit amount, which is 35% of the lesser of either: (1) the project’s total qualified project expenditures calculated on a per single-family dwelling basis; or (2) 80% of the area median new single-family dwelling sales price, subject to further limitations established by MHFA. A sponsor cannot claim the credit before the first taxable year stated on the eligibility certificate issued to the sponsor by MHFA. Any amount of the credit that exceeds the tax due for a taxable year may be carried forward for the duration of the qualified homeownership development project’s affordability period, which is a 10-year period that begins as of the date of the first sale of a single-family dwelling that was constructed as part of the project. The credit is subject to recapture.

The amount of credits that MHFA can authorize annually cannot exceed the sum of (1) $10 million; (2) any credit amounts not authorized in the preceding taxable year; and (3) any credits returned to MHFA by a sponsor. Effective January 1, 2030, the amount of credits that can be authorized annually is the sum of (1) any credit amounts not authorized in the preceding taxable year; and (2) any credits returned to MHFA by a sponsor.

Qualified conversion credit (New TE Item 1.631)
Starting with taxable years beginning on or after January 1, 2025, personal income taxpayers may claim a refundable, non-transferable qualified conversion credit in relation to a qualified conversion project that has been certified by the Executive Office of Housing and Livable Communities (“EOHLC”). To claim the credit, a sponsor must submit a project proposal to EOHLC requesting the certification of a housing development project as a qualified conversion project. After certifying the project, EOHLC determines the amount of credit awarded to the sponsor, which cannot exceed 10% of the qualified conversion’s project’s development costs.

The credit is allowed for the taxable year in which EOHLC notifies the Commissioner of the certified qualified conversion project’s completion. Any amount of the credit that exceeds the tax due for a taxable year may be carried forward to any of the 10 taxable years subsequent to the taxable year that the credit was allowed. The credit is subject to recapture.

The credit is no longer available for taxable years ending after December 31, 2029.

Climatetech Tax Incentive Program (New TE item 1.632)
Massachusetts provides a climatetech tax incentive program, which is administered by the Massachusetts clean energy center (“CEC”), in consultation with DOR. The tax incentives consist of three tax credits, the climatetech capital investment tax credit, a refundable climatetech jobs tax credit, and a climatetech qualified research expenses tax credit; as well as a sales and use tax exemption for purchases of tangible personal property to be used for the construction of research, development or manufacturing or other commercial climatetech facilities. The incentives all share an annual cap of $30 million and are effective for taxable years beginning on or after January 1, 2024.

The climatetech capital investment tax credit is a refundable tax credit available to personal income and corporate excise taxpayers who make capital investments in a climatetech facility. The amount of the credit is determined by the CEC, but cannot exceed 50% of the owner’s total capital investment in the facility.

The refundable climatetech jobs tax credit is a refundable tax credit available to personal income taxpayers who commit to creating at least 5 net new jobs in Massachusetts. The amount of credit is determined by the CEC. Where the credit exceeds the taxpayer’s liability, 90% of excess credit amount is refunded to the taxpayer.

Live Theater Tax Credit (New TE item 1.633)
The live theater tax credit program is administered by the Massachusetts Office of Business Development, in consultation with DOR. The credit is available to personal income and corporate excise taxpayers. The amount of the credit cannot exceed $7 million and is equal to (1) 35% of the total in-state payroll costs; (2) 25% of production and performance expenditures; and (3) 25% of transportation expenditures. The credit is not refundable, but is transferrable. Any unused amount of credit may be carried forward to the next 5 taxable years. The annual amount of credits that can be authorized cannot exceed $7 million.

The credit is effective for taxable years beginning on or after January 1, 2025 and expires on January 1, 2030.

Qualified Internship Tax Credit (New TE item 1.634)

The qualified internship tax credit is available to personal income and corporate excise taxpayers who hire a qualified intern. The credit is equal to the lesser of $5,000 or 50% of the wages paid to the intern. The annual amount of credits that can be authorized cannot exceed $10 million. A single employer cannot claim more than $100,000 in credits in a taxable year.

The credit is effective starting for the taxable year beginning on or after January 1 of the first calendar year following the next fiscal year that closes after November 20, 2024 with a consolidated net surplus of at least $400 million. The credit expires on January 1 of the sixth tax year following the effective date of the credit.

Corporate Excise Changes:

“An Act Making Appropriations for the Fiscal Year 2024 to Provide for Supplementing Certain Existing Appropriations and for Certain Other Activities and Projects”, “An Act Relative to the Affordable Homes Act”, “An Act Honoring, Empowering, and Recognizing Our Servicemembers and Veterans”, and “An Act Relative to Strengthening Massachusetts’ Economic Leadership” enacted various changes to the corporate excise.

