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Massachusetts Taxes: What You Need to Know

Understanding your paycheck in Massachusetts involves navigating federal, state, and local tax withholdings, insurance contributions, and pre-tax deductions. Here’s a comprehensive overview of all taxes applicable in 2026.

Federal, State, and Local Tax Withholding in Massachusetts in 2026

Massachusetts uses a flat income tax rate for most residents, with an additional surtax for high earners. Here is what you need to know:

Federal Income Tax:

Massachusetts residents are subject to federal income tax, just like all other U.S. citizens. The federal tax is calculated based on a progressive tax system with varying rates depending on income brackets, meaning individuals pay higher rates on higher income only on the portion that exceeds each threshold. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently extended the Tax Cuts and Jobs Act rate structure. For the 2026 tax year, the federal tax brackets are as follows:

For Single Filers: (Source)

• 10%: Applies to taxable income up to $12,400.
• 12%: Applies to income between $12,401 and $50,400.
• 22%: Applies to income between $50,401 and $105,700.
• 24%: Applies to income between $105,701 and $201,775.
• 32%: Applies to income between $201,776 and $256,200.
• 35%: Applies to income between $256,201 and $640,600.
• 37%: The top rate applies to taxable income over $640,600.

For Married Couples Filing Jointly: (Source)

• 10%: Applies to taxable income up to $24,800.
• 12%: Applies to income between $24,801 and $100,800.
• 22%: Applies to income between $100,801 and $211,400.
• 24%: Applies to income between $211,401 and $403,550.
• 32%: Applies to income between $403,551 and $512,450.
• 35%: Applies to income between $512,451 and $768,700.
• 37%: The top rate applies to taxable income over $768,700.

For Head of Household Filers: (Source)

• 10%: Applies to taxable income up to $17,700.
• 12%: Applies to income between $17,701 and $67,450.
• 22%: Applies to income between $67,451 and $105,700.
• 24%: Applies to income between $105,701 and $201,750.
• 32%: Applies to income between $201,751 and $256,200.
• 35%: Applies to income between $256,201 and $640,600.
• 37%: The top rate applies to taxable income over $640,600.

For Married Filing Separately: (Source)

• 10%: Applies to taxable income up to $12,400.
• 12%: Applies to income between $12,401 and $50,400.
• 22%: Applies to income between $50,401 and $105,700.
• 24%: Applies to income between $105,701 and $201,775.
• 32%: Applies to income between $201,776 and $256,200.
• 35%: Applies to income between $256,201 and $384,350.
• 37%: The top rate applies to taxable income over $384,350.

The 2026 federal standard deduction increases to $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. The standard deduction reduces the amount of income on which tax is calculated, meaning most employees won’t pay federal income tax on their first $16,100 (single) or $32,200 (joint) of earnings. (Source)

Massachusetts State Income Tax:

Unlike most states, Massachusetts uses a flat income tax rate rather than graduated brackets — with one important exception for high earners. (Source)

• 5.0% flat rate applies to all Massachusetts taxable income. This rate has been in effect since 2020 and applies uniformly regardless of filing status or income level.
• Additional 4% surtax applies to taxable income exceeding $1,107,750 for tax year 2026. This surtax — often called the “Millionaire’s Tax” — was approved by Massachusetts voters in November 2022 and took effect in 2023. The threshold increases annually for inflation. (Source)
• The combined effective top rate for high earners is therefore 9.0% (5% regular rate + 4% surtax) on income above the threshold.
• Full-time students with annual income not exceeding $8,000 are exempt from Massachusetts income tax withholding. (Source)

Local Tax: Massachusetts does not impose local income taxes, making payroll withholding straightforward. Your only state income tax obligation is to the Commonwealth.

Sales Tax: Massachusetts imposes a statewide sales tax of 6.25% on most retail goods and services. There are no additional local sales taxes, meaning the rate is uniform across the state. Essential items such as groceries and prescription drugs are exempt. (Source)

FICA and State Insurance Taxes in Massachusetts in 2026

FICA Taxes include Social Security and Medicare:

• Social Security is taxed at 6.2% on income up to $184,500 in 2026. This wage base increased from $168,600 in 2024 — employers must update payroll systems accordingly. (Source)
• Medicare is taxed at 1.45% on all income, with an additional 0.9% surtax on earnings over $200,000 for single filers ($250,000 for married filing jointly). (Source)

Massachusetts Unemployment Insurance (UI): Massachusetts UI is employer-funded only — employees do not pay UI contributions. Employers file quarterly employment and wage detail reports and pay contributions to the Department of Unemployment Assistance (DUA). For 2026, new employers (registered less than 3 years) pay 2.42%, and new construction industry employers pay 6.08%. Established employers (registered 3 or more years) receive an experience rating calculated annually by DUA, with rate notices sent by January 31 each year. (Source)

Massachusetts Paid Family and Medical Leave (PFML)

Massachusetts has a fully operational Paid Family and Medical Leave program. For 2026, the contribution rate remains 0.88% of eligible wages, capped at the Social Security wage base of $184,500. (Source)

For employers with 25 or more covered employees:

• Medical Leave: 0.70% of eligible wages — employers must contribute at least 0.42%; up to 0.28% may be withheld from employees.
• Family Leave: 0.18% of eligible wages — up to 100% may be withheld from employees.

For employers with fewer than 25 covered employees:

• Total effective contribution: 0.46% of eligible wages. These smaller employers are not required to pay the employer share of the medical leave contribution; the 0.46% represents only the employee-side portions.

