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November 21, 2022

Massachusetts voters approve ballot measure on 'millionaires' tax

  • After five unsuccessful attempts, Massachusetts voters approved a constitutional amendment to impose an additional 4% tax on taxable income over $1 million.
  • Until there is legislation or other guidance on the constitutional amendment, taxpayers are left with some uncertainty as to how the new tax will (1) be implemented, (2) apply to short-term capital gains, and (3) affect pass-through entities and their owners.

On November 8, 2022, 52% of voters approved Massachusetts ballot Question 1, amending the State's Constitution to impose an additional 4% tax on individual taxable income over $1 million. (Currently, Massachusetts has a flat 5% income tax rate.) This additional tax will apply for tax years beginning on or after January 1, 2023.


Article 44 of the Amendments of the Massachusetts Constitution (Article 44) authorizes the legislature to levy a state income tax at a "uniform rate throughout the commonwealth upon incomes derived from the same class of property." According to the Massachusetts Supreme Judicial Court (MA SJC), this provision prohibits a graduated income tax.

In the past 50 years, there have been six initiative petitions to amend Article 44 to permit the legislature to impose a graduated income tax. In five of these instances, the graduated income tax proposal was presented on a standalone basis (i.e., not combined with some other measure), and failed to garner the necessary votes for passage. The attempt in 2018 was not put before voters because the MA SJC found1 the petition violated the requirements of Article 48 of the Amendments of the Massachusetts Constitution (Article 48) concerning the subject matter and scope of initiative petitions (see Tax Alert 2018-1268.)

The process to pass this constitutional amendment began in 2019, with the introduction of a legislative amendment to Article 44 of the Massachusetts Constitution to fund education and transportation through an additional 4% state income tax on the portion of annual taxable income over $1 million, starting in 2023. As required by Article 48, the proposal received approval of a majority of the legislature during two successive legislative sessions — 2019 and 2021.

Plaintiffs, a group of Massachusetts taxpayers, challenged the constitutional amendment based on the Massachusetts Attorney General's and the Secretary of the Commonwealth's summary of the amendment and a one-sentence statement describing the effect of a "yes" or "no" vote. Plaintiffs argued that the materials, which referenced the additional tax revenue for education and transportation as "subject to appropriation by the [S]tate Legislature," could mislead voters into thinking that the legislature "[could] move funding around … and thereby use the additional revenues raised by the new tax to increase spending on whatever it want[ed]." The MA SJC rejected the challenge, finding the materials describing the amendment and the effects of a "yes" or "no" vote were not unfair or misleading. The court noted that the materials "closely track[ed] the language of the proposed amendment" and, therefore, "'fairly inform[ed] voters' of [the amendment's] operation." The MA SJC also noted that the summary only needed to describe the amendment itself.2 Accordingly, Question 1 was allowed to appear on this year's ballot.

Voters approve the additional income tax

As a result of voters approving Question 1, Article 44 of the Massachusetts Constitution will be amended to impose an additional 4% tax on taxable income over $1 million, starting in 2023. The $1 million income level will be adjusted annually to reflect changes to the cost of living using the same method used to adjust the federal income tax brackets.

The additional tax collected will be specifically allocated to education and transportation.


The increased tax rate is now embedded in the Massachusetts Constitution. Presumably, the legislature will now pass enabling legislation or otherwise add the new rate to Mass. Gen. Laws Ch. 62, which contains the individual income tax provisions. Until that time, it is unclear what, if any, additional guidance taxpayers will receive. For example, the new rate could apply to short-term capital gains, which Massachusetts currently taxes at a 12% rate. If it does, Massachusetts' short-term gains rate for income over $1 million will, at 16%, be the highest individual income tax rate on any category of income.

For pass-through entities, withholding rates for nonresidents and the pass-through entity tax rate currently remain unchanged. In the absence of further guidance, individual owners of pass-through entities may have additional estimated payment requirements to address the new additional 4% rate.

Affected taxpayers may want to consider certain planning ideas that could lessen the effect of the new rate in 2023.

Because the 4% rate is embedded in the Massachusetts Constitution, another constitutional amendment would be required to eliminate, reduce or increase the additional tax rate. The legislature, however, could act to change the 5% and 12% rates currently in the law.

Until there is legislation on the constitutional amendment, taxpayers are left with some uncertainty as to how the new tax will be implemented and how it will affect pass-through entities and their owners. We will continue to track any updates from Massachusetts that may provide clarity.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Jason Zorfas (
   • Scott Gilefsky (
Workforce Tax Services - Employment Tax Advisory Services
   • Kristie Lowery (
   • Kenneth Hausser (
   • Debera Salam (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer Brittenham, legal editor


1 Anderson v. Attorney General, Slip. Op. SJC-12422 (June 18, 2018) ) (Anderson I).

2 Anderson v. Attorney General Suffolk, SJC-12357 (Mass. Sup. Jud. Ct. June 22, 2022) (Anderson II).