How does the millionaire’s tax affect you?

In November 2022, Massachusetts voters approved a new tax on millionaires that will take effect in 2023. Under the new law, individuals with annual incomes over $1 million will be subject to an additional 4% tax on income over that threshold. This is on top of the existing 5% state income tax rate, bringing the total tax rate for these high earners to 9%.

While this tax will only affect a small percentage of Massachusetts residents, it has broader implications for other states considering similar measures. Several other states, including New York and California, have considered implementing their own millionaire taxes in recent years. Massachusetts’ success in passing this tax could pave the way for other states to follow suit.

Estate planning also plays a role in this new tax. For wealthy individuals who may be subject to the millionaire tax, it’s important to consider how this will affect their overall tax burden and their estate plan. The additional 4% tax could significantly impact their wealth and the amount they’re able to pass on to future generations.