Sortable table

Tax breaks proposed for elimination

The tax plan Governor Deval Patrick proposed this week would eliminate a flurry of personal tax breaks – from deductions for business lunches and charitable contributions to obscure provisions sparing taxes on settlements with coal miners and septic system upgrades. Administration and Finance officials stressed that under the governor’s plan, all taxpayers would see their personal exemption rate doubled – meaning many wouldn’t be taxed on the first $8,800 they make – and that they aim to simplify the tax code and eliminate special treatment for subsets of taxpayers.

Among the tax breaks that would remain untouched, though, are the earned income tax credit for low-income people, which costs the state about $132.3 million a year, and a film production tax credit that helps about 50 filmmakers save an average of $52,000 a year.

The sortable table below shows the tax breaks Patrick has proposed for elimination and, where available, the average amount a taxpayer is currently saving on the deduction.

-- Stephanie Ebbert

Tax breaks for elimination Revenue (mil)Est. # of Beneficiaries Avg. savings
Deduction for Employee Contributions to Public Pension Plans, Social Security and Railroad Retirement $299.6 3,585,000 $84
Exemption of Capital Gains on Home Sale $239.6 55,000 $4,356
Exemption of Interest on Life Insurance Policy and Annuity Cash Value $210.8N.A.N.A.
Deduction for Dependent Under 12 $135.8 510,000 $266
Exclusion from Gross Income of Parking, T-Pass and Vanpool Fringe Benefits$38.8N.A.N.A.
Tuition Tax Deduction$35.9 65,000 $553
Exemption of Premiums on Accident and Accidental Death Insurance$23.7 1,970,000 $12
Exemption of Scholarships and Fellowships $19.1 255,000 $75
Deduction for Child Care Expenses$15.4 54,000 $285
Septic System Repair Credit$12.5 11,000 $1,139
Health Savings Accounts exemption and deduction$12.3 10,000 $1,232
Exemption of Premiums on Group-Term Life Insurance$11.5N.A.N.A.
Exemption of Dependent Care Expenses$9.0N.A.N.A.
Exemption of Workers' Compensation Benefits$8.5N.A.N.A.
Employer-Provided Education Assistance$8.4N.A.N.A.
Personal Exemption for Students Aged 19 or Over$8.4N.A.N.A.
Exemption of Meals and Lodging Provided at Work$7.7N.A.N.A.
Commuter Deduction$6.7 225,000 $30
Exemption of Interest on Savings in Massachusetts Banks$5.1 505,000 $10
Exemption of Certain Foster Care Payments $3.1N.A.N.A.
Credit for Removal of Lead Paint $2.5 1,850 $1,354
Exemption of Rental Value of Parsonages$2.1N.A.N.A.
Renewable Energy Source Credit$1.3 2,000 $658
Deduction for Adoption Fees; Employer-Provided Adoption Assistance$0.5 1,000 $486
Expensing of Certain Capital Outlays of Farmers $0.3N.A.N.A.
Exemption of Payments Made to Coal Miners NegligibleN.A.N.A.
Exemption of Cost-Sharing Payments NegligibleN.A.N.A.
Discharge of Indebtedness for Health Care Professionals NegligibleN.A.N.A.
Archer Medical Savings Accounts (deduction)NegligibleN.A.N.A.
Clean-Fuel Vehicles and Certain Refueling Prop.NegligibleN.A.N.A.
Exclusion of Certain Prizes and Awards N.A.N.A.N.A.
Qualified Retirement Planning Services N.A.N.A.N.A.
Department of Defense Homeowners Assistance Plan N.A.N.A.N.A.
Charitable Contributions Tax DeductionN.A.N.A.N.A.
Deduction for Costs Involved in Unlawful Discrimination SuitsN.A.N.A.N.A.
Business-Related Entertainment ExpensesN.A.N.A.N.A.
Exemption of Income from the Sale, Lease or Transfer of Certain PatentsN.A.N.A.N.A.
Capital Gains Deduction N.A.N.A.N.A.
Deduction of Capital Losses against Interest and Dividend IncomeN.A.N.A.N.A.
Dependents Exemption where the Child Earns IncomeN.A.N.A.N.A.
Nontaxation of Charitable Purpose Income of Trustees, Executors or AdministratorsN.A.N.A.N.A.
Deductions and exemption for Archer Medical Savings Accounts N.A.N.A.N.A.

Sources: Massachusetts Executive Office for Administration and Finance, Department of Revenue Tax Expenditure Commission