Retiring in Massachusetts: What the State Actually Takes

On the ordinary retirement profile — $34,000 of Social Security and $61,000 of plan distributions — Massachusetts takes $2,830 a year in state income tax.

That is the number people compare, and it is the smallest of three. Property tax adds about $6,900 on the state's $690,000 median home, and insurance another $2,075. The three together come to $11,805, placing Massachusetts 46th of 50.

A note before you start. This is general education, not tax advice. Every Massachusetts figure comes from this site's own fifty-state income-tax dataset and its retirement tax engine, computed for a single filer aged 70 unless stated otherwise; property tax, median home price and insurance figures come from the site's core state dataset. Rates are for tax year 2026. Property tax is assessed locally in most states, so the effective rate here is a statewide figure rather than your county's.

1. What Massachusetts takes from retirement income

On Social Security. Fully exempt at every income level. Massachusetts never adopted IRC section 86, so benefits are simply not part of Massachusetts gross income — there is no income-based phase-in, no partial inclusion, and no age test. One consequence worth knowing: because benefits are excluded, Medicare premiums withheld from them are not deductible either.

On 401(k) and IRA distributions. 401(k) and 403(b) distributions are fully taxable at 5%. Massachusetts never allowed a deduction for traditional IRA contributions, so every contribution created Massachusetts basis, and distributions are excluded from Massachusetts income until that previously-taxed basis is recovered — basis-first, not pro-rata, computed on a Schedule X line 2 worksheet with separate worksheets per spouse. One edge case runs the other way: a Massachusetts resident who inherits a non-Massachusetts IRA is taxed on the entire distribution, since no Massachusetts tax was ever paid on the contributed income.

2. The rule that decides your Massachusetts bill

Public and private diverge completely. Private pensions and annuities are taxable at 5%. Massachusetts state and local contributory pensions are fully exempt under M.G.L. c. 62 sec. 2(a)(2)(E) — the trade being that employee contributions are added back to Massachusetts income when made — and the exemption extends to a surviving spouse. Federal contributory pensions, including CSRS, FERS and Postal Service annuities, are likewise fully excluded; the one carve-out is senior U.S.

The 4% surtax threshold does not vary by filing status and does not double for joint filers. M.G.L. c. 62 sec. 4(d) states one figure per return with no filing-status modifier, and the Department reinforces it by requiring federally-joint couples to file jointly in Massachusetts with no exception for surtax purposes. A married couple gets $1,107,750, not $2,215,500 — encoded above as an identical threshold across all four statuses.

Massachusetts does not adopt the new federal OBBBA individual deductions. The senior deduction, the qualified tips deduction, the qualified overtime deduction, the car-loan interest deduction, and the section 199A qualified business income deduction are all disallowed, and all tips and overtime must be reported in full.

3. What Massachusetts charges at three income levels

The same state, three retirements. All figures are for a single filer aged 70.

The marginal rate at the typical profile is 5%. That is what an extra dollar of distribution costs — a larger number than the 3% effective rate, and the one that matters when deciding how much to withdraw.

A married couple with $48,000 of Social Security and $62,000 of distributions pays $2,660.

4. Property tax, and why it lands harder in retirement

An effective rate of 1% on the state's $690,000 median home is about $6,900 a year.

For a retiree this is a harder cost than income tax, and the reason is structural: property tax is levied on the house, while retirement income falls. A bill sized to a working income arrives every year after the income has gone.

It is also assessed locally almost everywhere, so a statewide effective rate conceals real variation between counties. Treat the figure above as the state's shape rather than as your bill.

Massachusetts does have a homestead provision, and it is the one lever on this line worth understanding.

Massachusetts has no broad, automatic, statewide ad-valorem homestead property tax exemption like FL or LA. Instead, under M.G.L. c. 59, § 5C, individual cities and towns may optionally adopt a local 'residential exemption' that shifts a larger share of the tax burden from owner-occupied homes to non-owner-occupied and commercial property; most Massachusetts municipalities have not adopted it, but several major cities have, including Boston (saved qualifying homeowners up to $4,353.74 in the most recent fiscal year measured), Cambridge, and Somerville. Where adopted, owners must occupy the property as their primary residence as of January 1 and file an application by the town's deadline (e.g. April 1 for the following fiscal year in Boston); only one property per owner qualifies. Separately, Massachusetts's 'Declaration of Homestead' (M.G.L. c. 188) is an unrelated creditor-protection filing, not a property tax benefit, and is not reflected in this field.

Two things about homestead rules catch people out after a move. They almost always require the property to be your primary residence, which a snowbird splitting the year has to be able to demonstrate. And several states require an application to the county rather than granting it automatically — a benefit you qualify for and never claimed is worth nothing.

5. Insurance, the line nobody prices

Average home insurance in Massachusetts: $2,075 a year — 17th cheapest of the fifty states.

This is the line almost no retirement comparison includes, and across the country it varies more than income tax does: from Hawaii's $900 to Florida's $8,375, a ninefold spread.