2026 PFML benefit highlights: (Source)

• Maximum weekly benefit in 2026: $1,230.39 (up from $1,170.64 in 2025).
• State average weekly wage in 2026: $1,922.48.
• Eligible employees may take up to 12 weeks of paid family leave, up to 20 weeks of paid medical leave, or up to 26 weeks of leave to care for an injured service member per benefit year.

Pre-Tax Deductions in Massachusetts in 2026

Pre-tax deductions reduce your taxable income, thereby lowering your overall tax liability. These deductions are taken from your gross income before taxes are applied. Here’s a breakdown of common pre-tax deductions that Massachusetts residents can utilize:

Health Insurance Premiums

Employee contributions toward medical, dental, and vision insurance are generally deducted from wages on a pre-tax basis. This means that the amounts contributed for these health insurance plans are not included in taxable income, effectively reducing the employee’s federal, state, and FICA tax liability. This can translate into significant tax savings, especially for employees with comprehensive coverage.

401(k) Contributions

Contributions to 401(k) retirement accounts are pre-tax. For 2026, the contribution limit is $24,500, up from $23,500 in 2025. Employees aged 50 and older may contribute an additional $8,000 catch-up contribution, and a higher catch-up limit of $11,250 applies to those aged 60–63 under SECURE 2.0 provisions. The IRA contribution limit also increased to $7,500 for 2026. (Source)

Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA)

• Health Savings Accounts (HSAs) are available to individuals enrolled in qualifying high-deductible health plans (HDHPs). Contributions are pre-tax and can be used for qualified medical expenses. For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Unused HSA funds roll over year to year. (Source)
• Flexible Spending Accounts (FSAs) allow employees to set aside pre-tax dollars for medical and dependent care expenses. The FSA contribution limit for 2026 is $3,400, up $100 from 2025. The maximum carryover amount is $680. Unlike HSAs, FSAs generally have stricter rollover rules, making it important to plan annual expenses carefully. (Source)
• Dependent Care Assistance Program (DCAP): Employees may contribute up to $5,000 per household ($2,500 if married filing separately) to cover qualifying childcare and dependent care costs on a pre-tax basis.

Tax Rates and Brackets for 2026

These pre-tax deductions and corresponding tax rates provide significant opportunities for Massachusetts residents to manage their tax liabilities effectively while planning for the future — whether it involves health, retirement savings, or commuting costs. Understanding these deductions can help individuals maximize their take-home pay and benefit from tax-advantaged savings strategies.

Key Updates for 2026

• 4% Surtax Threshold: The Massachusetts surtax threshold increases annually for inflation. For tax year 2026, the threshold is $1,107,750, up from $1,083,150 in 2025. Only income above this threshold is subject to the additional 4%. (Source)
• Federal Standard Deduction: Increased to $32,200 for married filing jointly and $16,100 for single filers in 2026. (Source)
• Social Security Wage Base: Increased to $184,500 for 2026 (up from $168,600 in 2024). (Source)
• PFML Maximum Weekly Benefit: Increased to $1,230.39 in 2026, up from $1,170.64 in 2025. (Source)
• 401(k) Contribution Limit: Increased to $24,500 in 2026, up from $23,500 in 2025. (Source)

Median Household Income in Massachusetts

Massachusetts consistently ranks among the highest states for household income, driven by its thriving technology, healthcare, finance, and education sectors. According to the U.S. Census Bureau’s 2023 American Community Survey 1-year estimates, Massachusetts had a median household income of $99,858, ranking among the top three states nationally. (Source)

Cities like Boston, Cambridge, and the suburban communities west of Boston consistently lead in household earnings, hosting top employers in biotech, financial services, and higher education. However, the state’s high wages are balanced against elevated living costs, particularly housing.

Massachusetts Tax Brackets 2026

Massachusetts has a distinctive tax structure compared to most states. Where nearly all states use a graduated income tax — taxing higher earners at progressively higher rates on each dollar — Massachusetts applies a single flat rate of 5.0% to all taxable income. This simplicity means every Massachusetts taxpayer, regardless of income, is subject to the same base rate on their earnings. The major exception is the 4% Millionaire’s Surtax, which was added by voter referendum in 2022 and applies to income exceeding the annually adjusted threshold. (Source)

For tax year 2026, this surtax threshold is $1,107,750. The surtax applies to all Massachusetts taxpayers — individuals, trusts, estates, and unincorporated associations — whose taxable income exceeds this level. Only the portion of income above the threshold is subject to the extra 4%; all other income continues to be taxed at the flat 5.0% rate. (Source — 4% Surtax) (Source — Personal Income Tax 5.0% rate)

How Massachusetts income tax works in practice:

• A single filer earning $80,000 pays 5.0% on their Massachusetts taxable income — approximately $4,000 in state income tax before exemptions.
• A high earner with $1,500,000 in taxable income pays 5.0% on the first $1,107,750 (~$55,388) and 9.0% on the remaining $392,250 (~$35,303), for a combined Massachusetts state income tax bill of approximately $90,691.

Other taxes in Massachusetts affecting residents: (Source)

• State Sales Tax: 6.25% statewide on most retail goods and taxable services; no local add-ons. Groceries and prescription drugs are exempt.
• Short-Term Capital Gains: 8.5% on short-term capital gains from the sale of capital assets.
• Long-Term Capital Gains on Collectibles: 12% (subject to a 50% deduction).
• Corporate Income Tax: 8.00% (applies to businesses, not individual employees).

Massachusetts’s flat income tax structure makes payroll withholding calculations straightforward for most employees. Employers should ensure that Circular M withholding tables effective January 1, 2026 are in use, and that employees earning near or above $1,107,750 annually have appropriate additional withholding arrangements in place for the surtax. (Source) (Source)