What's Proposed Under Baker's $700M Tax Relief Plan

MASSACHUSETTS — Gov. Charlie Baker met with state lawmakers on Tuesday to discuss his nearly $700 million tax relief package. The governor touted the plan as benefitting parents, low- and middle-income workers and seniors at a time when "the cost of just about everything is going up," he said in January.

The proposal would double tax credits for seniors and child care, increase the deduction for rent payments and raise the income floor on "no tax status." It also raises the threshold on the estate tax and cuts the tax rate on short-term capital gains, points on which members of the Revenue Committee challenged Baker and Administration and Finance Secretary Michael Heffernan.

Sen. Adam Hinds, co-chair of the committee and a candidate for lieutenant governor, questioned the timing of those breaks, given that "Wall Street is going through the roof and breaking records," the State House News Service reported.

"And yet our food bank lines are going around the block, and so there's a real disconnect in who benefits in the economy right now," he continued.

Baker said he is seeking to relieve middle-income taxpayers and encourage people to stay in Massachusetts as they age, the State House News Service reported.

Here is what's proposed under Baker's relief plan:

• Double the maximum Senior Circuit Breaker Credit to lower the overall tax burden for more than 100,000 lower-income homeowners aged 65+
• Increase the rental deduction cap from $3,000 to $5,000, allowing approximately 881,000 Massachusetts renters to keep approximately $77 million more annually
• Double the dependent care credit to $480 for one qualifying individual and $960 for two or more, and double the household dependent care credit rate to $360 for one qualifying individual and $720 for two or more to benefit more than 700,000 families
• Increase the Massachusetts adjusted gross income (AGI) thresholds for "no tax status" to $12,400 for single filers, $24,800 for joint filers, and $18,650 for head of households, which will provide direct relief to more than 234,000 low-income filers
• Double the estate tax threshold and eliminate the current "cliff effect" that taxes the full amount below the threshold
• Change the short-term capital gains tax rate to 5 percent to align the Commonwealth with most other states