Massachusetts taxpayers will be excited to find out that they will be receiving a refund from MA for tax year 2021!
Massachusetts law dictates that if tax revenue collections exceed a certain annual tax revenue cap then all excess will be returned to taxpayers. MA exceeded the cap in 2021, so what this functionally means is that all taxpayers in MA should be receiving a refund of up to 13% of their total MA tax liability in 2021!
Here’s the relevant information on what to expect:
- MA taxpayers will receive a credit/refund of approximately 13% of their MA personal tax liability for tax year 2021.
- If you are eligible for a refund you will receive it automatically as a check sent through the mail or through direct deposit.
- Distribution of refunds is expected to begin in November 2022 – no action is needed to receive your refund! More information about this process will be shared closer to that time.
- If you would like to calculate the amount of refund you should expect:
- You can contact your SPP PCFO/team to calculate the approximate amount on your behalf. If your 2021 return has been filed then we can calculate the exact refund. If the return hasn’t been filed yet we should be able to provide an estimate based on your final 2021 tax projection.
- You can calculate the refund due yourself in the following Mass.Gov link. There is a tab for MA full-year residents and non-residents/part-year returns. You should have your 2021 MA tax return handy for the inputs!
- We will look for additional guidance as it becomes available, but the current expectation is that this refund will NOT be treated as taxable income for 2022. So this will be a tax-free windfall!
While this will benefit all MA taxpayers, the ones who stand to benefit the most from a dollar amount perspective are those with high incomes or that had a liquidity event in 2021.
Example – MA taxpayer reported ~$5MM of income in 2021 and paid $250,000 in MA income taxes. That taxpayer should expect a refund of approximately $32,500 to be paid to them from MA DOR in November by check or direct deposit. The refund should NOT be treated as taxable income.
This is a unique circumstance, but we are happy to answer any questions to the extent possible based on the information currently available. Please do not hesitate to contact your SPP team accordingly!