For a retiree it behaves like a second property tax. It rises independently of income, a fixed-income household absorbs the whole increase, and it is a condition of the mortgage if you still have one.

6. What retiring in Massachusetts actually costs

Income tax on the typical retirement profile, plus property tax and insurance on each state's own median home. Massachusetts is shown against its own neighbours in the ranking, and against the extremes.

Massachusetts comes to $11,805, 46th of 50.

Income tax is 24% of that total. It is the line every comparison leads with and, here, not the largest of the three.

One large caveat, and it matters. Each row uses that state's own median home, and those differ a great deal. So this compares the typical house in each state, not the same house in each state — buying below a state's median improves its figure materially.

7. Whose pension it is changes the bill

Massachusetts does not tax all pensions the same way. The same $50,000 costs $2,280 if it is a private employer pension and $0 if it is a government one. Public and private diverge completely. Private pensions and annuities are taxable at 5%. Massachusetts state and local contributory pensions are fully exempt under M.G.L. c. 62 sec. 2(a)(2)(E) — the trade being that employee contributions are added back to Massachusetts income when made — and the exemption extends to a surviving spouse. Federal contributory pensions, including CSRS, FERS and Postal Service annuities, are likewise fully excluded; the one carve-out is senior U.S. This is the distinction most published comparisons flatten. A state described as exempting pension income may exempt only the government kind — and a private-sector career is the case most states treat least generously.

8. What a Roth conversion costs in Massachusetts

Converting $50,000 to a Roth costs an extra $2,500 in Massachusetts tax — 5 cents on the dollar.

These are computed, not read off the bracket table, which matters because a conversion large enough to be worth making usually leaves the bracket it started in.

The state's share is the part you can move. Convert in a year you are resident somewhere with no income tax and it is zero; convert here and it is 5%. The federal tax is due either way.

9. What part-time work costs here

$20,000 of part-time work costs an extra $1,000 in Massachusetts tax — an effective 5% on the earnings.

Compare that with the 5% a Roth conversion costs. The state treats the two identically, which keeps the decision a non-tax one.

Two federal rules apply on top and neither depends on your state. Earnings can raise the taxable share of Social Security, and claiming before full retirement age exposes you to the federal earnings test.

10. The order to draw your accounts in

The order you draw accounts in is worth real money, and the right order depends on the state.

Massachusetts applies the same treatment whenever you withdraw, so the order is a federal question rather than a state one — with the exception that the marginal rate is 5%, and a year of unusually high withdrawals pays that on the excess.

Smoothing withdrawals across years therefore beats lumping them, modestly. Take a large one-off distribution in a single year and it climbs the bracket schedule; spread the same amount over three and more of it stays low.

Required minimum distributions overrule all of this from 73 onward. Once they begin you must take the calculated amount whether the order suits you or not, which is the argument for drawing down or converting the pre-tax balance in the years before.

11. Or move across the state line

For most people the real alternative to Massachusetts is not Wyoming — it is the state on the other side of the line, near the same family, the same doctors and the same weather.

Rhode Island is the cheapest of the group at $8,897, $2,908 below Massachusetts. Whether that is worth a move is a question about your life rather than your spreadsheet — but it is the comparison worth running, because it is the one you could actually act on.

One thing this table cannot show is the county. Property tax is set locally, and the spread inside a single state is routinely wider than the gap between two neighbouring states. A border move to a cheaper state and an expensive county can leave you worse off.

12. If you are moving to Massachusetts from somewhere else

The eight most populous states people leave, measured against Massachusetts on the same three lines.

Massachusetts is cheaper than 0 of these eight. The move is not obviously about cost, on these lines.

A move is not free, and this table does not price it. Transaction costs on both houses run to several per cent of the sale price, and at typical values that is often more than the first two or three years of the saving.

Massachusetts charges a transfer tax on the purchase itself — 0.5%, customarily paid by the seller. On the state's $690,000 median home that is about $3,146, once, at the point of sale. Closing costs here run about 2% to 5% of the price — $13,800 to $34,500 on the median home, which is the real entry fee for the annual saving this article has been describing.

13. Where these Massachusetts figures are approximate

Every income tax figure above comes from this site's own Massachusetts record, and that record notes its own limits. They are reproduced here rather than left in the dataset, because a reader who falls into one of these cases is being quoted a number that is wrong for them.

• Traditional IRA distributions are the exception and this site's calculator overstates them.
• A calculator that reuses the federally taxable amount, as this one does, will overstate Massachusetts tax for anyone who made deductible traditional-IRA contributions while a Massachusetts resident.
• Another state's government pension is conditionally deductible under a reciprocity rule this site's calculator does not model: deductible if that state exempts or deducts Massachusetts public pensions, or has no income tax; not deductible if that state offers only a credit.

None of this affects the property tax or insurance lines, which come from a separate dataset and are not modelled.

