Massachusetts taxes capital gains at 9%. Combined with federal taxes, your effective rate on a home sale could reach 27.8%.
MA State Rate
9%
5% + 4% surtax on income > $1M
Federal Rate
15%
Most common long-term bracket
Combined Effective
27.8%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Massachusetts is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Massachusetts don't qualify for the exclusion. You'll owe 9% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Massachusetts, homes sold in March sell for 23% more than those sold in October (-15%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Massachusetts and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 0% | $0 | No tax on capital gains (I&D tax repealed 2025) | |
| 5.99% | $8,985 | Top marginal rate | |
| 6.99% | $10,485 | Top marginal rate | |
| 8.75% | $13,125 | Top marginal rate | |
MassachusettsYou | 9% | $13,500 | 5% + 4% surtax on income > $1M |
| 10.9% | $16,350 | Top marginal rate; NYC adds up to 3.876% |
Selling in New Hampshire instead of Massachusetts would save $13,500 in state tax on a $150K gain.
Massachusetts taxes short-term capital gains (held < 1 year) at 12% and long-term gains at 5%. Additionally, the 2023 'millionaire tax' adds a 4% surtax on total income exceeding $1 million, bringing the effective rate to 9% for high-income sellers.
The Greater Boston area (Cambridge, Brookline, Newton, Wellesley) features some of the highest property values in the nation, frequently generating gains above the federal exclusion.
Massachusetts distinguishes between short-term and long-term gains at the state level, which is unusual. Sellers who have owned for less than one year face the punitive 12% short-term rate.
The surtax threshold is indexed to inflation, but with Boston-area home values, many sellers of higher-value properties will exceed the $1M income threshold in the year of sale.
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