Summary of Bill S 1944: An Act Relative to the Exemption of Private Pension Income from Taxation

Purpose and Intent

Bill S 1944 aims to amend the tax code in Massachusetts to provide exemptions for private pension income. The primary goal is to alleviate the tax burden on individuals receiving pension income, particularly focusing on those under and over the age of 60.

Key Provisions

The bill proposes the following changes to Subsection B of Section 3 of Chapter 62 of the General Laws:

• Pension Income Exemptions:

  • Individuals under the age of 60 will be exempt from taxation on pension income amounts not exceeding $2,000.
  • Individuals aged 60 and older will be exempt from taxation on pension income amounts not exceeding $12,500.

• Definition of Eligible Retirement Income:

  • The bill defines "eligible retirement income" to include:
  • Distributions from qualified retirement plans as defined in the federal Internal Revenue Code (IRC) § 4974.
  • Cash or deferred arrangements described in IRC § 401(k).
  • Government deferred compensation plans described in IRC § 457.
  • Dividends, capital gains, interest, and rental income from real property, minus deductible rental expenses.
  • For joint tenants or tenants by the entirety, eligible retirement income will be considered as received equally by both spouses.

Affected Parties

This bill will primarily affect:
- Individuals Receiving Pension Income: Those under 60 will benefit from a lower tax threshold, while those 60 and older will have a significantly higher exemption limit.
- Retirees and Seniors: The legislation is particularly beneficial for retirees who rely on pension income as a primary source of financial support.

Procedural Aspects

• Introduced: February 27, 2025.
• Current Status: The bill has been referred to the committee on Revenue and has received concurrence from the House.
• Hearing Scheduled: A public hearing is set for November 18, 2025, from 10:00 AM to 1:00 PM in room A-1.

Related Legislation

• This bill is a replacement for a similar matter filed in the previous session, identified as Senate No. 1775 of 2023-2024.

Conclusion

Bill S 1944 represents an effort by the Massachusetts legislature to provide financial relief to individuals receiving pension income, particularly benefiting older adults. By establishing clear exemptions based on age and income thresholds, the bill aims to enhance the financial security of retirees in the Commonwealth.