Companies Celebrate, Suffer New Mass. Tax Rate

Massachusetts business owners are waking up New Year's Day morning to a new corporate tax rate. Whether they're celebrating or suffering may depend on the size of their companies.

Large, multi-state corporations are more likely to feel a hangover. The state law going into effect Friday subjects more of their income to Massachusetts’ relatively high corporate tax rate.

But smaller companies will be popping champagne corks.

"Any company solely located in Massachusetts will be better off under the new tax rate," said Richard Lord, who heads the Associated Industries of Massachusetts.

For these smaller companies, the corporate tax rate drops from 9.5 to 8.75 percent. Financial institutions are subject to a separate rate, but it also drops for them, from 10.5 to 10 percent.

Those companies can start planning for next year’s party, too, because corporate taxes are set to fall again in 2011 and 2012.