Boston

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Taxes

Information about local, state, and federal tax regulations including income and sales taxes.

Sections

1. Types of Taxes in Boston

Residents and visitors in Boston are subject to several types of taxes, including:

A. Federal Taxes

  • Income Tax: The U.S. federal government imposes income tax on individuals and businesses. The rates are progressive, ranging from 10% to 37%, depending on your income bracket.
  • Social Security and Medicare Taxes: These are payroll taxes deducted from your paycheck if you are employed in the U.S. The combined rate is 7.65% for employees (6.2% for Social Security and 1.45% for Medicare).

B. Massachusetts State Taxes

  • Income Tax: Massachusetts has a flat income tax rate of 5% on most types of income, including wages, salaries, and investment income.
  • Sales Tax: The state imposes a 6.25% sales tax on most goods and some services. However, there is no additional local sales tax in Boston.
  • Capital Gains Tax: Short-term capital gains (assets held for less than a year) are taxed at 12%, while long-term capital gains are taxed at the standard 5% rate.

C. Local Taxes

Boston does not impose a local income tax or additional sales tax. However, there are specific local taxes and fees to be aware of:

  • Property Tax: If you own property in Boston, youโ€™ll pay property taxes based on the assessed value of your property. The residential property tax rate for 2023 is $10.88 per $1,000 of assessed value.
  • Hotel/Short-Term Rental Tax: Visitors staying in hotels, motels, or short-term rentals (e.g., Airbnb) are subject to a combined tax rate of 14.95% (5.7% state tax, 6% local tax, and 2.75% convention center tax for Boston).

D. Other Taxes

  • Excise Tax: Vehicle owners in Boston must pay an annual excise tax of $25 per $1,000 of the vehicleโ€™s value.
  • Meals Tax: Restaurants in Boston charge a 7% meals tax (6.25% state tax + 0.75% local tax) on prepared food and beverages.

2. General Tax Rates Overview

| Tax Type | Rate | Notes | |--------------------------|------------------------------------|---------------------------------------------------------------------------| | Federal Income Tax | 10%โ€“37% | Progressive rates based on income brackets. | | Massachusetts Income Tax | 5% | Flat rate for all income types. | | Sales Tax | 6.25% | Applies to most goods and some services. | | Property Tax | $10.88 per $1,000 of assessed value | Applies to property owners in Boston. | | Hotel/Short-Term Rental | 14.95% | Includes state, local, and convention center taxes. | | Meals Tax | 7% | Applies to prepared food and beverages. | | Vehicle Excise Tax | $25 per $1,000 of vehicle value | Annual tax for vehicle owners. |

3. Filing Taxes in Boston

If you are a resident, immigrant, or worker in Boston, youโ€™ll need to file taxes annually. Hereโ€™s a step-by-step guide:

A. Federal Tax Filing

  1. Determine Your Filing Status: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow(er).
  2. Collect Necessary Documents:
    • W-2 forms (for employees).
    • 1099 forms (for freelancers or contractors).
    • Other income statements (e.g., investment income, rental income).
    • Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
  3. File Your Federal Taxes:
    • Use IRS Form 1040.
    • File online via the IRS website or through tax software like TurboTax or H&R Block.
    • Deadline: April 15 (or the next business day if it falls on a weekend/holiday).

B. Massachusetts State Tax Filing

  1. Determine Your Residency Status:
    • Resident: You live in Massachusetts for more than 183 days in a year.
    • Non-Resident: You earn income in Massachusetts but live elsewhere.
    • Part-Year Resident: You moved into or out of Massachusetts during the tax year.
  2. File Your State Taxes:
    • Use Form 1 (Resident) or Form 1-NR/PY (Non-Resident/Part-Year Resident).
    • File online via the Massachusetts Department of Revenue (DOR) website or through tax software.
    • Deadline: April 15.

C. Local Taxes

  • Property taxes are billed quarterly in Boston. Payments can be made online through the City of Boston website or in person at City Hall.
  • Excise taxes for vehicles are billed annually and can also be paid online.

4. Boston-Specific Considerations

  • Tax-Free Weekend: Massachusetts typically offers a tax-free weekend in August, during which most retail items under $2,500 are exempt from sales tax.
  • Student Tax Obligations: Boston is home to many universities. Students who work part-time or earn income in Massachusetts must file state and federal taxes, even if they are international students.
  • Immigrants and Non-Residents: If you are a non-resident or new immigrant, you may need to file Form 1040-NR for federal taxes and Form 1-NR/PY for Massachusetts state taxes.
  • Property Tax Exemptions: Boston offers property tax exemptions for certain groups, such as seniors, veterans, and low-income residents. Check with the Boston Assessing Department for eligibility.

5. Resources for Tax Assistance

If you need help with taxes in Boston, the following resources are available:

  • IRS Free File: For individuals earning less than $73,000 annually, the IRS offers free tax preparation software.
  • Volunteer Income Tax Assistance (VITA): Free tax help for low-income individuals, seniors, and non-English speakers. Locations are available throughout Boston.
  • Massachusetts Department of Revenue (DOR): Visit mass.gov/dor for state tax forms, filing instructions, and payment options.
  • City of Boston Assessing Department: For property tax inquiries, visit boston.gov or call 311.
  • Tax Professionals: Consider hiring a Certified Public Accountant (CPA) or Enrolled Agent (EA) for complex tax situations.

6. Tips for Visitors and Immigrants

  • Visitors: Sales tax is automatically included at the point of sale, so thereโ€™s no need to file taxes unless you earn income in the U.S.
  • Immigrants: If you are new to the U.S., familiarize yourself with the tax system. You may need to file taxes even if you are on a visa, depending on your income and residency status.
  • Keep Records: Maintain copies of all tax-related documents for at least three years in case of an audit.

By understanding these tax obligations and resources, you can navigate Bostonโ€™s tax system with confidence. If you have specific questions or need further assistance, feel free to ask!