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S 2091

Establishes standards for the reuse of deconstructed building materials

2025 Regular Session Introduced by Brian Kavanagh and 2 co-sponsors

Massachusetts decouples from federal §163(j), letting individuals, pass-throughs and corporations deduct more business interest on MA returns, retroactive to 2018.

AMENDED ON THIRD READING 2091A
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WeVote Research Nonpartisan
Bill Summary · S 2091

Summary — S.2091 (Commonwealth of Massachusetts)

Note on sources and inconsistencies
- The bill package provided contains conflicting metadata: the short title at top refers to “standards for the reuse of solid‑sawn lumber in construction,” but the full bill text and the document header clearly concern state tax conformity and the deduction of business interest. The text and sponsor/petition details (Bruce E. Tarr) indicate this is a Massachusetts bill amending chapters 62 and 63 of the General Laws to change how federal Internal Revenue Code (IRC) provisions are treated for Massachusetts income tax purposes.
- The legislative action timeline also contains date/order inconsistencies. Readers should verify status and text on the official Massachusetts Legislature website for the authoritative record.

Purpose and intent
- The bill would change Massachusetts income tax law to allow taxpayers to deduct business interest for Massachusetts tax purposes by excluding the effect of IRC section 163(j) (the post‑TCJA limitation on business interest expense) when computing Massachusetts taxable income. In short: it decouples Massachusetts from the federal §163(j) limitation and restores broader state deductibility of business interest.

Key provisions
1. Amend Chapter 62, Section 1 (definition of “Code”)
- Replaces subsection (c) so that, for purposes of determining the amount of business interest deductible under chapter 62, federal IRC section 163(j) does not apply.
- Keeps other federal conformity rules generally tied to the IRC as in effect for the taxable year (with enumerated exceptions).

  1. Amend Chapter 63, Section 1 (definition of “Code”)

    • Defines “Code” as the IRC “as amended and in effect for the taxable year,” but specifies that for sections 163(j), 381(c)(20), 382(d)(3), and 382(k)(1) the reference is to the Code as amended and in effect for tax years beginning before January 1, 2018 (i.e., pre‑2018 treatment).

  2. Amend Chapter 63, Section 30 (definition of “net income”)

    • Clarifies that “net income” uses federal deductions “as amended and in effect for the taxable year,” but for the specific sections listed above (including 163(j)) the pre‑2018 Code applies.
    • Adds that any deduction allocable to income classes not included in a corporation’s taxable net income (per sec. 38(a)) shall not be allowed.

  3. Effective date

    • The act would apply to taxable years beginning after December 31, 2017 (i.e., it is retroactive to tax years beginning 2018 and later).

Who would be affected
- Massachusetts individuals and pass‑through entities and corporations that carry interest expense subject to IRC §163(j) limitations at the federal level.
- State tax revenue: allowing additional deductions likely reduces Massachusetts taxable income for affected taxpayers and therefore would likely decrease state tax revenue relative to full conformity with federal §163(j).
- Tax practitioners and preparers: must apply a different (pre‑2018) federal rule for certain IRC sections when computing Massachusetts taxable income.

Procedural status (from provided record — verify with official source)
- Introduced/filer: Petitioned/presented by Sen. Bruce E. Tarr (First Essex & Middlesex).
- Various entries indicate the bill was read, referred to committees (Revenue; Governmental Operations; Housing, Construction and Community Development), had hearings scheduled, and entries labeled “PASSED SENATE” and “DELIVERED TO ASSEMBLY.” Given the conflicting dates and entries, confirm current status on the Legislature’s website.

Potential fiscal and policy implications
- Restoring state deductibility of business interest could improve cash flow and taxable income calculations for leveraged businesses and pass‑through entities.
- The change creates a decoupling between Massachusetts and federal tax treatment, increasing tax code complexity and compliance burdens (state‑specific adjustments).
- Likely to reduce state tax receipts; the magnitude depends on the number and size of businesses affected and how many were limited by §163(j).

Related bills and notes
- Related/companion bills listed in the record: S 2296, A 3029, prior-session S 8614. Confirm cross‑references and companion status with official bill tracking.

If you want, I can:
- Produce a one‑page explainer for impacted taxpayers (businesses, CPAs),
- Estimate likely revenue impact given state data (requires fiscal inputs), or
- Retrieve/verify the current official status and text from the Massachusetts Legislature website.

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

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