1.000 Exclusions from Gross Income

Exclusions from Gross Income

1.000

5,516.4

6,032.6

6,381.2

6,730.7

7,084.0

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1.001
Exemption of Premiums on Accident and Accidental Death Insurance

Employer contributions for premiums on accident and accidental death insurance are not included in the income of the employee and are deductible by the employer.

IRC § 106

included in 1.004

1.002
Exemption of Premiums on Group-Term Life Insurance

Due to Massachusetts' reliance on the Internal Revenue Code ("Code") for purposes of determining income, employer payments of employees' group-term life insurance premiums for coverage up to $50,000 per employee are not included in income by the employee.

IRC § 79

32.1

1.003
Exemption of Death Benefits and Interest on Life Insurance Policy and Annuity Cash Value

Due to Massachusetts' conformity with Internal Revenue Code (IRC) § 101, increases in the cash value of life insurance policies and annuities are not taxed until distributed to the policy holder. If the policy holder dies with the policy in force, the increase in value and the death benefit are excluded from income when paid to policy or annuity beneficiaries.

IRC § 101

442.7

1.004
Exemption of Employer Contributions to Accident and Health Plans and Certain Benefits Received

Massachusetts conforms to the federal individual income tax exclusions for: (i) employer contributions to employees' accident and health plans and (ii) benefits received by employees from such plans.

M.G.L. c. 62, §§ 1(c), 1(d), and § 2(a)(2)(Q); Code §§ 105 and 106

1,627.3

1.005
Exemption of Annuity or Pension Payments to Fire and Police Personnel

Income from noncontributory annuities or pensions to certain retired fire and police personnel or their survivors are tax-exempt.

M.G.L. c. 32

N.A.

1.006
Exemption of Distributions from Certain Contributory Pension and Annuity Plans

Income from contributory pensions of the U.S. and Massachusetts governments, including their agencies and political subdivisions, is excluded from Massachusetts gross income.

M.G.L. c. 62, §§ 2(a)(2)(E)

528.8

1.007
Exemption of Railroad Retirement Benefits

Railroad Retirement benefits are excluded from Massachusetts gross income.

M.G.L. c. 62, § 2(a)(2)(H)

1.6

1.008
Exemption of Public Assistance Benefits

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, public assistance benefits are excluded from gross income.

IRC § 61(a)(1); Rev. Rul. 71-425, 1971-2 C.B. 76

1,734.3

1.009
Exemption of Social Security Benefits

Social Security benefits are excluded from Massachusetts gross income.

M.G.L. c. 62, § 2 (a)(2)(H)

658.9

1.010
Exemption of Workers' Compensation Benefits

Due to Massachusetts' reliance on the Internal Revenue Code ("Code") for purposes of determining income, amounts received under workers' compensation acts as compensation for personal injuries or sickness are excluded from gross income.

IRC § 104 (a)(1)

54.5

1.011
Exemption for Dependent Care Expenses

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, dependent care assistance provided by employers to employees is excluded from Massachusetts gross income.

M.G.L. c. 62, §§ 1(c), 1(d), 2(a); Internal Code § 129

5.7

1.012
Exemption of Certain Foster Care Payments

Massachusetts conforms to the federal income tax exclusion for payments by state and local social services agencies to taxpayers that provide foster care to children in need.

IRC § 131

3.9

1.013
Exemption of Payments Made to Coal Miners

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, amounts received by coal miners or their survivors as compensation for disability or death from black lung disease are excluded from Massachusetts gross income.

IRC § 104(a)(1); Rev. Rul. 72-400

Negligible

1.014
Exemption of Rental Value of Parsonages

Massachusetts conforms to Internal Revenue Code (the "Code") § 107, which allows ministers to exclude from gross income a housing allowance or the rental value of a parsonage furnished as part of their compensation. As defined in Internal Revenue Service pronouncements and federal case law, the term "minister" includes people holding various titles in a variety of religious organizations.

M.G.L. c. 62, §§ 1(c), 1(d), and § 2(a); Code § 107

4.5

1.015
Exemption of Scholarships, Fellowships, and Tuition Reductions

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, qualifying scholarships, fellowship grants, and tuition reductions are excluded from Massachusetts gross income.

