HOUSE . . . . . . . No. 3770
The Commonwealth of Massachusetts
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HOUSE OF REPRESENTATIVES, April 11, 2023.
The committee on Ways and Means, to whom was referred the message
from Her Excellency the Governor submitting requests for making
appropriations for the fiscal year 2023 to provide for supplementing certain
existing appropriations and for certain other activities and projects (House,
No. 47) reports, in part, recommending that the accompanying bill (House,
No. 3770) ought to pass.
For the committee,
AARON MICHLEWITZ.
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 FILED ON: 4/11/2023
HOUSE . . . . . . . . . . . . . . . No. 3770
The Commonwealth of Massachusetts
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In the One Hundred and Ninety-Third General Court
(2023-2024)
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An Act to improve the Commonwealth’s competitiveness, affordability, and equity.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Section 2H of chapter 29 of the General Laws, as appearing in the 2020
2 Official Edition, is hereby amended by striking out, in line 29, the figure “15” and inserting in
3 place thereof the following figure:- 25.5.
4 SECTION 2. Section 3 of chapter 62 of the General Laws, as so appearing, is hereby
5 amended by striking out, in line 109, the figure “$3,000” and inserting in place thereof the
6 following figure:- $4,000.
7 SECTION 3. Section 4 of said chapter 62, as so appearing, is hereby amended by
8 inserting, in line 5, after the word “cent” the following words:- ; provided, however, that any
9 gain from the sale or exchange of capital assets held for 1 year or less shall be taxed at the rate of
10 8 per cent.
11 SECTION 4. Said section 4 of said chapter 62, as amended by section 3, is hereby further
12 amended by striking out the figure “8” and inserting in place thereof the following figure:- 5.
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13 SECTION 5. Section 6 of said chapter 62, as appearing in the 2020 Official Edition, is
14 hereby amended by striking out, in lines 245 and 250, the figure “30”, each time it appears, and
15 inserting in place thereof, in each instance, the following figure:- 40.
16 SECTION 6. Said section 6 of said chapter 62, as so appearing, is hereby further
17 amended by striking out, in line 447, the figure “$750” and inserting in place thereof the
18 following figure:- $1,500.
19 SECTION 7. Said section 6 of said chapter 62 is hereby further amended by striking out
20 subsections (x) and (y), added by section 29 of chapter 24 of the acts of 2021, and inserting in
21 place thereof the following subsection:-
22 (x)(1) As used in this subsection, the following words shall, unless the context clearly
23 requires otherwise, have the following meanings:
24 “Cost-of-living adjustment”, for any calendar year, the percentage, if any, by which the
25 CPI for the preceding calendar year exceeds the CPI for calendar year 2023.
26 “CPI”, the consumer price index for any calendar year as defined in section 1 of the
27 Code.
28 “Eligible dependent”, an individual who is either: (i) under the age of 13 and who
29 qualifies for exemption as a dependent pursuant to section 151 of the Code; (ii) not less than 65
30 years of age and who qualifies as a dependent pursuant to section 152 of the Code; or (iii)
31 disabled and who qualifies as a dependent pursuant to section 152 of the Code.
32 “Maintains a household”, the same meaning as defined in section 21 of the Code.
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33 (2) A taxpayer who maintains a household that includes as a member an eligible
34 dependent shall be allowed a credit in an amount equal to $310 for each such eligible dependent;
35 provided, that the credit provided in this subsection shall be allowed only if the taxpayer and the
36 taxpayer’s spouse file a joint return for the taxable year or if the taxpayer qualifies as a head of
37 household pursuant to section 2(b) of the Code. For each taxable year, the commissioner shall
38 annually increase the amount of the credit for each eligible dependent as provided by this
39 subsection by an amount equal to such credit multiplied by the cost-of-living adjustment for the
40 calendar year in which such taxable year begins. With respect to a taxpayer who is a non-resident
41 for part of the taxable year, the credit shall be further limited to the amount of allowable credit
42 multiplied by a fraction, the numerator of which shall be the number of days in the taxable year
43 the person resided in the commonwealth and the denominator of which shall be the number of
44 days in the taxable year. A person who is a non-resident for the entire taxable year shall not be
45 allowed the credit. If the amount of the credit allowed pursuant to this subsection exceeds the
46 taxpayer’s tax liability, the commissioner shall treat the excess as an overpayment and shall pay
47 the taxpayer the entire amount of the excess without interest.
48 SECTION 8. Paragraph (2) of subsection (x) of said section 6 of said chapter 62, as
49 amended by section 7, is hereby further amended by striking out the figure “$310” and inserting
50 in place thereof the following figure:- $455.