If you are in one of the cases above, treat the income tax figure as the shape rather than the amount and get the number from a preparer who can see your actual return.

14. What Massachusetts does not exempt you from

The federal system, entirely. This is the commonest misunderstanding about state retirement taxation, and it is worth stating plainly.

Required minimum distributions still apply. The amount is federal — your prior-year balance divided by an IRS life expectancy factor — and identical in all fifty states. A state changes what the distribution costs you, not whether you must take it.

Social Security is still federally taxable, on the federal provisional-income calculation, whatever your state does with it.

IRMAA still applies, with its two-year lag. A large conversion or distribution raises a Medicare premium two years later regardless of address.

And capital gains are still federally taxed. What Massachusetts adds on top is a separate question from what the federal system takes.

15. Establishing that you actually live here

Any state tax advantage is worth nothing until Massachusetts is your domicile, and the state you left may disagree about when that happened.

High-tax states audit departing residents. The question is not whether you own a home here; it is whether you genuinely abandoned the old domicile. Days spent in each state, voter registration, vehicle registration, where your doctors are and where you claim a homestead all bear on it.

The snowbird case is the risky one. Splitting the year between two states while keeping a home in both is exactly the profile a residency audit is built for. If a plan depends on the saving, count the days from the first year rather than reconstructing them afterwards.

16. Who Massachusetts actually suits

A military retiree, whose pension is exempt here while a private one is not.

Someone with a government pension, which this state treats better than a private one of the same size.

It suits an affluent retiree least. At the affluent profile the bill is $6,780, and whatever exclusion helps a modest income has stopped helping by then.

And it suits someone buying below the median, because $6,900 of property tax on the median home is the largest single line in this article.

17. What to check before you decide

Get your county's actual property tax rate, not the state average. Property tax is levied locally almost everywhere, and the spread inside a state is often wider than the spread between states.

Get a real insurance quote on a real address. $2,075 is the state average; construction, roof age and exposure move it a long way.

Work out your own income tax rather than using the profile above. $95,000 split one way is not $95,000 split another, and in Massachusetts the mix between Social Security and distributions changes the answer.

And check what your current state actually charges you before assuming it is worse. On these three lines the ranking surprises people in both directions.

Frequently asked questions

Does Massachusetts tax Social Security? No. Fully exempt at every income level. Massachusetts never adopted IRC section 86, so benefits are simply not part of Massachusetts gross income — there is no income-based phase-in, no partial inclusion, and no age test. One consequence worth knowing: because benefits are excluded, Medicare premiums withheld from them are not deductible either.

Does Massachusetts tax 401(k) or IRA withdrawals? 401(k) and 403(b) distributions are fully taxable at 5%. Massachusetts never allowed a deduction for traditional IRA contributions, so every contribution created Massachusetts basis, and distributions are excluded from Massachusetts income until that previously-taxed basis is recovered — basis-first, not pro-rata, computed on a Schedule X line 2 worksheet with separate worksheets per spouse. One edge case runs the other way: a Massachusetts resident who inherits a non-Massachusetts IRA is taxed on the entire distribution, since no Massachusetts tax was ever paid on the contributed income.

What about pensions — private, government, or military? A $50,000 pension costs $2,280 if private, $0 if a government pension, and $0 if military retired pay. Those differences are the state's own policy, not an accident of the arithmetic.

What does retiring in Massachusetts actually cost? Income tax of $2,830 on the typical profile, plus about $6,900 of property tax and $2,075 of insurance on the median home — $11,805, which is 46th of 50.

Is Massachusetts a cheap state to retire in? On these three lines it ranks 46th of 50. Whether that makes it cheap for you depends far more on the house than on the tax code.

What does a Roth conversion cost in Massachusetts? An extra $2,500 in state tax on $50,000 converted, and $5,000 on $100,000. That is 5% of the amount converted, on top of the federal tax.

Does part-time work get taxed differently from my 401(k) withdrawals? $20,000 of part-time earnings costs $1,000 in state tax, an effective 5%.

Would a neighbouring state be cheaper than Massachusetts? Rhode Island is the cheapest of Massachusetts and its neighbours at $8,897 against Massachusetts's $11,805.

Do required minimum distributions change if I move here? No. The required amount is a federal calculation and identical in every state. What changes is what the distribution costs once taken.

Does this article include local income tax? No local income tax applies to retirement income in Massachusetts on the figures used here.

Will Massachusetts's treatment still apply in ten years? State legislatures revise retirement taxation regularly — several states have changed theirs in the past three years. Figures here are for tax year 2026 and are worth re-checking before a move.

What to do next

Two numbers decide this and neither is the one in the headline: your county's actual property tax rate, and a real insurance quote on a real address.

• Retirement state tax calculator — what any state charges on your income, cited per state
• RMD calculator — the distribution you must take, which no state changes
• Home insurance premium estimator — the line this article says decides it
• The Relocation Tax Playbook — establishing domicile, and the states that contest it