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HD 2466

An Act aligning the long-term capital gains tax rate with the short-term capital gains tax rate

194th Legislature (2025-2026) Introduced by Tara Hong

Massachusetts bill would tax all capital gains at identical rates regardless of holding period, eliminating preferential long-term treatment and potentially increasing state revenue while reducing investment incentives.

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Bill Summary · HD 2466

Legislative bill overview

HD 2466 proposes to eliminate the distinction between long-term and short-term capital gains taxation in Massachusetts by taxing both at the same rate. Currently, Massachusetts taxes long-term capital gains (assets held over one year) at a lower rate than short-term gains and ordinary income. This bill would treat all capital gains uniformly regardless of holding period.

Why is this important

Capital gains taxation significantly affects investment decisions, wealth accumulation, and state revenue. This change would alter incentives for holding investments long-term, potentially increasing tax revenue but also affecting retirement savings, small business valuations, and investment behavior across the state. The shift reflects different philosophical approaches to whether the tax code should encourage long-term investing.

Potential points of contention

  • Economic impact on investors: Long-term capital gains rates are designed to encourage holding investments; eliminating this distinction may discourage patient capital and long-term wealth building, particularly affecting retirement accounts and smaller investors
  • Revenue versus growth tradeoff: While the state may gain short-term tax revenue, higher capital gains taxes could reduce investment activity, business expansion, and potentially drive investment/businesses to other states with lower rates
  • Equity concerns: Supporters argue uniform rates are fairer; opponents contend lower long-term rates reward patient capital and small business owners, while critics note capital gains disproportionately benefit wealthy individuals regardless of rate structure

Compiled from official sources — confirm details with the bill’s official record.

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