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SD 1377

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

194th Legislature (2025-2026) Introduced by Jamie Eldridge

Massachusetts bill would eliminate preferential tax rates for long-term capital gains, taxing all gains uniformly to increase state revenue but potentially discouraging long-term investing.

House concurred
0
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Bill Summary · SD 1377

Legislative bill overview

SD 1377 would eliminate the preferential tax treatment for long-term capital gains in Massachusetts by aligning their tax rate with short-term capital gains rates. 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 subject all capital gains to the same tax rate regardless of holding period.

Why is this important

Capital gains taxes significantly affect investment behavior, retirement savings, and state revenue. This change could increase tax revenue for Massachusetts but would reduce the financial incentive for long-term investing and potentially impact middle-class investors with retirement accounts, stock holdings, and home sales. The outcome depends heavily on what the resulting unified rate would be set at.

Potential points of contention

  • Revenue vs. economic impact: While the state gains tax revenue, it may discourage long-term investment, potentially reducing business formation and economic growth
  • Regressivity concerns: Wealthier individuals hold more capital gains, but middle-class savers with retirement and investment accounts would also be affected
  • Competitiveness: Massachusetts could become less attractive for investors and businesses compared to neighboring states with preferential capital gains treatment

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

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