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S 231

Exempts from state income taxation the first $250,000 earned by four-year college graduates or the first $150,000 earned by two-year graduates

2025 Regular Session Introduced by Jim Tedisco

The bill would exempt the first $250,000 of earned income for four-year degree holders and $150,000 for two-year degree holders from state income tax.

REFERRED TO BUDGET AND REVENUE
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WeVote Research Nonpartisan
Bill Summary · S 231

Bill Summary — S 231 (Introduced Jan 23, 2025)

Overview / Purpose

S 231 would exempt a portion of recent college graduates’ earnings from state income taxation. Specifically, it proposes to exempt:
- The first $250,000 of income earned by graduates of four‑year colleges; and
- The first $150,000 of income earned by graduates of two‑year colleges.

The stated intent is to provide a tax incentive to recent graduates, reduce their tax burden during early career years, and improve economic retention/attraction of college‑educated workers.

Key provisions (as described)

  • Income exemption amounts: $250,000 for four‑year degree holders; $150,000 for two‑year degree holders.
  • The exemption applies to “earned” income (phrase used in title). The bill text provided to this summary does not define whether this is per tax year, lifetime, or subject to other limits (see “Open questions” below).
  • Applies to state income taxation (i.e., reduces taxable income subject to the state income tax).

Who would be affected

  • Primary beneficiaries: Individuals who recently (or at any time, depending on definitions) hold a two‑year or four‑year college degree and earn wages, salaries, or other forms of earned income within the state.
  • State tax authorities: would need to update return forms, instructions, and enforcement guidance.
  • State budget: would experience reduced personal income tax revenue to the extent the exemption is claimed.

Fiscal and policy implications

  • Revenue impact: Likely substantial, depending on (a) whether the exemption is annual or one‑time, (b) time limits (e.g., years since graduation), and (c) the number of graduates whose incomes fall within the exemption thresholds. No fiscal estimate is provided in the materials supplied.
  • Distributional effects: Larger dollar benefit to higher‑earning recent graduates (particularly four‑year degree holders near the $250k threshold); lower‑income graduates may see little or no benefit.
  • Labor market effects: Could encourage retention of degree holders in the state, attract graduates from elsewhere, or increase after‑tax return on higher‑paying jobs.

Procedural status & timeline

  • Introduced: January 23, 2025.
  • Current status (as provided): Referred to Budget and Revenue.
  • No enacted text or effective date is provided.

Notes, inconsistencies & recommended clarifications

  • The bill package supplied contains conflicting materials: a Massachusetts Senate docket titled “WEATHER Act of 2025” concerning real‑estate continuing education (chapter 112 amendment) appears to be a different measure and does not match the tax‑exemption title. Sponsor and related‑bill listings also include a mix of federal and state names (e.g., U.S. Senators and “HR 2435”), suggesting the provided metadata may be combined from multiple, different bills.
  • Critical unanswered questions that materially affect impact and administration: Are the exemption amounts annual or lifetime? Is there an eligibility window (e.g., within X years of graduation)? Are graduate level and accreditation requirements defined? Does “earned” include business/self‑employment income? Is there a cap per taxpayer or household?
  • Recommendation: Obtain the official bill text and fiscal note from the legislature (Budget & Revenue committee) to confirm definitions, eligibility periods, administration rules, and projected revenue effects before relying on estimates or advocacy.

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

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