The following corporate expenditures have been revised or created due to recent law changes:

Economic Development Incentive Program Credit (TE Item 2.605)
Under the Economic Development Incentive Program (EDIP), the Economic Assistance Coordination Council (EACC) may award tax credits to taxpayers that participate in a "certified project" (as defined in G.L. c. 23A, §§ 3A and 3F). The amount of credit allowed in each case is determined by the EACC based on numerous factors set forth in G.L. c. 23A, § 3D, including the number of jobs expected to be created, the amount of capital to be invested, and the net new economic benefit expected to be created. The EACC may designate the credit as refundable for any certified project. Prior to January 1, 2024, the EACC could not annually designate more than $5 million in refundable credits. This limitation is eliminated effective January 1, 2024.

Increase of the cap for and extension of the Massachusetts historic rehabilitation credit (TE Item 2.610)
For taxable years beginning on or after January 1, 2024, the Massachusetts historic rehabilitation credit’s annual cap has been increased from $55 million to $110 million. The credit was due to expire on December 31, 2027, but has been extended to taxable years ending on or before December 31, 2030.

Life Sciences Tax Incentive Program (TE Item 2.617)
Effective for taxable years beginning on or after January 1, 2024, the Angel Investor Tax Credit is no longer available. In addition, the annual amount of life science tax incentives that can be authorized has been increased from $30 million to $40 million.

Increase of the cap for and extension of the community investment credit (TE Item 2.621)
For taxable years beginning on or after January 1, 2025, the community investment credit’s annual cap has been increased from $12 million to $15 million. The credit was due to expire on December 31, 2025, but has been made permanent.

Increase to the qualified veterans hire tax credit (TE Item 2.623)
For taxable years beginning on or after January 1, 2024, the amount of credit a business can claim for each qualified veteran it hires has been increased from $2,000 to $2,500.

Cranberry Bog Renovation Credit (TE Item 2.625)
Effective for tax years beginning on or after January 1, 2020, taxpayers primarily engaged in cranberry production may claim a nontransferable, refundable credit equal to 25% of expenses incurred in the renovation, repair, replacement, regrading or restoration of a cranberry bog for the cultivation, harvesting or production of cranberries. The Secretary for Energy and Environmental Affairs determines eligible costs and the amount of the credit. The amount of credit that can be claimed by a taxpayer for a taxable year cannot exceed $100,000. The annual total cap amount is $2 million. The credit is no longer available for taxable years beginning on or after January 1, 2030.

Temporary authorized training tax credit for emergency assistance (New TE Item 2.629)
Starting with taxable years beginning on or after January 1, 2024, business corporations taxable under G.L. c. 63 that provide training to a qualified trainee through an authorized training program may claim a temporary authorized training tax credit for emergency assistance. A qualified individual is an individual receiving benefits through the emergency housing assistance program pursuant to G.L. c. 23B, § 30. To qualify for the credit, a taxpayer must (1) have a place of business in the Commonwealth; (2) conduct an authorized training program in the Commonwealth that is in compliance with recommendations of the Executive Office of Labor and Workforce Development (“EOLWD”); (3) enroll the qualified trainee in an authorized training program on or after April 30, 2024; and (4) meet any additional requirements determined by the Executive Office for Administration and Finance and EOLWD. The credit is equal to $2,500 for each qualified trainee that receives the training from the entity. The amount of the credit that exceeds the tax due for a taxable year may be carried forward to the subsequent taxable year. The credit is subject to an annual cap of $10 million.

Massachusetts homeownership credit (New TE Item 2.630)
Starting with taxable years beginning on or after January 1, 2025, taxpayers subject to tax under G.L. c. 63 may claim a Massachusetts homeownership tax credit in relation to a qualified homeownership development project to the extent authorized by the Executive Director of the Massachusetts Housing Finance Agency (“MHFA”). The credit is non-refundable but is transferrable. The amount of the credit authorized by MHFA cannot exceed the maximum credit amount, which is 35% of the lesser of either: (1) the project’s total qualified project expenditures calculated on a per single-family dwelling basis; or (2) 80% of the area median new single-family dwelling sales price, subject to further limitations established by MHFA. A sponsor cannot claim the credit before the first taxable year stated on the eligibility certificate issued to the sponsor by MHFA. Any amount of the credit that exceeds the tax due for a taxable year may be carried forward for the duration of the qualified homeownership development project’s affordability period, which is a 10-year period that begins as of the date of the first sale of a single-family dwelling that was constructed as part of the project. The credit is subject to recapture if MHFA determines that a sponsor or qualified homeownership development project does not qualify for the credit, ceases to qualify for the credit, or did not qualify for the credit at the time they claimed the credit.