51 SECTION 9. Said paragraph (2) of said subsection (x) of said section 6 of said chapter
52 62, as amended by section 8, is hereby further amended by striking out the figure “$455” and
53 inserting in place thereof the following figure:- $600.
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54 SECTION 10. The first paragraph of section 6 of chapter 62F of the General Laws, as
55 appearing in the 2020 Official Edition, is hereby amended by striking out the second sentence
56 and inserting in place thereof the following 3 sentences:- The credit shall be applied against the
57 then current personal income tax liability of each taxpayer who files an income tax return in both
58 the then current and the previous taxable year in an amount determined by dividing the total
59 amount of excess revenues by the total number of taxpayers filing an income tax return in the
60 previous taxable year. For the purposes of this section, a married couple filing a joint return shall
61 be counted as 2 taxpayers. If the amount of the credit allowed under this section exceeds the
62 taxpayer’s liability, the commissioner shall treat the excess as an overpayment and shall pay the
63 taxpayer the amount of the excess without interest.
64 SECTION 11. Section 2A of chapter 63 of the General Laws, as so appearing, is hereby
65 amended by striking out subsections (b) and (c) and inserting in place thereof the following 2
66 subsections:-
67 (b) If the financial institution has income from business activity which is taxable both
68 within and without the commonwealth, its net income shall be apportioned to the commonwealth
69 by multiplying its net income by its receipts factor. If the receipts factor is missing, the whole of
70 the financial institution’s net income shall be taxable pursuant to section 2. The receipts factor
71 shall be missing if both its numerator and denominator are zero, but it shall not be missing
72 merely because its numerator is zero.
73 (c) The receipts factor shall be computed according to the method of accounting, cash or
74 accrual basis, used by the taxpayer for federal income tax purposes for the taxable year.
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75 SECTION 12. Subsection (d) of said section 2A of said chapter 63, as so appearing, is
76 hereby amended by striking out paragraph (xii) and inserting in place thereof the following
77 paragraph:-
78 (xii) The amount of interest, dividends, net gains, but not less than zero, and other income
79 from investment assets and activities and from trading assets and activities to be attributed to the
80 commonwealth and included in the numerator shall be determined by multiplying all such
81 income from such assets and activities by a fraction, the numerator of which shall be the total
82 receipts included in the numerator pursuant to paragraphs (i) through (x), inclusive, and
83 paragraph (xii) and the denominator of which shall be all total receipts of the taxpayer included
84 in the denominator other than interest, dividends, net gains, but not less than zero, and other
85 income from investment assets and activities and from trading assets and activities.
86 SECTION 13. Said section 2A of said chapter 63, as so appearing, is hereby further
87 amended by striking out subsections (e) through (g), inclusive, and inserting in place thereof the
88 following subsection:-
89 (e) If the provisions of subsections (a) to (d), inclusive, are not reasonably adapted to
90 approximate the net income derived from business carried on within the commonwealth, a
91 financial institution may apply to the commissioner, or the commissioner may require the
92 financial institution, to have its income derived from business carried on within the
93 commonwealth determined by a method other than that set forth in subsections (a) to (d),
94 inclusive. Such application shall be made by attaching to its duly-filed return a statement of the
95 reasons why the financial institution believes that subsections (a) to (d), inclusive, are not
96 reasonably adapted to approximate its net income derived from business carried on within the
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 97 commonwealth and a description of the method sought by it. A financial institution which so
98 applies shall, upon receipt of a request therefor from the commissioner, file with the
99 commissioner, under oath of its treasurer, a statement of such additional information as the
100 commissioner may require.
101 If, after such application by the financial institution, or after the commissioner’s own
102 review, the commissioner determines that the provisions of subsections (a) to (d), inclusive, are
103 not reasonably adapted to approximate the financial institution’s net income derived from
104 business carried on within the commonwealth, the commissioner shall by reasonable methods
105 determine the amount of net income derived from business activity carried on within the
106 commonwealth. The amount thus determined shall be the net income taxable under section 2 and
107 the foregoing determination shall be in lieu of the determination required by subsections (a) to
108 (d), inclusive. If an alternative method is used by the commissioner hereunder, the
109 commissioner, in their discretion, with respect to the 2 next succeeding taxable years, may
110 require similar information from such financial institution if it shall appear that the provisions of
111 subsections (a) to (d), inclusive, are not reasonably adapted to approximate for the applicable
112 year the financial institution’s net income derived from business carried on within the
113 commonwealth and may again by reasonable methods determine such income.