IRC § 117(a), (d)

55.5

1.016
Exemption of Certain Prizes and Awards

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, prizes for achievements in specified fields and certain cash payments received for participating in the Olympics or Paralympics are excluded from Massachusetts gross income.

IRC § 74

3.5

1.017
Exclusion of Payments Received Under Government Conservation, Reclamation and Restoration Programs

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, property owners may exclude from income certain payments they receive for participating in designated conservation, reclamation, and restoration programs.

IRC § 126

0.4

1.018
Exclusion from Employee Income of Meals and Lodging Furnished for the Convenience of the Employer

This tax expenditure provides employees with an income exclusion for the value of meals and lodging provided by their employers for the employers' business purposes. Massachusetts conforms to the exclusion set out in the Internal Revenue Code (the "Code"), which results in a state tax expenditure.

M.G.L. c. 62, § 2(a)

75.8

1.019
Exclusion from Employee Income of Business-Related Meals and Entertainment

Provides an income exclusion for the value of business-related meals and entertainment provided to employees, consistent with the federal exclusion.

M.G.L. c. 62, § 2(a)

32.4

1.020
Exemption of Income from the Sale, Lease, or Transfer of Certain Patents

Exempts from tax income from the sale or transfer of certain patents, or from the production of royalty or other income from property subject to such patents, for a period of five years. The patents must be issued to or applied for by a Massachusetts resident or a Massachusetts corporation, support energy conservation or alternative energy, and be approved by the commissioner of energy resources.

M.G.L. c. 62, § 2(a)(2)(G); M.G.L. c. 63, § 30.3

Expired

1.021
Exemption of Capital Gains on Home Sales

Massachusetts conforms to the Internal Revenue Code (the "Code") § 121 exclusion from gross income for up to $250,000 of capital gain (or $500,000 if filing jointly) on the sale of a principal residence.

M.G.L. c. 62, §§ 1(c), 1(d), and § 2(a); Code § 121

429.2

1.022
Exemption for Capital Gains at Time of Death

Ordinarily, for federal income tax purposes, capital gains are taxed at the time appreciated property is transferred to a new owner. However, tax is not imposed on capital assets transferred by reason of the owner's death. Further, the new owner receives the assets with a new basis (i.e. the fair market value of assets at the time of decedent's death) rather than the same "carryover" basis of the decedent. Thus, the amount of appreciation that occurred while the decedent held the asset is never taxed. Massachusetts generally follows the federal rules for purposes of determining taxable capital gains. This conformity allows capital assets to escape the personal income tax to the extent of appreciation occurring prior to the decedent's death, resulting in a state tax expenditure. Comment: See also item 1.106

IRC §§ 1001 and 1014

915.0

1.023
Exemption of Interest from Massachusetts Obligations

Interest earned on Massachusetts state and local obligations is exempt from the personal income tax. The exemption applies to interest income from any obligation issued by the Commonwealth, any political subdivision of the Commonwealth, or any agency or instrumentality thereof.

M.G.L. c. 62, § 2 (a)(1)(A); IRC § 103

87.7

1.024
Exemption of Benefits and Allowances to Armed Forces Personnel

Due to its reliance on the Internal Revenue Code (Code) for purposes of determining income, Massachusetts excludes several benefits to members of the armed services, including, under IRC § 112 (i) compensation earned by members of the Armed Forces serving in a combat zone and (ii) income received by such individuals who were hospitalized as a result of injury incurred while serving in a combat zone, and under IRC § 134, certain qualified military benefits, such as certain medical and disability benefits, moving allowances, dependent care assistance, and certain travel benefits.

IRC §§ 112, 134

17.4

1.025
Exemption of Veterans' Pensions, Disability Compensation and G.I. Benefits

Federal law provides that amounts received as veterans' disability pensions, disability compensation and G.I. benefits are exempt from federal and state taxation. Massachusetts is thus not permitted to tax such amounts.

38 U.S.C. § 5301

69.5

1.026
Exemption of Military Disability Pensions

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, amounts received as military disability pensions are excluded from gross income.

