Massachusetts taxes a far larger share of lower- and middle-income households' earnings compared to competing states across the political spectrum, according to a new study published June 25, 2026 by Pioneer Institute. The report, titled "Universal or Targeted? Is Massachusetts an Outlier in How It Delivers Tax Relief to Lower- and Middle-Income Households?", finds that the Commonwealth relies on a patchwork of targeted credits rather than broad-based relief, leaving typical families with a heavier tax burden than those in red and blue competitor states. The findings come just days after the state Supreme Judicial Court blocked a ballot initiative that would have reduced the state's income tax rate from 5 to 4 percent.
The Commonwealth's personal exemption remains frozen at just $4,400 for single filers and $8,800 for married couples filing jointly—levels that haven't changed since 2008 and have declined 55 percent in inflation-adjusted value. If rates had been adjusted for inflation, they would have saved tax filers an additional $861 million in 2025. By comparison, North Carolina shields $12,750 for single filers and $25,500 for married couples, while the federal standard deduction shields $15,750 and $31,500, respectively. Neighboring states also provide more generous protection: Maine allows single filers to deduct up to the equivalent of $20,150, while Rhode Island shields $16,000. As a result, a married couple earning $100,000 pays taxes on $91,200 of income in Massachusetts before additional eligibility-based credits and deductions are applied, compared with just $74,500 in North Carolina. At Massachusetts' 5 percent income tax rate, that difference leaves Massachusetts couples paying $835 more in taxes—and when North Carolina's lower rate of 3.99 percent is factored in, the difference approaches $1,400 annually.
"States like North Carolina shield nearly three times as much income from taxation as Massachusetts does," said Aidan Enright, co-author of the study. Jim Stergios, executive director of Pioneer Institute, added that "Massachusetts politicians speak the language of progressivism, but our tax code tells a different story. We dispense tax relief with an eyedropper—and expect families to navigate a maze of credits and deductions." The report notes that unlike many states that rely on broad standard deductions, Massachusetts is heavily dependent on a collection of targeted credits and deductions, including those for children, renters, seniors, commuters, and student-loan borrowers. While these provisions provide important relief, they require taxpayers to navigate complex eligibility and filing requirements because they aren't universal.
The report explains that Massachusetts begins taxing ordinary households at significantly lower income levels than many of the states with which it competes, creating a heavier burden on working families who are already struggling with some of the nation's highest housing, healthcare, and energy costs. The frozen personal exemption levels mean that current rates shield far less income from Massachusetts taxpayers than many competing and neighboring states, effectively expanding the tax base at the expense of lower- and middle-income families. For these families, having to hire a tax professional to understand the maze of targeted credits and deductions is just another kind of tax, according to the study.
The report recommends doubling the Commonwealth's personal exemption and indexing it to inflation, as several states have done. The study estimates that the change would reduce revenues by approximately $1.2 billion annually and could be phased in over several years to minimize fiscal disruptions. While it wouldn't provide relief on the scale of the proposed ballot initiative that was recently blocked by the court, the reform would represent an important step toward broader, simpler, and more transparent tax relief. The report also calls for a comprehensive review of the Commonwealth's system of credits and deductions to assess whether relief is being delivered broadly and effectively and to compare Massachusetts' approach with those of competing states to identify better ways to support working families.