#2022-6 February 25, 2022

Governor Baker Testifies on $700 Million Tax Plan

On Tuesday, Governor Charlie Baker testified in-person at a legislative hearing on his nearly $700 million tax relief package.  In his testimony, he stated that the package is a way to keep more money in the pockets of parents, low-income workers and seniors.  However, some legislators were skeptical of whether the majority of the tax provisions would actually benefit those individuals.  

The tax breaks that Baker announced with his $48.5 billion fiscal 2023 budget includes changes to how the state handles estate and short-term capital gains taxes as well as an increase in tax credits for seniors and childcare.  The package (H 4361) also contains an increase in the deduction for rent payments, which has been static for many years.  In addition, the measure raises the income level at which Massachusetts residents are required to file taxes.

Governor Baker and Administration and Finance Secretary Michael Heffernan appeared before the Joint Committee on Revenue in a newly reopened State House with seven committee members attending in-person while others joined via videoconference.  Many of the committee’s questions involved the proposals to raise the threshold at which the estate tax kicks in and lower the tax rate on short-term capital gains, which some lawmakers said would primarily benefit wealthier residents.

According to the Governor’s statement, the bill will:

• Cut the tax rate on short-term capital gains from its current 12 percent to 5 percent, a change Baker said would align it with the tax on other income and mirror the way other states treat short-term capital gains.
• Double the threshold at which the estate tax kicks in to $2 million.  While the current tax applies to the full value of estates over $1 million, Baker's proposal would tax only the amount above $2 million.
• Raise the income level at which people are required to file taxes.  Currently, Massachusetts residents must file an income tax return if they earn $8,000 as a single filer, $14,400 as a head of household, or $16,400 as joint filers.  Baker’s plan would raise the no-tax threshold to align with the federal level, bringing it to $12,400 for single filers, $18,650 for heads of households, and $24,800 for joint filers.
• Double the maximum allowed senior circuit breaker tax credit.  The credit rises with inflation and the increase this year would have raised it from $1,170 to $2,340.
• Increase the cap on the rent deduction from $3,000 to $5,000.  That deduction is limited to half of the rent paid during a tax year.
• Double the dependent care tax credit to $480 for one qualifying individual and $960 for two or more.  Baker wrote in a budget-filing message that for those claiming the household dependent care credit, rates would also double to $360 for one qualifying individual and $720 for two or more.

To view the bill, click here.

Division of Banks to Hold Virtual Hearing on Licensing of Mortgage Lenders and Brokers

The Division of Banks announced that it will hold a virtual public hearing on Wednesday, March 16, 2022 at 10:00 AM relative to the amendments to 209 CMR 42.00: The Licensing of Mortgage Lenders and Mortgage Brokers.  

The purpose of the proposed amendments to 209 CMR 42.00 is as follows: (1) to update the definition of “mortgage broker” to provide clarity regarding which activities by entities that provide information regarding prospective borrowers, known as lead generators, would require licensure; (2) to add a new section regarding licensure exemptions; and (3) to add two definitions to the regulation that were added to G.L. c. 255E pursuant to Chapter 228 of the Acts of 2018.  These two definitions added a new mortgage licensing exemption for bona fide nonprofit affordable homeownership organizations and clarified the existing mortgage licensing exemption for instrumentalities of the United States or any state.  There are other technical updates to both regulations as well.

Written comments may be submitted to the Division on the proposed amendments until Wednesday, March 23, 2022 at 5:00 PM.

To review the public hearing notice and proposed amendments please click here.

New & Improved 2021 Massachusetts Banking Law Book **Deadline for Hard Copy Orders Monday**

After months of compiling and integrating two years of new state laws, emergency COVID-19 orders, and numerous edits and revisions, we are pleased to report the 2021 Massachusetts Banking Law Book is not only back but going digital!

The 2021 edition of Law Book continues its tradition of including all updated relevant MA statutes, regulations, an updated comprehensive cross-reference matrix of Massachusetts banking law to regulatory bulletins and Division of Bank opinion letters and an up-to-date list of directives and opinions by the Division.  The 2021 Edition also contains all the trust, probate and estate laws such as the Uniform Probate and Trust Codes, all in one single fully electronic and searchable book!

While this edition is available in a fully electronic format accessible via the new Massachusetts Bankers Publication Hub, the Association’s print run deadline for hardcopies closes Monday, so order your copy today! Please note, each purchase of a physical book will also include single-user licensed access to the electronic copy – an added benefit in our new hybrid working environment world!

With numerous revisions, additions, and corrections this publication is an essential resource for legal and compliance professionals throughout the industry.  Please click here to download the order form for hard-copies or visit here for electronic access only.  Discounts are available for larger orders, and we encourage banks to order multiple copies or licenses for your staff.