The Massachusetts Senate unveiled a long-awaited $590 million tax relief proposal Thursday as the Democratic-led Senate and House, and Democratic Gov. Maura Healey, work to come up with a final tax-cutting plan.
The Senate proposal would increase the rental deduction cap from $3,000 to $4,000, increase the child and dependent tax credit from $180 to $310 per child or dependent, bump up the earned income tax credit from 30% to 40% of the federal credit and double the maximum senior circuit breaker credit from $1,200 to $2,400.
The Senate, like the House, would also raise the state’s estate tax threshold from $1 million to $2 million, a doubling of the threshold that mirrors what's in the House's proposal. Also similar to the House's version, the Senate is looking to allow a uniform credit of $99,600. The Senate's version of the estate tax will cost the state $185 million, according to reporting from the State House News Service.
Healey, who released her own $742 million tax relief package in February, would eliminate the tax for estates valued up to $3 million.
Massachusetts is one of just 12 states with an estate tax.
Senate President Karen Spilka described the chamber's budget proposal as “progressive, smart, sustainable and permanent.”
“Our tax relief package intentionally targets housing affordability so we can not only maintain our economic competitiveness but ensure our residents can stay where they want to work, live, raise families and pursue their dreams,” she said in a written statement.
In April, Massachusetts House lawmakers overwhelmingly approved their own $654 million tax relief package.
The House proposal would also make changes to the 1986 law designed to limit state tax revenue growth and return any excess to taxpayers. The law triggered nearly $3 billion in refunds last year.
It will be up to the House and Senate to come up with a compromise bill to send back to Healey.
The state may also have to reimburse the federal government after an audit found it used about $2.5 billion in federal dollars instead of state funds to pay benefits dating back to 2020.
The Senate is expected to take up the bill next week.
The State House News Service's Sam Drysdale contributed reporting.