Homebuyers moving to the Boston area should familiarize themselves not only with real estate property taxes, but also several other taxes that will impact the overall cost of relocating to Massachusetts. Besides real estate property taxes, Massachusetts has an income tax, a sales tax, an excise tax, and a tax related to the failure to obtain health insurance.
In Massachusetts, property owners pay property tax. Local real estate taxes are generally based on the assessed value of the home itself, as well as the land it resides on. The boards of assessors in each city or town assess property taxes. Depending on the area, the assessors are either elected by the public or appointed by local governing bodies. Cities and towns issue property tax bills on a quarterly basis. Property taxes help to fund many municipal services, including public education, school transportation, libraries, parks and recreation, emergency services, and in some cases trash removal.
The sales tax in Massachusetts is 6.25 percent and it is imposed on the purchase price of many tangible goods, utilities, and telecommunications services as well as on meals served at restaurants. A city of town may also charge a local sales tax on the sales of restaurant meals up to 0.75 percent. Currently, residential electricity, gas, steam, and certain telecommunications charges are exempt from the sales tax. There are also various other product-based exemptions such as food, prescription medicines, certain medical products, and clothing (individual clothing items that exceed $175 or more are taxed). The Massachusetts Department of Revenue has a complete list of items that are and are not taxed. For many years, Massachusetts has held a tax-free weekend the second week of August. During this weekend, sales tax is waived on otherwise taxable non-business items. Exclusions include telecommunications services, tobacco, gas, steam, electricity, motor vehicles, motorboats, meals, and any single item that exceeds $2,500. Typically, the best back-to-school sales are reserved for this weekend.
Chapter 60A of Massachusetts General Laws imposes an excise on the privilege of registering a motor vehicle or a trailer in the Commonwealth of Massachusetts. The excise is levied annually in lieu of a tangible personal property tax. Non-registered vehicles do remain subject to taxation as personal property. The excise is levied by the city or town where the vehicle is principally garaged and the revenues become part of the local community treasury. The Registry of Motor Vehicles prepares data for excise bills according to the information on the motor vehicle registration and sends it to city or town assessors. Cities and towns then prepare bills based on excise data sent by the Registry in conformity with Department of Revenue requirements.
Massachusetts Health Care Reform Act requires most adults with access to affordable health insurance to obtain it. Failure to comply results in monthly penalties in the tax year. There is no penalty in the case of a gap in coverage of 63 consecutive days or less. Penalties are applied to an individual’s personal income tax return. The Massachusetts Health Connector has established standards that determine whether individuals, married couples, and families can afford health insurance based on their incomes and affordable health insurance premiums. If it is decided an individual, married couple, or family cannot afford health insurance according to the standards, they will not be penalized.
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