2.500
2.500 Exclusions from Property Component
Tax Expenditure Name
Tax Expenditure Number
FY2023
FY2024
FY2025
FY2026
FY2027
Exclusions from Property Component
2.500
376.0
393.5
410.6
416.8
418.8
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Tax Item
Description
Origin
FY2027
2.501
Nontaxation of Certain Energy Property
Nontaxation of Certain Energy Property
This tax expenditure allows a corporate excise deduction for certain alternative energy property. It is not currently active, although the statute authorizing it is still in effect, because the deduction requires certification by a state agency that no longer exists. In the absence of that agency or a successor agency to certify the property, no exemption can be allowed. These circumstances are further explained below.
In addition to a tax on net income, the Massachusetts corporate excise also imposes a tax on net worth or tangible personal property. The tax on tangible personal property applies if the book value of the taxpayer's tangible personal property located in Massachusetts and not subject to local taxation is ten percent or more of the taxpayer's total assets (with certain adjustments). If this is the case, the non-income measure of the corporate excise is based on the book value of the corporation's tangible property located in Massachusetts and is not subject to local tax.
The statute provides for a deduction from tangible property subject to the excise for "expenditures paid or incurred during the taxable year with respect to the installation of any solar or wind powered climatic control unit and any solar or wind powered water heating unit or any other type unit or system powered thereby." The statute further provides that the exemption is limited to equipment "for which the manufacturer's British thermal unit impact statement has been submitted to the director of the bureau of building construction and which have been certified by said director as complying with applicable provisions of regulations and standards issued by him pursuant to law."
Historically, the Bureau of Building Construction was responsible for setting construction standards in Massachusetts. In 1980, it was absorbed by the Division of Capital Planning and Operations ("DCPO"), now the Division of Capital Asset Management & Maintenance ("DCAMM"). The Bureau of Construction's function in certifying alternative energy property was not specifically delegated to any successor agency. No certification standards, guidelines or regulations have been established by DCAMM or any other Massachusetts agencies for corporations seeking to take the alternative energy property deduction.
As a result of these circumstances this tax expenditure is not active.
In addition to a tax on net income, the Massachusetts corporate excise also imposes a tax on net worth or tangible personal property. The tax on tangible personal property applies if the book value of the taxpayer's tangible personal property located in Massachusetts and not subject to local taxation is ten percent or more of the taxpayer's total assets (with certain adjustments). If this is the case, the non-income measure of the corporate excise is based on the book value of the corporation's tangible property located in Massachusetts and is not subject to local tax.
The statute provides for a deduction from tangible property subject to the excise for "expenditures paid or incurred during the taxable year with respect to the installation of any solar or wind powered climatic control unit and any solar or wind powered water heating unit or any other type unit or system powered thereby." The statute further provides that the exemption is limited to equipment "for which the manufacturer's British thermal unit impact statement has been submitted to the director of the bureau of building construction and which have been certified by said director as complying with applicable provisions of regulations and standards issued by him pursuant to law."
Historically, the Bureau of Building Construction was responsible for setting construction standards in Massachusetts. In 1980, it was absorbed by the Division of Capital Planning and Operations ("DCPO"), now the Division of Capital Asset Management & Maintenance ("DCAMM"). The Bureau of Construction's function in certifying alternative energy property was not specifically delegated to any successor agency. No certification standards, guidelines or regulations have been established by DCAMM or any other Massachusetts agencies for corporations seeking to take the alternative energy property deduction.
As a result of these circumstances this tax expenditure is not active.
M.G.L. c. 63, §38H(f)
Not Active
2.502
Exemption for Property Subject to Local Taxation
Exemption for Property Subject to Local Taxation
The corporate excise is comprised of a net income tax and a property or net worth tax. M.G.L. c. 63, § 39. Tangible property corporations pay the property tax and intangible property corporations pay the net worth tax. The net income tax applies to both tangible and intangible property corporations. Whether a corporation is a tangible or intangible property corporation is based on the value of its tangible property located in Massachusetts and not subject to local tax, as a percentage of the corporation's total assets. See M.G.L. c. 63, § 30. If the percentage is 10% or more, the corporation is a tangible property corporation. If the percentage is lower than 10%, the corporation is an intangible property corporation.
Tangible property corporations pay a state level tangible property tax equal to .26% of the value of their tangible property located in Massachusetts and not subject to local tax. Thus, tangible property subject to local tax is excluded from the state tax base.
Intangible property corporations pay a state level tax equal to .26% of their net worth apportioned to Massachusetts. However, a deduction from net worth is allowed for the value of tangible property located in Massachusetts and subject to local taxation. See M.G.L. c. 63, § 30.8. Thus, the value of such tangible property is largely excluded from the state tax base.
Whether or not tangible property owned by corporations is subject to tax at the local level is determined under c. 59, § 5. In general, real property is subject to local tax unless an exemption applies. Tangible personal property owned by corporations may be taxable depending on the corporation's line of business or how the corporation uses the property.
Without the state level exemption and deduction for tangible property subject to local taxation, such property would be subject to tax at both the state and local levels. The state level corporate excise lost as a result of the exemption and deduction constitutes a tax expenditure.
Tangible property corporations pay a state level tangible property tax equal to .26% of the value of their tangible property located in Massachusetts and not subject to local tax. Thus, tangible property subject to local tax is excluded from the state tax base.
Intangible property corporations pay a state level tax equal to .26% of their net worth apportioned to Massachusetts. However, a deduction from net worth is allowed for the value of tangible property located in Massachusetts and subject to local taxation. See M.G.L. c. 63, § 30.8. Thus, the value of such tangible property is largely excluded from the state tax base.
Whether or not tangible property owned by corporations is subject to tax at the local level is determined under c. 59, § 5. In general, real property is subject to local tax unless an exemption applies. Tangible personal property owned by corporations may be taxable depending on the corporation's line of business or how the corporation uses the property.
Without the state level exemption and deduction for tangible property subject to local taxation, such property would be subject to tax at both the state and local levels. The state level corporate excise lost as a result of the exemption and deduction constitutes a tax expenditure.
M.G.L. c. 63, §§30(7) ; 30.8; §39(a)(1)
418.8
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