Massachusetts is an “outlier” as one of only 12 states with an estate tax
OCT. 21, 2025…..As tax policy debates swirl leading into an election year, a report released this month shows that 28 states have cut individual income tax rates since 2021 and that state tax burdens span a range from $3,000 per capita in Alaska to more than $12,000 in New York and Connecticut.
The findings, included in the second installment of The Council of State Governments’ 50-State Scan series, put emerging local tax debates in a more national context. The organization says its report is intended to provide non-partisan analysis and insight into strategies that states are taking in response to policy challenges.
“The CSG 50-State Scan gives policymakers a clear, comparative view of how their colleagues across the country are responding to policy challenges,” former Kansas Rep. David Adkins, executive director of The Council of State Governments, said in a statement.
More than 40 states and U.S. territories enacted tax reforms in 2025, according to the “Surveying the Tax Policy Landscape: A 50-State Review” report from the Kentucky-based group whose previous studies explored links between state tax systems and economic conditions, costs of living and budget priorities.
The last major income tax change in Massachusetts occurred in 2022 when voters adopted a constitutional amendment adding a 4% surtax on household income above about $1 million per year. That new tax has accounted for the bulk of growth in recent state tax collections at a time when non-surtax collections have slowed. A possible 2026 ballot question pushed by business groups would cut the 5% income tax rate to 4%.
Tax policy debates have percolated at the committee level this term but could potentially surface in the traditional economic development and job creation bill that is expected to emerge in the coming months. The Legislature also gets a chance to weigh in on eligible tax policy initiative petitions before they reach the ballot.
A union-backed coalition is mobilizing this session around legislation increasing the state tax on corporate offshore profits, with supporters asserting a majority in the House and Senate favor that legislation. Raise Up Massachusetts says the change will only hit larger corporations and will offset impacts of federal funding cuts.
But business groups are also urgently pressing for change. The Greater Boston Chamber of Commerce and Massachusetts Association of Certified Public Accountants last week cited Massachusetts’ 41st ranking in the Tax Foundation’s State Tax Competitiveness Index, 45th in domestic migration in a Massachusetts Taxpayers Foundation report, and 50th in private employment growth in that same MTF report.
“Between the 3rd quarters of 2023 and 2024, private employment in Massachusetts shrank by 0.6 percent,” the MTF report said. “This alarming stat shows that the cost crunch in Massachusetts has real consequences for the state’s job picture. During that same time period, the state’s unemployment rate also ticked up from 3 to 4.1 percent.”
Massachusetts is an “outlier” as one of only 12 states with an estate tax, chamber president Jim Rooney wrote in an Oct. 15 letter to top state officials, urging the repeal of a tax that the chamber says makes it “more difficult for family-owned and small businesses to survive generational change.” The chamber and CPA group are also urging lawmakers to reduce the short-term capital gains tax rate to 5% from 8.5%, cut the corporate tax rate from 8% to 7%, and expand the sales tax exemption to help more research and development entities.
Gov. Maura Healey in 2022 supported the income surtax constitutional amendment adopted by voters and then as governor signed tax relief measures in 2023 that had nearly passed under former Gov. Charlie Baker.
Healey declined Tuesday to specify tax policy changes that she favors to make the state more competitive but asserted that she’s “focused on lowering costs every day.”
“Always more work to do,” she told the News Service. “I really am focused on affordability for residents in our state. In terms of businesses, I also want Massachusetts to be the most competitive state out there, attractive to business.”
According to the Council of State Governments report, Louisiana, Nebraska, North Carolina and Pennsylvania recently lowered corporate tax rates; Alabama, Kansas and Oklahoma reduced or eliminated sales taxes on groceries; and Florida and California expanded sales tax holidays or exemptions.
States that expanded tax credits and deductions to ease household costs and spur economic growth included Rhode Island and its retirement income exemption, New Mexico’s health care worker credit, and New Jersey’s technology investment incentives.