Qualified conversion credit (New TE Item 2.631)

Starting with taxable years beginning on or after January 1, 2025, taxpayers subject to tax under G.L. c. 63 may claim a refundable, non-transferable qualified conversion credit in relation to a qualified conversion project that has been certified by the Executive Office of Housing and Livable Communities (“EOHLC”). To claim the credit, a sponsor must submit a project proposal to EOHLC requesting the certification of a housing development project as a qualified conversion project. After certifying the project, EOHLC determines the amount of credit awarded to the sponsor, which cannot exceed 10% of the qualified conversion’s project’s development costs.

The credit is no longer available for taxable years ending after December 31, 2029.

Climatetech Tax Incentive Program (New TE Item 2.632)
Massachusetts provides a climatetech tax incentive program, which is administered by the Massachusetts clean energy center (“CEC”), in consultation with DOR. The tax incentives consist of three tax credits, the climatetech capital investment tax credit, a refundable climatetech jobs tax credit, and a climatetech qualified research expenses tax credit; as well as a sales and use tax exemption for purchases of tangible personal property to be used for the construction of research, development or manufacturing or other commercial climatetech facilities. The incentives all share an annual cap of $30 million and are effective for taxable years beginning on or after January 1, 2024.

The climatetech qualified research expenses tax credit is available to corporate excise taxpayers. The credit amount is based on the taxpayer’s qualified research expenses in a manner similar to the standard research expense tax credit. The credit is not refundable, but unused amounts of the credit may be carried forward to the next subsequent 15 taxable years.

Live Theater Credit (New TE Item 2.633)
The live theater tax credit program is administered by the Massachusetts Office of Business Development, in consultation with DOR. The credit is available to personal income and corporate excise taxpayers. The amount of the credit cannot exceed $7 million and is equal to (1) 35% of the total in-state payroll costs; (2) 25% of production and performance expenditures; and (3) 25% of transportation expenditures. The credit is not refundable, but is transferrable. Any unused amount of credit may be carried forward to the next 5 taxable years. The annual amount of credits that can be authorized cannot exceed $7 million.

The credit is effective for taxable years beginning on or after January 1, 2025 and expires on January 1, 2030.

Qualified Internship Credit (New TE Item 2.634)
The qualified internship tax credit is available to personal income and corporate excise taxpayers that hire a qualified intern. The credit is equal to the lesser of $5,000 or 50% of the wages paid to the intern. The annual amount of credits that can be authorized cannot exceed $10 million. A single employer cannot claim more than $100,000 in credits in a taxable year.

The credit is effective starting the taxable year beginning on or after January 1 of the first calendar year following the next fiscal year that closes after November 20, 2024 with a consolidated net surplus of at least $400 million. The credit expires on January 1 of the sixth tax year following the effective date of the credit.

Sales and Use Tax Changes

The FY25 Budget and “An Act Relative to Strengthening Massachusetts’ Economic Leadership” enacted the following changes to the sales and use tax.

Repeal of the sales tax exemption for certain publications of tax-exempt organizations (TE Items 3.607)
Effective September 27, 2024, the sales and use tax exemption for sales of publications of any corporation, foundation, organization or institution that is an exempt organization pursuant to Code § 501(c)(3) and described in G.L. c. 64H, § 6(e) is repealed, except in cases where such publications are produced in an accessible format, including, but not limited to, braille, enlarged print, audio or electronic text, for use by individuals unable to read other print due to disability.

Exemption for Sales of Certain Tangible Personal Property Purchased for a Certified Climatetech Company (New TE Item 3.006)
Effective for taxable years beginning on or after January 1, 2024, sales of tangible personal property purchased for a certified climatetech company, to the extent authorized pursuant to the climatetech tax incentive program, for use in connection with the construction, alteration, remodeling, repair or remediation of research, development or manufacturing facilities and utility support systems, are exempt from sales tax.

Qualified Data Center Sales and Use Tax Exemption (New TE Item 3.007)
A sales and use tax exemption is available to the owner or operator of a qualified data center for the purchase of eligible data center equipment, software, electricity used in a qualified data center, and construction costs incurred in the building, renovation, or refurbishment of a qualified data center. For a data center to be qualified, it must meet certain criteria and be certified by the Secretary of the Executive Office of Economic Development (“EOED”). However, EOED will not accept applications for certification until it completes its development, in consultation with DOR, of the required regulations and a standardized application form for the certification of qualified data centers.