Massachusetts State Tax Deductions

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Although it's been called Taxachusetts, Bay State residents may qualify for a variety of state income tax deductions. Non-residents who spend a significant part of the year in the state may also qualify for certain deductions if they must file a Massachusetts return for income tax purposes. Some expenses must exceed a percentage of the taxpayer's adjusted gross income to qualify for deductions.

Employee Deductions

Employees may deduct certain expenses not reimbursed by the employer on the Massachusetts income tax form. These include unreimbursed travel expenses, including meals, accommodations and transportation in connection with employment. Up to half of business entertaining and meal expenses may qualify as deductions. Only those meal and entertainment expenses incurred while the employee is away from the primary Massachusetts residence are deductible. To qualify for state deductions, the taxpayer must itemize deductions for the federal tax return, any joint returns must be filed in Massachusetts and unreimbursed business expenses must exceed 2 percent of the taxpayer's federal adjusted gross income. Employees with disabilities do not have to meet the 2 percent standard.

Child Care or Dependent Deductions

Massachusetts residents may deduct child care or dependent care expenses, but not both. Eligible household members for these deductions are children under 13, dependent disabled spouses or dependents over the age of 65. The deductions are permitted for child or dependent care expenses, enabling the taxpayer to continue working or seek employment. As of June 2011, the maximum permitted deduction is $4,800 for one child or other dependent and $9,600 for two or more individuals.

Rental Deductions

Massachusetts allows a rent deduction paid by the tenant for a primary residence located in the state. Up to half of the rent paid, or a maximum of $3,000, is deductible. Rent paid by third-parties, such as parents paying children's rents, is ineligible if the rental is not the party's primary residence. Those renting jointly may take a deduction, according to the amount of rent paid by each individual. Primary residences include not only apartments or houses, but also mobile homes, hotels if used as the primary residence and nursing homes. It does not include facilities rented by students or faculty members whose primary residence is elsewhere, or non-residents whose legal domicile is in another country or state, or vacation homes.

Education Deductions

In a state famous for its institutions of higher learning, it's not surprising that residents may deduct a portion of college tuition payments on the Massachusetts tax return. Taxpayers may deduct payments made for themselves or their dependents and spouses enrolled in a degree program at accredited two- and four-year post secondary schools. The deduction equals the amount of tuition payments exceeding 25 percent of the taxpayer's adjusted gross income, less any scholarship or grant money or employer reimbursement. Graduate degree tuition payments are ineligible for the deduction. Deductions are only for tuition, and do not include room and board, supplies, books or other educational expenses.

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