Key Takeaways
- Massachusetts has a 9% flat income tax plus 4% surtax on income over $1M
- MA DOR aggressively pursues remote workers who left during COVID
- The 183-day rule creates statutory residency risk
- Proper exit documentation is critical for audit defense
Overview: Massachusetts Tax Burden
Massachusetts has a 9% flat income tax, making it one of the highest-tax states in the country. In 2023, voters approved an additional 4% surtax on income over $1 million, bringing the top rate to 13% for high earners.
$5,000 - $50,000+
Annual savings depending on income level
Massachusetts Tax Rates
| Income Level | Tax Rate | Effective on $150K |
|---|---|---|
| All income (standard) | 9% | $13,500 |
| Income over $1,000,000 | 13% (9% + 4% surtax) | N/A |
Savings Examples
- $100,000 income: Save ~$9,000/year
- $150,000 income: Save ~$13,500/year
- $250,000 income: Save ~$22,500/year
- $1,500,000 income: Save ~$155,000/year (includes surtax)
Massachusetts Residency Rules
Domicile Test
Your domicile is your "true, fixed, and permanent home." Massachusetts considers:
- Where you maintain your principal residence
- Location of family and personal effects
- Where you're registered to vote
- State of your driver's license
- Where you file federal returns from
- Business and social ties
183-Day Statutory Residency
Massachusetts considers you a statutory resident if you:
- Maintain a permanent place of abode in MA, AND
- Spend more than 183 days in Massachusetts
Post-COVID Audits: MA DOR has been aggressively auditing people who claimed to leave during the pandemic while continuing to work remotely for MA employers. Documentation of your actual move is critical.
Properly Exiting Massachusetts
Step 1: Establish Florida Domicile
- Get a Florida residential address through Your Tax Base
- File Florida Declaration of Domicile
- Get Florida driver's license (surrender MA license)
- Register to vote in Florida
- Register vehicles in Florida
Step 2: Sever Massachusetts Ties
- Sell or rent MA property: Vacant property raises red flags
- Update employer records: Work location should show Florida
- Close MA-based accounts: Banks, memberships, subscriptions
- Transfer professional licenses: To Florida
- Cancel utilities: Document the cancellation dates
Step 3: File Proper Tax Returns
- Move year: File MA Form 1-NR/PY (part-year resident)
- Report only MA-period income: Income after move date is not MA income
- Federal return: File with Florida address
Massachusetts DOR Audits
The Massachusetts Department of Revenue has increased residency audits, particularly targeting:
- High-income taxpayers claiming to have moved
- Remote workers with MA employers
- Part-year filers with significant income
- Those who moved during COVID-19 pandemic
What DOR Examines
- Cell phone records and location data
- Credit card transaction locations
- Social media posts showing location
- E-ZPass and toll records
- Bank account activity locations
- Medical and professional appointments
Documentation Strategy: Keep a day-by-day log of your location, save travel receipts, and take time-stamped photos in Florida. This creates a defensible record if audited.
Remote Workers with MA Employers
If you work remotely for a Massachusetts company:
- Work performed outside MA is not MA-source income
- Update your employer's records to show Florida work location
- Ensure you're not withholding MA taxes after your move
- Avoid traveling to MA for work if possible
- Document that your work is performed from Florida
MA Employer Withholding
Some employers continue MA withholding by default. After establishing Florida residency:
- Submit updated W-4 showing Florida address
- Request employer stop MA withholding
- If over-withheld, claim refund on MA non-resident return
Millionaire Surtax Considerations
The 4% surtax on income over $1 million makes exit planning especially valuable for high earners:
- $1.5M income: Extra $20,000 in MA surtax alone
- Capital gains: Large stock sales trigger the surtax
- Business sales: Timing the sale after establishing FL residence is critical
Planning Opportunity: If you're planning a major liquidity event (stock sale, business sale), establishing Florida residency BEFORE the event can save hundreds of thousands in taxes.
Recommended Timeline
- Before move: Secure Florida address, document your intent
- Move date: Clear date of domicile change, be physically present in FL
- Within 30 days: Florida DL, voter registration, vehicle registration
- Within 90 days: Complete all updates, cancel MA ties
- Tax season: File MA part-year return (Form 1-NR/PY)