As a business owner in Massachusetts, you can apply for a slew of different state-sponsored business tax incentives. Here’s a list of tax credits—both general and industry-specific—to look out for.
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Tax incentives for small businesses in Massachusetts
Apprenticeship Tax Credit
The Apprenticeship Tax Credit rewards Massachusetts employers in healthcare, tech, and manufacturing for hiring registered apprentices. If you qualify for the credit, you can get up to $4,800 in credits of 50% of your apprentice’s wages paid—whichever is less—for each registered apprentice you hire, up to $100,000 total.
To be eligible to apply, you need to have a Certificate of Good Standing within the past six months from the Massachusetts Department of Revenue, and a Certificate of Compliance no older than three months from the Massachusetts Department of Unemployment Assistance.
Learn more about how to apply here.
Brownfields Tax Credit
Businesses in Massachusetts can get a Brownfields Tax Credit for cleaning up contaminated property in the state. Depending on the severity of the project and the scope of the work, you can either get 25% or 50% of your cleanup project costs covered.
To qualify, you need to make sure:
- The cleanup begins on or before August 5, 2028, with all removal costs incurred before January 1, 2029
- You own or lease the property for a business purpose
- The property is located in an Economically Distressed Area, and has been reported to the Massachusetts Department of Environmental Protection (MassDEP)
- The property has achieved a Permanent Solution or is in Remedy Operation Status (ROS)
- The site meets the 15% assessed value test
Gather more information on the Brownfields Tax Credit here.
Certified Housing Development Tax Credit
The Certified Housing Development Tax Credit (CHDC)—which has an annual cap of $10 million—incentivizes corporations to invest in housing development projects within Massachusetts. If your business qualifies, you can get a tax credit equal to up to 25% of your housing development project costs.
For more information on the credit, review the legislature here.
Community Investment Tax Credit
Massachusetts’s Community Investment Tax Credit (CITC) rewards businesses that make cash contributions to community organizations investing in economic opportunities for low and moderate-income households in Massachusetts, as well as community partnership funds. The annual cap for the CITC is $12 million.
To qualify for the credit, you need to contribute at least $1,000 to an eligible community organization; you can then get a credit equal to up to 50% of your total qualified investment.
Learn more about the credit here.
Conservation Land Tax Credit
The Conservation Land Tax Credit (CLTC) credits businesses for donating certified land to public or private conservation agencies in Massachusetts. If you qualify, you can get a credit equal to 50% of the fair market value of the land, not to exceed $75,000.
Learn more about how to apply for the credit and what qualifies as certified land here.
Cranberry Bog Renovation Credit
If you own a cranberry farming business in Massachusetts, you might be eligible for the Cranberry Bog Renovation Credit, which rewards you for undertaking a cranberry bog renovation or restoration project. If your project is eligible, you can get a credit equal to 25% of the renovation or repair costs, not to exceed $100,000.
Learn how to apply for the credit here.
Dairy Farmer Tax Credit
Dairy farmers in Massachusetts can apply for the Dairy Farmer Tax Credit, which is designed to offset downturns in milk prices. If the cost of milk falls below a price based on federal standards, Massachusetts dairy farmers can apply for a tax credit against their corporate excise tax or personal income tax.
The amount of credit depends on the volume of milk the farm produces and sells during the tax year in question. To qualify for the credit, you need to have a certificate of registration as a Massachusetts dairy farmer from the Commissioner of the Massachusetts Department of Agricultural Resources.
Apply for the tax credit here.
Disability Employment Tax Credit
Businesses that hire qualified employees with disabilities are eligible for the Disability Employment Tax Credit (DETC). The credit is equal to $5,000 or 30% (whichever amount is less) of the wages paid to each qualified employee with a disability in the first taxable year of employment.
To qualify for the credit, the employee your business hires must meet the below criteria:
- Be certified by the MRC as having a condition that meets the definition of a disability
- Be capable of working independently
- Be physically or mentally impaired in such a way that constitutes or results in a substantial impediment to employment
- Be hired after July 1, 2021
- Be primarily employed and living in Massachusetts
- Be employed for at least 12 consecutive months
To be eligible for the credit, your business needs to receive a DETC certification for the employee you hire. Find out how to apply for and claim the credit here.
