Author: Jonathan Harrington

An obscure law in Massachusetts called Chapter 62F, enacted by voters in 1986 and only used once since then, allows for taxpayers to receive a credit if total tax revenues in a given year exceed an annual cap tied to wage and salary growth in Massachusetts. For tax year 2021, this amount was $2.941 billion, and this entire sum will be returned to Massachusetts taxpayers. Massachusetts estimates that more than three million Massachusetts taxpayers will be eligible for this special refund .

Who is eligible?

• To be eligible, individuals must have filed a 2021 state tax return on or before October 17, 2022.
• Anyone who paid personal income taxes in Massachusetts in the 2021 tax year and filed a 2021 state tax return on or before October 17, 2022 is eligible to receive a refund. This includes residents, non-residents, trusts and estates . Non-residents on whose behalf a partnership files a return on a composite basis are also eligible.
• Corporate income tax, room occupancy tax, sales tax, and all forms of excise tax paid in 2021 are not eligible for this refund.

How will taxpayer receive the refund?

• Individuals eligible for a refund will receive it automatically as a check sent through the mail or through direct deposit. Distribution of refunds is expected to begin in November 2022 .
• 62F refunds will only be reduced due to normal intercepts, including for unpaid tax liability, unpaid child support, and certain other debts.

How much will taxpayers receive?

• In general, eligible taxpayers will receive a credit in the form of a refund that is approximately 13% of their Massachusetts tax year 2021 personal income tax liability. This percentage is a preliminary estimate and will be finalized in late October, after all 2021 tax returns are filed.
• An individual’s credit may be reduced due to refund intercepts, including for unpaid taxes, unpaid child support, and certain other debts.

How can I calculate my refund amount?

• More information on how much you will receive, you can visit the Massachusetts Department of Revenue 62F Calculator. You will need a copy of your 2021 tax return in order to calculate the refund amount.

What if I already received a tax refund for a return I filed for Tax Year 2021?

• Even if you previously received a refund for tax year 2021, this would not reduce or otherwise impact your 62F refund, and your receipt of a 62F refund has no bearing on whether you will be due an income tax refund for Tax Year 2022.

Is the 62F Refund Taxable?

• The refunds are not taxable as income at the state level.
• All tax refunds, including the 62F refunds, are taxable at the federal level only to the extent that an individual claimed itemized deductions on his or her federal return for Tax Year 2021, including his or her state income tax.
• Refund recipients who itemized on their federal returns for Tax Year 2021 will receive a Form 1099-G from the Department of Revenue by January 31, 2023, to use when completing their 2022 federal return.

_{Jonathan Harrington, CFP®, MSFP, MST are advisors at Milestone Financial Planning, LLC, a fee-only financial planning firm in Bedford NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services, and have unlimited access to our advisors. We receive no commissions or referral fees. We put our clients’ interests first.  If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors .}