Stimulus 2022: Massachusetts’ propose tax refund payments worth up to $20,000

MASSACHUSETTS lawmakers proposed changing its current tax structure where residents would receive a maximum credit of $6,500 per taxpayer.

Chapter 62F offers a windfall of cash to the state’s top-income earners, while lower-income workers receive a much smaller amount.

The proposed law, led by Representative Michael Connolly, would redistribute the remainder of the $2.9billion and designate an extra $200 to about a  3.5million state residents.

“We took action to authorize the advance refund checks, and we did so in a way that returns the entire $2.9billion and delivers a bigger refund to 99.4 percent of eligible taxpayers,” Mr. Connolly said in a press release.

The lawmakers filed the proposed legislation as housing, childcare, healthcare, food, energy, fuel, and heating costs continued to rise.

Ch. 62F “would be a major fiscal policy failure… but it doesn’t have to be this way. Rep. Connolly introduced legislation that would cap tax credits at $6,500 for the wealthiest households, allowing the state to more fairly redistribute the $3 billion…” https://t.co/w8yJ8L0xPB

— Mike Connolly (@MikeConnollyMA) October 15, 2022

What is the current law?

According to the proposed legislation, Chapter 62F is a tax cap to prevent excessive tax hikes.

Nearly 26 percent of the $2.9billion excess will be given to taxpayers who earned over $ 1 million in income in 2021.

Taxpayers with incomes of $ 1 million or more will get refunds of about $22,000 on average.

While taxpayers in the bottom 20 percent of incomes will receive refunds of about $9 on average.

Chapter 62F is based on a revenue-growth limit set by wage and salary information.

Proud to be standing up for working people, poor folks, and the middle class here in Massachusetts alongside @JamieEldridgeMA, @JamieBelsito, and @CllrKendraLara. We want to limit Ch. 62F tax credits for multimillionaires in order to provide more economic relief to the 99% of us. pic.twitter.com/TLNQQrdjlX

— Mike Connolly (@MikeConnollyMA) October 13, 2022

The lawmakers claim this doesn’t consider capital gains and non-withheld income as top earners grab most of their income from capital gains.

Middle to lower-income folks sees most of their income in wages and salaries.

“This results in a revenue limit that doesn’t account for how wealthy people make a lot of their money,” according to the press release.

Other states and their tax rate

Missouri Governor Michael L. Parson has signed legislation dropping the state income tax rate.

More details on the bogus calculations that are involved in setting the Chapter 62F revenue-growth limit and our proposal to “put more money in more people’s pockets” are available here on my State House blog. https://t.co/rxwn5t5Fqv

— Mike Connolly (@MikeConnollyMA) October 13, 2022

Starting January 1, 2023, the tax rate will drop from 10.25 percent to 4.95 percent.

The Missouri governor said in a press conference, “while Washington D.C. politicians ignore record inflation and skyrocketing consumer prices, we won’t make the same mistake here in the state of Missouri.”

The law reduces the top individual income tax rate from 5.2 to 4.95 percent, where most taxpayers will see a roughly five percent decrease in their tax liability.

Additionally, this will eliminate the bottom income tax bracket and allow residents to earn their first $1,000 tax-free.

Residents may see the tax rate drop to 4.8 percent as soon as 2024, but only if state tax revenue increases by at least $175million over a specific period.

At 10 am, I will be joining with @JamieEldridgeMA, @JamieBelsito, and @CllrKendraLara for a media availability to discuss our bill to cap Ch. 62F tax credits for million-dollar income earners and evenly redistribute the excess funds. 3.5 million taxpayers would get an extra $200. pic.twitter.com/6F2NWbO8GH

— Mike Connolly (@MikeConnollyMA) October 13, 2022

The new law also permits three additional annual tax cuts that may lower the tax rate to 4.5 percent.

Reduce the top individual income tax rate from 5.2 to 4.95 percent, where most taxpayers will see a roughly five percent decrease in their tax liability.

Additionally, this will eliminate the bottom income tax bracket and allow residents to earn their first $1,000 tax-free.

Residents may see the tax rate drop to 4.8 percent as soon as 2024, but only if state tax revenue increases by at least $175million over a specific period.

Plus, a tax expert shares the moves to make before the end of 2022, including preparing for direct payments worth up to $1,000s.