Why Massachusetts goes its own way
Massachusetts starts its income tax from federal definitions, but it chooses which version of the Internal Revenue Code to follow. For personal income tax, it generally follows the Code as it stood on 1 January 2024. Anything Congress changed after that date only applies on the Form 1 if Massachusetts adopts it specifically.
In Technical Information Release 26-4, the Department of Revenue went through the 2025 law provision by provision. The answer for most of the headline individual changes was no. A few narrower changes, mainly around 529 plans, ABLE accounts and gambling losses, were adopted.
The changes side by side
| Change | Federal | Massachusetts |
|---|---|---|
| Standard deduction | Raised for 2025 to $15,750 single, $31,500 married filing jointly, $23,625 head of household; $16,100 / $32,200 / $24,150 for 2026 | No standard deduction at all; personal exemptions instead |
| Qualified tips | Deduction up to $25,000 a year, 2025 to 2028 | Not allowed; all tips taxable |
| Qualified overtime | Deduction for the premium portion, up to $12,500 ($25,000 joint), 2025 to 2028 | Not allowed; all overtime taxable |
| Seniors 65+ | Extra $6,000 deduction per person, 2025 to 2028 | Not allowed; Massachusetts has its own senior breaks |
| Car loan interest | Deduction up to $10,000 a year, 2025 to 2028, new U.S.-assembled vehicles | Not allowed |
| State and local tax (SALT) cap | $40,000 for 2025, $40,400 for 2026, reduced at higher incomes | Does not follow; Massachusetts does not allow federal Schedule A deductions |
| Child tax credit | $2,200 per child for 2025 and 2026 | Separate state credit: $440 per eligible dependent |
| Charitable deduction for non-itemizers | Up to $1,000 ($2,000 joint) from 2026 | Does not follow |
| 0.5% floor on itemized charitable gifts | From 2026 | Does not follow |
| Trump accounts for children | New account type; $1,000 federal pilot contribution for children born 2025 to 2028 | Does not follow |
| Qualified business income deduction | Made permanent | Not allowed |
| 529 plan expenses | More expenses count as qualified, including certain credentialing costs | Follows |
| ABLE accounts | Higher contribution limit; 529-to-ABLE rollovers extended | Follows |
| Gambling losses | Limited to 90% of winnings from 2026 | Follows |
What this means in practice
The new federal deductions reduce federal taxable income, but the Form 1 starts from income as Massachusetts defines it. A server with $20,000 of tips, a nurse with $8,000 of overtime premium or a retiree who qualifies for the senior deduction will see a lower federal bill and no change at all on the Massachusetts side from these provisions.
The reverse is also true. Some Massachusetts breaks have no federal counterpart: the rent deduction, the commuter deduction, the 529 contribution deduction and the senior circuit breaker credit. A return that looks complete federally can still be missing Massachusetts items.
Illustrative example. A married couple in Brockton earn $110,000 in wages, including $6,000 of overtime premium. Federally, they may deduct the $6,000 on the new Schedule 1-A for 2025. In Massachusetts, all $110,000 of wages is income, and at the 5% rate the overtime alone adds $300 of Massachusetts tax. Nothing is wrong with either return; they simply follow different law.
Timing: which year each change starts
Not every change took effect for 2025. The tips, overtime, senior and car loan deductions apply to tax years 2025 through 2028. The SALT cap increase started with 2025 and reverts to $10,000 from 2030. The charitable changes, both the new non-itemizer deduction and the 0.5% floor for itemizers, start with 2026 returns. Trump account contributions could not be made before 4 July 2026.
For 2026, several credits ended as well. According to the 2026 Form 1040-ES, the new, previously owned and commercial clean vehicle credits, the energy efficient home improvement credit and the residential clean energy credit have expired and cannot be claimed on a 2026 return.
- 2025 to 2028: tips, overtime, senior and car loan interest deductions
- 2025: SALT cap rises to $40,000; 2026: $40,400; 2030 on: $10,000
- 2026: non-itemizer charitable deduction and 0.5% itemizer floor begin
- 2026: clean vehicle and home energy credits no longer claimable
- Permanent: the seven rate brackets and the $2,200 child tax credit (indexed)
Common misreadings
Much of the coverage of the 2025 law was written about the federal return only. The phrases that circulate, such as no tax on tips or no tax on overtime, describe federal income tax deductions. Tips and overtime are still subject to Social Security and Medicare tax, and in Massachusetts they are taxed in full.
Similarly, the senior deduction is not a Social Security exclusion. It is an extra $6,000 deduction that phases out above $75,000 of modified adjusted gross income ($150,000 joint). Massachusetts, separately and long before this law, already excludes Social Security benefits from income.
Where to go next
- Tips: the federal deduction and the Massachusetts treatment
- Overtime: who qualifies and the limits
- Seniors: the $6,000 deduction and the Massachusetts breaks for 65 and older
- SALT cap: whether Massachusetts homeowners should itemize again
- Child credits: $2,200 federal and $440 Massachusetts
Where we come in
We prepare the federal and Massachusetts returns together, so the new federal deductions are claimed where they apply and the Massachusetts return is built from Massachusetts rules rather than copied from the federal one. Before we start, we give you a scope and a price in writing.
Figures on this page were checked against the IRS and Massachusetts sources listed alongside on 28 Sep 2026. They change — confirm the current amount before relying on one.
General information for owner-led businesses, not advice for your specific situation. Tax and accounting rules change, and how they apply depends on facts particular to your business. Talk to us — or to another qualified professional — before acting on anything here.
