WeVote
Log In

Bill

Bill

H 3005

Electoral college

2025-2026 Regular Session Introduced by Brandon Newton and 2 co-sponsors

Allows MA cities and towns to replace property taxes with income-based taxes on residents and businesses, decided by local vote, with rates set from income data (TRE/CIE).

Referred to Committee on Invitations and Memorial Resolutions
0
WeVote Research Nonpartisan
Bill Summary · H 3005

Legislative Bill Summary: H 3005 — An Act relative to municipal income-based taxation

Overview

H 3005, introduced February 27, 2025, proposes to authorize cities and towns in Massachusetts to replace local real property taxes with an income-based tax system for both residents and businesses. The bill would add a new Section 95 to Chapter 59 of the General Laws, creating a framework for municipalities to levy taxes based on personal and business income if the locality adopts the change by local vote and undertakes the required classifications hearings.

Purpose and intent

  • Give municipalities the option to shift from property tax-based funding to a taxation model derived from residents’ personal income and businesses’ reported income.
  • Establish a formula-based approach to set local tax rates that align with each municipality’s revenue needs, using income data rather than property values.

Key provisions and definitions

  • Definitions (Section 95(a)):
    • Commercial and Industrial Evaluation (CIE): total income reported by every business registered in the city/town on Massachusetts state tax forms.
    • Commercial and Industrial Levy (CIL): the portion of the tax levy rate imposed on a business’ total income, as allocated by the city/town.
    • Resident Levy (RL): the portion of the levy rate imposed on a resident’s personal income, as allocated by the city/town.
    • Total Resident Evaluation (TRE): sum of personal income for all individuals legally residing in the city/town, as reported on MA state Form 1.
  • Local option (Section 95(b)):
    • A city or town may adopt income-based taxation in lieu of local real property taxes, in accordance with this section, by vote of its local government (city council, select board, etc.).
  • Tax rate determination (Section 95(d)-(e)):
    • Resident tax rate: determined by dividing the city/town’s RL by its TRE.
    • Commercial/Industrial tax rate: determined by dividing the city/town’s CIL by its CIE.
  • Tax levy and assessment (Section 95(f)-(g)):
    • Residents would be taxed based on personal income multiplied by the resident income-based tax rate.
    • Businesses would be taxed based on reported business income multiplied by the income-based business tax rate.

How it would work (operational flow)

  1. A municipality exercises the option by local vote.
  2. The city/town conducts classification hearings to set the split of the total local levy between RL and CIL, ensuring RL + CIL equals the total local levy required.
  3. Rates are calculated:
    • RL rate = TRE-derived proportion.
    • CIL rate = CIE-derived proportion.
  4. Tax bills are issued:
    • Residents pay tax proportional to personal income × RL rate.
    • Businesses pay tax proportional to reported business income × CIL rate.

Who would be affected

  • Residents: liable for income-based local taxes in participating municipalities.
  • Businesses: liable for income-based local taxes in participating municipalities.
  • Municipalities: gains a new mechanism to fund local services; would require administration of income data, hearings, and annual tax rate calculations.

Procedural and timeline aspects

  • Status: Hearing scheduled for November 7, 2025 (Gardner Auditorium) from 10:00 AM–2:00 PM.
  • Previous actions:
    • Referred to the House Committee on Revenue on February 27, 2025.
    • Senate concurred (historical action noted).
    • Multiple hearings scheduled/cancelled in 2025 (e.g., July 22, 2025; July 14, 2025 cancellation).
  • Related bill: HD 3649 (House version), which appears to replace or supersede prior similar measures (see “Related Bills”).
  • The bill is a proposed amendment to Chapter 59, Section 95, and would require local adoption via vote and subsequent implementation steps.

Potential impact and considerations

  • Revenue stability: shifting from property taxes to income-based taxes could alter revenue volatility and reliance on income cycles.
  • Local autonomy: empowers municipalities to tailor tax structure to local context but increases administrative complexity.
  • Compliance and administration: municipalities would need systems to collect and verify TRE and CIE data and to perform annual rate calculations.
  • Equity considerations: impact on high- vs. low-income residents and on different business sectors would vary by locality.

Note: This summary reflects the bill text and the stated legislative actions to date. It does not reflect any enacted changes or final passage.

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

Sign in to ask a question.