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Massachusetts Basic Business Taxes

Feb/Mar 09
Corporate income tax:
The state imposes an income tax on all domestic and foreign corporations. Tangible personal property, not taxed locally, or net worth is taxed at the rate of $2.60 per $1,000, and net income is taxed at a rate of 9.5 percent. A minimum corporate tax of $456 is required.

Sales and use taxes:
A 5 percent tax is levied on gross receipts from sales at retail as well as on transfers of possession by rental or lease.

Single Sales Factor Tax Structure:
The single sales factor changes the method used by manufacturing and mutual fund corporations for apportioning their income for purposes of taxation in Massachusetts. The formula is most advantageous to corporations that maintain a significant amount of their property and payroll within the commonwealth. The allocation formula will rely entirely on the sales attributable to Massachusetts, or to a state in which the company is not taxable but the sale was made by an employee connected to a Massachusetts office. All sales delivered to a foreign country would not be considered Massachusetts sales regardless of who sold the product. The law requires a reporting requirement on defense and manufacturing companies regarding such matters as volume of sales, capital investments, capacity utilization, and so on.

Research and development:
All machinery, replacement parts, and materials used by manufacturing and R&D corporations in research and development are exempt from sales and use taxation.

Industrial machinery and equipment:
Exemptions from sales and use taxation are provided for machinery and parts utilized by manufacturers, and utilities. Other exemptions apply to tools and dies used to cast metal products, new and used buses, concrete-mixing trucks, barges and commercial fishing vessels, and printing corporations.

Industrial fuels and raw materials:
Fuel consumed and materials used as component parts for manufacturing; fuel and supplies for barges; fuel for heating, railroads, and aircraft; water, steam, and gas; and containers are not subject to sales and use taxes.

Real property tax:
Real property is assessed only in the town where it lies. Tax Increment Financing (TIF) allows property owners in designated Economic Target Areas to benefit from agreements that can be reached with municipalities to reduce the incremental taxes resulting from investment for a period of time.

Personal property tax:
Personal property of business is taxed at the local level only in the town where it lies. Manufacturers are exempt from local personal property tax, but are taxed at the state rate of $2.60 per $1,000 plus 9.5 percent of taxable net income. EDIP-certified projects are exempt from personal property taxes for the life of a TIF.

Business inventory:
Business inventories held by corporations are exempt from local property taxation.

Massachusetts State Contact:
Massachusetts Business Resource Team
One Ashburton Place, Suite 2101
Boston, MA 02108
1-877-BIZTEAM (249-8326)

Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.

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