114 SECTION 14. Said chapter 63 is hereby further amended by striking out section 38, as so
115 appearing, and inserting in place thereof the following section:-
116 Section 38. The commissioner shall determine the part of the net income of a business
117 corporation derived from business carried on within the commonwealth as follows:
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118 (a) Net income, as defined in section 30, adjusted as follows shall constitute taxable net
119 income:
120 (1) 95 per cent of dividends, exclusive of distributions in liquidation, included therein
121 shall be deducted other than dividends from or on account of the ownership of:
122 (i) shares in a corporate trust, as defined in section 1 of chapter 62, to the extent such
123 dividends represent tax-free earnings and profits, as defined in section 8 of said chapter 62, as in
124 effect on December 31, 2008;
125 (ii) deemed distributions and actual distributions, except actual distributions out of
126 previously taxed income, from a domestic international sales corporation, as defined in 26 U.S.C.
127 § 992, which is not a wholly owned domestic international sales corporation; or
128 (iii) any class of stock, if the corporation owns less than 15 per cent of the voting stock of
129 the corporation paying such dividend.
130 (2) Long-term capital gains realized and long-term capital losses sustained from the sale
131 or exchange of intangible property affected under the provisions of the Federal Internal Revenue
132 Code, as amended, and in effect for taxable years ended on or before December 31, 1962, shall
133 not be included in any part therein.
134 (b) If the corporation does not have income from business activity which is taxable in
135 another state, the whole of its taxable net income, determined pursuant to subsection (a), shall be
136 allocated to the commonwealth. For purposes of this section, a corporation is taxable in another
137 state if: (1) in that state such corporation is subject to a net income tax, a franchise tax measured
138 by net income, a franchise tax for the privilege of doing business or a corporate stock tax; or (2)
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139 that state has jurisdiction to subject such corporation to a net income tax regardless of whether,
140 in fact, the state does or does not. Notwithstanding any other provision of this section, the
141 portion of the taxable net income of a corporation that a non-domiciliary state is prohibited from
142 taxing under the Constitution of the United States shall be allocated in full to the commonwealth
143 if the commercial domicile of the corporation is in the commonwealth.
144 (c) If a corporation has income from business activity which is taxable both within and
145 without the commonwealth, its taxable net income, as determined pursuant to subsection (a),
146 shall be apportioned to the commonwealth by multiplying such taxable net income by the sales
147 factor.
148 (d) The sales factor is a fraction, the numerator of which is the total sales of the
149 corporation in the commonwealth during the taxable year, and the denominator of which is the
150 total sales of the corporation everywhere during the taxable year.
151 As used in this section, unless specifically stated otherwise, “sales” shall mean all gross
152 receipts of the corporation, including deemed receipts from transactions treated as sales or
153 exchanges under the Code, except interest, dividends and gross receipts from the maturity,
154 redemption, sale, exchange or other disposition of securities; provided, however, that “sales”
155 shall not include gross receipts from transactions or activities to the extent that a non-domiciliary
156 state would be prohibited from taxing the income from such transactions or activities under the
157 Constitution of the United States.
158 (e) Sales of tangible personal property are in the commonwealth for purposes of this
159 section if: (1) the property is delivered or shipped to a purchaser within the commonwealth
160 regardless of the f.o.b. point or other conditions of the sale; or (2) the corporation is not taxable
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161 in the state of the purchaser and the property was not sold by an agent or agencies chiefly
162 situated at, connected with or sent out from premises for the transaction of business owned or
163 rented by the corporation outside the commonwealth. “Purchaser”, as used in clauses (1) and (2)
164 shall include the United States government.
165 (f) Sales, other than sales of tangible personal property, are in the commonwealth for
166 purposes of this section if the corporation’s market for the sale is in the commonwealth. The
167 corporation’s market for a sale is in the commonwealth and the sale is thus assigned to the
168 commonwealth for the purpose of this section:
169 (1) in the case of sale, rental, lease or license of real property, if and to the extent the
170 property is located in the commonwealth;
171 (2) in the case of rental, lease or license of tangible personal property, if and to the extent
172 the property is located in the commonwealth;
173 (3) in the case of sale of a service, if and to the extent the service is delivered to a
174 location in the commonwealth;
175 (4) in the case of lease or license of intangible property, including a sale or exchange of
176 such property where the receipts from the sale or exchange derive from payments that are
177 contingent on the productivity, use or disposition of the property, if and to the extent the
178 intangible property is used in the commonwealth; and
179 (5) in the case of the sale of intangible property, other than as provided in clause (4),
180 where the property sold is a contract right, government license or similar intangible property that
181 authorizes the holder to conduct a business activity in a specific geographic area, if and to the
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182 extent that the intangible property is used in or otherwise associated with the commonwealth;
183 provided, however, that any sale of intangible property, not otherwise described in this clause or
184 clause (4), shall be excluded from the numerator and the denominator of the sales factor.
185 (g) If the sales factor is missing, the whole of the corporation’s net income shall be<