M.G.L. c. 62, § 1(c); IRC §§ 104(a)(4) and (5), and IRC §§ 104 (b)

0.8

1.027
Exemption of Compensation to Massachusetts-Based Nonresident Military Personnel

Nonresident servicemembers are not subject to personal income tax on compensation for active-duty military service, even if the service is performed in Massachusetts.

M.G.L. c. 62, § 5A(c)

12.8

1.028
Exemption for Taxpayers Killed in Military Action or by Terrorist Activity

Certain individuals that died as a result of injuries sustained in (i) military service in a combat zone, (ii) military or civilian service in a military action or terrorist attack, or (iii) specified terrorist attacks on civilians are exempted from the Massachusetts personal income tax, subject to certain limitations. The Massachusetts exclusion parallels a similar federal exclusion.

M.G.L. c. 62, § 25; IRC, § 692.

Negligible

1.029
Exemption for Retirement Pay of the Uniformed Services

Income from U.S. military pensions is excluded from Massachusetts gross income. Such pensions are those derived from service in the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, and the Commissioned Corps of the Public Health Service and National Oceanic and Atmospheric Administration. Note that income from such pensions is subject to the federal income tax.

M.G.L. c. 62, § 2(a)(2)(E); St.1997, c. 139, s. 1

24.6

1.030
Exclusion from Gross Income of Parking, T-Pass and Vanpool Fringe Benefits

Massachusetts conforms to the federal tax exclusion for employer-provided parking, transit passes, and vanpool benefits provided under the Internal Revenue Code (the "Code"). In 2023, the Massachusetts and federal exclusions are subject to monthly maximums of $300 for parking and $300 for combined transit pass and vanpool benefits. The Massachusetts exclusion amount was different than the federal exclusion amount in prior years because prior to 2022 the state relied on the federal exclusion amounts determined under the 2005 Code.

M.G.L. c. 62, §§ 1(c), 1(d), and § 2(a); Code § 132(f)

59.6

1.031
Health Savings Accounts

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, eligible contributions to, earnings in, and qualified distributions from health savings accounts (HSAs) are not subject to the personal income tax.

M.G.L. c. 62, §§ 1(c), 1(d), and 2(d)(1); IRC § 223

61.1

1.032
Employer-Provided Adoption Assistance

Massachusetts adopted the federal exclusion for employer-provided adoption expenses paid (or treated as paid under IRC sec. 137). Previously, Massachusetts followed the 2005 Code and as such the exclusion had a sunset after 2010. With the recent update to the Code as of January 1, 2022, Massachusetts this expenditure has been restored.

IRC § 137

2.5

1.033
Employer-Provided Educational Assistance

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, certain employer payments for employee education and training assistance are excluded from employee gross income.

M.G.L. c. 62, § 1(c); Code §§ 127 and 132(j)(8)

13.7

1.035
Department of Defense Homeowners Assistance Plan

Due to Massachusetts' reliance on the Internal Revenue Code (Code), Massachusetts adopts the federal exclusion for qualified military base realignment and closure fringe benefits paid by the Department of Defense (DOD) to military personnel, eligible civilian personnel, or their spouses. Such benefits are intended to compensate such individuals for reductions in the fair market value of their homes that result from having to move due to base closures or injury related to military service.

M.G.L. c. 62, § 1(c) ; IRC § 132 (a)(8), (n); 42 U.S. Code § 3374

0.2

1.036
Survivor Annuities of Fallen Public Safety Officers

For both Massachusetts and federal tax purposes, an exclusion from income is allowed for amounts paid under a governmental plan as an annuity to the survivor of a public safety officer killed in the line of duty. Massachusetts adopts the federal exclusion as amended and in effect on January 1, 2005, that excludes these annuities.

IRC § 101(h)

N.A.

1.037
Survivor Annuities of Fallen Astronauts

Massachusetts adopts the federal exclusion for death benefits paid by the U.S. government to the survivors of astronauts who die in the line of duty. The Massachusetts exclusion is effective for payments made on or after January 1, 2005.

IRC § 101(i)

N.A.

