Capital gains: 5% base rate plus 4% surtax on income above the indexed threshold, which includes capital gains.
What changed: A new elective 4% pass-through entity surtax (Chapter 63E) for 2026 lets owners take a 90% credit, which may help with the federal SALT cap (reported by secondary sources).
| January 1, 2026 | Massachusetts 4% millionaire surtax threshold indexed for 2026 The 4% surtax (9% top rate) applies above $1,083,150 for 2025; secondary sources report $1,107,750 for 2026, not confirmed on mass.gov. It is especially costly in a year with a large one-time gain such as a business or home sale. | In effect |
| August 31, 2026 | Massachusetts elective 4% pass-through entity surtax (Chapter 63E) Pass-through businesses can elect to pay the 4% surtax on owners' income above the threshold at the entity level, and owners get a 90% credit. This can turn surtax into a business deduction outside the federal SALT cap. | Enacted |
The 4% surtax on income above $1 million has now overshot its original $2 billion revenue projection for a third straight year, fueling interest from other states in copying the approach.
California's combined top marginal rate reaches 14.4% and NYC residents face up to 14.776%, even as Georgia, Indiana, Kentucky and six other states cut income tax rates on January 1.