(MASSACHUSETTS) Massachusetts will keep a 5% flat income tax in 2026 on taxable income up to $1,083,150, and it will add a 4% surtax above that level. For immigrants and other newcomers, the headline is simple: the state tax bite stays the same, but high earners still face a combined 9% marginal rate on the excess. The Massachusetts Department of Revenue released draft 2026 withholding tables on December 15, 2025 confirming this structure. That matters if you work on a visa, run a startup, or file as a new resident and want your paycheck withholding to match your real bill.
2026 rates that drive withholding and year-end tax
Massachusetts taxes most income at 5%, with no graduated brackets, so each extra dollar up to $1,083,150 faces the same rate. Once taxable income exceeds $1,083,150, the state adds a 4% surtax on the amount over the threshold.
That creates a 9% combined marginal rate on dollars above $1,083,150, even though the first $1,083,150 remains taxed at 5%. The threshold rises with inflation and applies the same way regardless of filing status, which is unusual for readers used to federal brackets.
Key takeaway: If your total Massachusetts taxable income could exceed $1,083,150, plan for a potential surtax that effectively raises the marginal rate on the excess to 9%.
Who needs to pay attention: common immigrant tax profiles
New arrivals often meet Massachusetts tax rules long before they become permanent residents, because state tax residency follows where you live and work. These groups feel the 5% rate and the 4% surtax most directly through withholding, estimated payments, and capital gains reporting.
Pay extra attention if you are:
– An F-1 student on OPT or STEM OPT with wage income
– An H-1B, L-1, O-1, or TN worker expecting a year-end bonus
– A founder with stock compensation, option exercises, or a startup sale
– A household with one spouse abroad and one spouse in Massachusetts for work
– A high-income professional who could cross $1,083,150 through wages plus investment income
Eligibility and filing status basics for newcomers
Most immigrants file a Massachusetts return if they are residents, part-year residents, or nonresidents with Massachusetts-source income. Your federal tax label (for example, “resident alien” or “nonresident alien”) does not automatically determine Massachusetts treatment.
What matters in practice:
– Where you lived
– Where you worked
– Whether Massachusetts tax was withheld from your pay
Keep proof of entry dates, leases, and payroll records, because part-year residency calculations often turn on those documents.
Income types that change the rate
Different income categories can have special state rates that stack with the surtax when applicable:
- Wages, interest, dividends, most long-term capital gains: taxed at 5%
- Short-term capital gains: taxed at 8.50%
- Long-term gains from collectibles: taxed at 12.00% after a 50% deduction
Note: These special rates do not replace the 4% surtax; the surtax still applies to amounts over $1,083,150.
Documents to gather before you file
Collect federal forms and match them to Massachusetts reporting. Common paperwork includes:
– W-2 wage statements
– 1099 forms for interest or contract work
– Brokerage statements for stock sales
If you need an Individual Taxpayer Identification Number, file Form W-7 with the IRS, and keep copies for your state return. If you change jobs or start work after arriving, update withholding using Form W-4 so your employer withholds closer to what you owe.
Official forms:
– IRS: Form W-7
– IRS: Form W-4
Checking your Massachusetts withholding against the 2026 tables
The Department of Revenue’s draft tables tell employers how much to withhold from each paycheck, and they are the best early signal for 2026. You can track updates and related guidance through the Massachusetts Department of Revenue on Mass.gov.
Draft tables can change before final publication, so watch for a revised release if you are adjusting estimated payments or planning a large year-end transaction. VisaVerge.com reports that many high-income immigrants miscalculate the surtax when they rely on federal bracket thinking instead of Massachusetts’ flat-rate design.
Application process: how to file and pay without surprises
There is no separate application to “qualify” for the 5% rate; it applies by law when you file your return and compute taxable income. The practical steps for most households fit into four actions:
- Prepare your federal return, typically on Form 1040, because many Massachusetts figures start there.
- Determine whether you are a full-year resident, part-year resident, or nonresident for Massachusetts purposes.
- Review withholding and estimated payments to see whether your total income will cross $1,083,150 and trigger the 4% surtax.
- File, pay any balance due, and keep records in case the state asks for proof of residency dates or Massachusetts-source income.
For federal filing, see IRS resources for Form 1040 and instructions that help match wages, scholarships, and investment income.
Practical examples: when the surtax appears
- Example 1: A software engineer on an H-1B earning $300,000 pays the Massachusetts 5% rate on taxable income, with no 4% surtax because the income stays below $1,083,150.
- Example 2: A founder who sells shares and ends the year with $1,200,000 of taxable income pays 5% on the first $1,083,150 and 9% on the remaining $116,850.
- Example 3: If that same founder has short-term capital gains, those gains face the 8.50% state rate, and the 4% surtax still applies to amounts above the threshold.
Policy watch: a separate 2026 ballot fight over future rates
A proposed ballot question for 2026 would gradually reduce the base rate to 4% by 2029 if voters approve it. The measure would not change 2026 taxes, and it faces opposition from state leaders, including Rep. Aaron Michlewitz, who called it “irresponsible” because of a potential $5 billion revenue loss.
Tips immigrants use to stay compliant and avoid penalties
Don’t wait for April to discover you owe the surtax; bonuses, option exercises, and large distributions often arrive late in the year. If you expect to cross $1,083,150, increase withholding early or make estimated payments so you are not hit with a large bill at filing time.
Practical compliance tips:
– Keep immigration documents with your tax file (I-94 travel history, work authorization notices).
– Keep payroll and residency evidence (leases, entry dates) for audits that focus on residency dates and wage sourcing.
– File early to reduce the risk of surprise tax balances and penalties.
Final note: Monitor the Massachusetts Department of Revenue for final withholding tables and any guidance updates, and adjust withholding or estimated payments if your year-end income could push you over the surtax threshold.
Massachusetts will enforce a 5% flat income tax for 2026, but a 4% surtax applies to income over $1,083,150. This structure impacts high-earning professionals, founders, and immigrants on various visas. While the base rate is flat, special rates exist for capital gains. New residents must navigate state-specific residency rules, which differ from federal definitions, and adjust withholding to avoid penalties.