Economic Development Incentive Program Credit (EDIPC)
The Economic Development Incentive Program Credit (EDIPC) is designed to stimulate job creation, attract new businesses, and promote business expansion in Massachusetts. To qualify for the credit, your business needs to apply to the Economic Assistance Coordinating Council (EACC) and get designated as a certified project.
From there, you can earn a credit anywhere from 10% to 50% of the purchase or construction of qualifying tangible properties, like personal property, buildings, or structures within buildings. If your business is designated as a certified job creation project, you can also get a credit of $5,000 per new job created.
For more details on the credit, visit this page.
Economic Development Incentive Program: Vacant Storefront Credit
The EDIP also has a Vacant Storefront Credit, which rewards businesses for moving into previously vacant storefronts for at least one year. To qualify, a business just needs to occupy the formerly vacant storefront, not create new jobs or invest in business improvements.
Find more information here.
Economic Opportunity Area Credit
Part of the EDIP, the Economic Opportunity Area Credit (EOAC) gives qualified businesses a credit against their corporate tax liability. If your business was designated as a certified project in an economic opportunity area (EOA) before January 1, 2010, you’re eligible for a credit equal to 5% of the cost of qualifying property purchased for business use. That property can include tangible personal property, buildings, and the structures within buildings.
Learn more about the credit here.
Farming and Fisheries Tax Credit
Farming and Fisheries Tax Credit gives eligible personal income taxpayers a credit of 3% of the cost of qualifying property purchased or constructed for agriculture, farming, or commercial fishing purposes.
The qualifying properties must abide by the below criteria:
- Personal or other tangible properties, including buildings and structures
- Located in Massachusetts
- Used solely in farming, agriculture, or fishing
- Depreciable with a useful life of at least 4 years
Find more information on the credit here.
Film Incentive Tax Credit
The Massachusetts Film Incentive Tax Credit is available to qualified motion picture and production companies that film within the state. There are two possible credits:
- Payroll credit: This is equal to 25% of the business’s total qualifying payroll expenses for employees connected with the filming and production of a motion picture in Massachusetts. To qualify, your business needs to incur at least $50,000 in production expenses in Massachusetts within a 12-month consecutive period.
- Production expense credit: This is equal to 25% of the business’s total qualifying production expenses related to the filming and production of a motion picture in Massachusetts. To qualify, your business’s Massachusetts production expenses must exceed 75% of the total production expenses, and you need to spend at least 75% of the filming days in Massachusetts.
Learn more about the tax credit here.
Historic Rehabilitation Tax Credit
With the Historic Rehabilitation Tax Credit, Massachusetts businesses can get credit for taking on projects to restore or rehabilitate certified historic properties and structures. If your project qualifies, you can get up to 20% of your rehabilitation expenses covered.
To qualify, you need to make sure you:
- Get final certification from the Massachusetts Historical Commission (MHC)
- Have your project “placed in service,” meaning you have permits to occupy at least a significant portion of the historic structure
The credit counts for the year your historic rehabilitation project is officially placed in service. Find out more about the credit here.
Investment Tax Credit
Massachusetts’s Investment Tax Credit gives qualifying corporations credit against their corporate excise tax for the purchase or lease of certain tangible property. To qualify, your business needs to be one of the following: a manufacturing corporation, a research and development corporation, or a corporation primarily engaged in agriculture or commercial fishing.
If you qualify, you can get credit for up to 50% of your corporate excise tax for the purchase or construction of tangible personal property and other tangible property like buildings and structural components.
Find information about how to apply here.
Life Science Credits
As part of the Life Sciences Investment Program and the Life Sciences Tax Incentive Program, Massachusetts created a series of five Life Science Credits available to certified life science companies in the state. If you own a certified life science business based in Massachusetts, you might be eligible for one of the five credits:
- The Life Sciences Refundable Investment Tax Credit gives a credit of up to 10% of the cost of qualifying property purchased or used for the life science company.
