Origin: 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.
Origin: M.G.L. c. 63, §§30(7) ; 30.8; §39(a)(1)
Corporate Excise Tax
Exclusions from Property Component
2.502
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.<BR><BR>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.<BR><BR>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.<BR><BR>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.<BR><BR>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, <a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter63/Section30" target="_blank">§§30(7) ; 30.8</a>; <a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter63/Section39" target="_blank">§39(a)(1)</a>
376.0
393.5
410.6
416.8
418.8