1.039
Discharge of Indebtedness for Health Care Professionals

Massachusetts adopts the federal exclusion for discharges of indebtedness related to certain costs for students entering health care professions.

M.G.L. c. 62, § 2; IRC § 108(f)(4)

1.2

1.040
Archer Medical Savings Accounts

Due to Massachusetts' reliance on the Internal Revenue Code ("Code") for purposes of determining income, eligible contributions to, earnings in, and qualified distributions from Archer medical savings accounts ("Archer MSAs") are not subject to the personal income tax.

M.G.L. c. 62, §§ 1(c), 1(d), and 2(d)(1); IRC § 220

0.2

1.041
Earnings of Pre-paid and Tuition Savings ("529" plans)

Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, Massachusetts allows an income exclusion for amounts earned by pre-paid tuition programs and tuition savings accounts.. See TIR 18-14 for more information.

IRC § 529

37.3

1.042
Exclusion of Gains of Qualified Small Business Stock (QSBS) Gain

For federal tax purposes Internal Revenue Code ("IRC") § 1202 allows individuals an income exclusion for gains derived from the sale of qualified small business stock ("QSBS"). Because Massachusetts generally follows the IRC as in effect in 2005 for personal income tax purposes, Massachusetts allows an income exclusion for 50% of such gains.

IRC § 1202

25.2

1.043
Exclusion of Alimony Payments Made

Due to Massachusetts' conformity with Internal Revenue Code (IRC) § 61, Massachusetts excludes from gross income alimony payments made pursuant to any divorce or separation instrument executed after December 31, 2018, and (ii) to any divorce or separation instrument executed before 2019 but modified after 2018 to expressly provide that alimony or separate maintenance payments are not deductible by the payer or includible in the gross income of the recipient.

IRC §§ 61(a)(8) and 62(a)(10)

7.0

1.044
Exclusion From Gross Income Of Discharged Qualified Principal Residence Indebtedness

Due to Massachusetts' conformity with IRC § 108(a)(1), Massachusetts excludes from gross income the discharge of qualified principal residence indebtedness. The maximum amount excludable from Massachusetts gross income as discharged qualified principal residence indebtedness is $750,000 ($375,000 if married filing separately)

IRC § 108(a)(1)(E)

0.3

1.045
Exclusion From Gross Income Of Amounts Received Under The Work Colleges Program

Due to Massachusetts' conformity with IRC § 117(c)(2), Massachusetts allows an exclusion from gross income for amounts an individual receives from a comprehensive student work-learning service program at a work college.

IRC § 117(c)(2)

40.3

1.046
Exclusion Of Benefits Provided To Volunteer Firefighters And Emergency Medical Responders

Due to Massachusetts' conformity with IRC § 139B, a member of a qualified volunteer emergency response organization may exclude from gross income (i) any qualified state or local tax benefit provided on account of the member's services and (ii) qualified payments of up to $600 for the member's services. A "qualified volunteer emergency response organization" is any volunteer organization which is (i) organized and operated to provide firefighting or emergency medical services, and (ii) is required to provide such services by a state or local government. A taxpayer may take a charitable deduction for expenses incurred in performing services as a member of a qualified volunteer emergency response organization only to the extent those expenses exceed the amount of the taxpayer's qualified payments excluded from federal gross income under IRC § 139B.

IRC § 139B

0.7

1.047
Exclusion From Gross Income Of Indian Healthcare Benefits

Due to Massachusetts' conformity with IRC § 139D, Massachusetts allows taxpayers to exclude from gross income the value of any qualified Indian health care benefit.

IRC § 139D

15.8

1.048
Exclusion From Gross Income Of Indian General Welfare Benefits

Due to Massachusetts' conformity with IRC § 139E, Massachusetts allows taxpayers to exclude from gross income general Indian welfare payments paid by Indian tribal government programs.

IRC § 139E

0.1

1.049
Exclusion From Gross Income Of Certain Amounts Received By Wrongfully Incarcerated Individuals

Due to Massachusetts' conformity with IRC § 139F, Massachusetts allows taxpayers to exclude from gross income amounts received as civil damages, restitution, or other monetary award relating to the wrongful incarceration of an individual.

IRC § 139F

0.1

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