- The Life Sciences Refundable FDA User Fees Tax Credit gives life science companies a 100% credit on any FDA user fees paid to submit an application to manufacture a human drug in Massachusetts.
- The Life Sciences Refundable Section 38M Research Tax Credit gives eligible life science companies a credit on qualified research activities within Massachusetts.
- The Life Sciences Research Tax Credit gives life science companies credit for additional research expenditures not covered under the previous research credit.
- The Life Sciences Refundable Jobs Tax Credit gives eligible life science companies credit for creating 50 net new full-time jobs in Massachusetts.
Get more information on the life science credits—including how to apply—here.
Low Income Housing Tax Credit
With the Low Income Housing Tax Credit (LIHTC), partnerships and corporations can get a credit against their corporate excise tax for investing in qualified low-income housing projects in Massachusetts. The credit cannot reduce a company’s corporate excise tax below the minimum excise, which is $456. Learn more about which housing projects qualify for the LIHTC here.
Medical Device Tax Credit
If you own a medical device company, you might qualify for the Medical Device Tax Credit, which you can use against your corporate excise tax. The credit is equal to 100% of the user fees your company pays to the FDA for pre-market submissions to market new technologies that are either developed or manufactured in Massachusetts.
To receive the credit, a medical device company must file a completed application with DOR and get a credit certificate from DOR. Keep in mind that the credit cannot lower your corporate excise tax below the minimum excise, which is $456.
Find more information on the credit here.
Research Credit
Similar to the federal research and development (R&D) credit, the Massachusetts Research Credit gives qualifying businesses a credit on qualified research expenses, which include employee wages, contractor wages, and supplies.
The credit amount is equal to the first $25,000 of corporate excise tax due, plus 75% of any excise due in excess of $25,000.
Learn more about the Massachusetts Research Credit here.
Plus, here’s everything you need to know about the federal R&D credit.
Solar, Wind, and Energy Credit
Massachusetts doesn’t have any state solar credits for businesses, but they do offer a residential Solar, Wind, and Energy Credit to taxpayers. If you own or rent a residential property in Massachusetts, you can get a credit for investing in renewable energy improvements on the property.
The credit amount is 15% of the net expenditure for a renewable energy source property improvement, up to $1,000.
Learn more about the credit here.
Vanpool Credit
The Vanpool Credit gives businesses a credit against their corporate excise tax for incurring rideshare expenses. The credit is equal to 30% of the costs related to the purchase or lease of company shuttle vans used for employer-sponsored ridesharing programs in the state. However, the credit can’t reduce a company’s corporate excise tax lower than the minimum of $456.
Find more information about the credit here.
Veteran’s Hire Tax Credit
The Veteran’s Hire Tax Credit is designed to motivate businesses to hire eligible veterans as employees. If your business hires qualified veterans, you can get a credit of $2,000 per veteran hired. To qualify, your business corporation needs to meet the following criteria:
- Employe under 100 employees
- Be certified by the Commissioner of Veterans Services
- Qualify for and claim the Work Opportunity Credit
- Employee a veteran whose primary place of employment and residence is in Massachusetts
Gather more details on the credit here.
Massachusetts city and county tax credits
Many Massachusetts cities and counties have local business tax incentive programs. Visit your city or county’s official website to explore available tax credits and apply. Here’s a complete list of Massachusetts cities and counties.
Sales and use tax exemptions
In addition to tax credits, Massachusetts also offers a handful of sales and use tax exemptions to businesses. The most notable one is the Massachusetts Small Business Energy Tax Exemption. With this exemption, qualifying small businesses with gross incomes under $1 million and five or fewer employees don’t have to pay taxes on their energy use.
For a full list of Massachusetts sales and use tax exemptions, visit this page.
Financing resources for small businesses in Massachusetts
If you need help getting capital—either to grow your current operation or launch a new venture—there’s no shortage of grant and loan options in Massachusetts. Check out Gusto’s comprehensive guide to business loans and grants in Massachusetts.
And here are even more Massachusetts business resources:
