Massachusetts has adopted 830 CMR 62B.2.4, introducing new withholding requirements on the sale of real estate by non-residents when the gross sales price is $1,000,000 or more. These rules are designed to ensure proper collection of state taxes and will take effect for real estate closings on or after November 1, 2025
What Is 830 CMR 62B.2.4?
This regulation requires a withholding agent—often the closing attorney, escrow agent, or title company—to withhold a portion of sale proceeds at closing and remit it to the Massachusetts Department of Revenue (DOR). The withholding applies when the gross sales price meets or exceeds $1,000,000, and the seller is a non-resident.
Key Features and Requirements
- Effective Date: Applies to closings on or after November 1, 2025.
- Threshold: Gross sales price of $1,000,000 or more.
- Withholding Agent: Responsible party for withholding and filing—typically a closing attorney or title company. If no agent exists, the buyer assumes this role.
- Calculation Options:
- Default: Withholding based on gross sales price.
- Alternative: Seller may elect to withhold based on estimated net gain (gross price minus adjusted basis and sale-related expenses).
- Tax Rates:
- For personal income tax: 4% of gross price, or 5% of estimated net gain, plus 4% surtax on amounts exceeding surtax thresholds.
- For corporate excise tax: 4% of gross price, or 8% of estimated net gain.
- Transferor’s Certification: Must be completed by each seller at or before closing. It allows sellers to claim exemption, reduced withholding, or elect the alternative calculation.
- Filing and Remittance: Agent must file Form NRW and remit withheld taxes electronically via MassTaxConnect within 10 days of closing, even if zero withholding applies.
- Exemptions include full-year Massachusetts residents, pass-through entities, publicly traded partnerships, estates of resident decedents, corporations with MA business presence, exempt organizations, government entities, various financial institutions, and certain REITs—provided a Transferor’s Certification is submitted.
- Other Exceptions: Reduced withholding may apply in cases like sales where required withholding exceeds proceeds after debts, foreclosure sales, or involuntary conversions under IRC § 1033—if certified.
Why This Matters to Your Sale
- Significant Cash Flow Impact: Sellers may see sizable withholding at closing, especially for high-ticket properties.
- Planning Is Essential: Knowing whether you qualify for exemptions or wish to use the alternative net gain calculation can materially affect proceeds at closing.
- Increased Administrative Requirements: Transferor’s Certifications and Form NRW must be completed carefully and timely.
- Avoid Surprises: Non-residents, especially former MA residents or entities without a current MA presence, need proactive planning to manage tax and cash flow implications.
Professional Insight
As experienced CPAs, we know that at the time of closing, property sellers may not yet know the precise adjusted basis or net gain—making the gross-price withholding method the path of least resistance. However, electing the alternative method may yield substantial savings when properly supported. The Transferor’s Certification thus becomes a critical document, not only for withholding calculation but also for preserving your rights to exemptions or reductions.
For closing agents, understanding these updated rules is just as important. Failing to withhold, file, and remit properly can result in penalties and interest. Whether you’re a seller or agent, planning ahead with a tax advisor ensures smoother transitions and minimized financial risk.
Take Action Today!
Ensure compliance and support a smoother closing. We can help you:
- Evaluate whether withholding applies to your sale.
- Choose between gross-price or alternative calculation.
- Prepare and submit the Transferor’s Certification.
- File Form NRW and remit withholding through MassTaxConnect.
- Navigate potential exemptions or exceptions strategically.
Contact us at (401) 921-2000 or via our website to safeguard your real estate transaction and financial outcome.
The “One Big Beautiful Bill Act” ( P.L. 119-21) was signed into law on July 4, 2025. Included in the Bill are two new deductions for American workers that are retroactive to January 1, 2025. The “No Tax on Tips” and “No Tax on Overtime” provisions are designed to provide tax savings to the American worker.
No Tax on Tips (2025–2028)
This provision allows eligible individuals to deduct up to $25,000 annually in qualified tips from their taxable income. Qualified tips include voluntary cash or charged tips received from customers or through tip-sharing arrangements.
Eligibility Requirements:
- Must work in an occupation listed by the IRS as customarily receiving tips as of December 31, 2024. The IRS will publish this list by October 2, 2025.
- For self-employed individuals, the deduction cannot exceed net income from the business in which the tips were earned.
- The deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) over $150,000 ($300,000 for joint filers).
- Not available to employees or self-employed individuals involved in Specified Service Trades or Businesses (SSTBs) under section 199A.
- Taxpayers must include their Social Security number on their tax return and file jointly if married.
Important Notes: Both itemizers and non-itemizers can claim this deduction, and employers/payors will need to furnish tip-related statements to the IRS and the employee. Forms W-2, 1099, and other payroll return forms will not be updated for tax year 2025. The IRS is working on new guidance and updated forms for tax year 2026.
No Tax on Overtime (2025–2028)
Under this deduction, individuals may deduct the overtime pay they receive beyond their regular rate of pay, such as the “half” portion in time-and-a-half compensation. The maximum annual deduction is $12,500 ($25,000 for joint filers).
Deduction Details:
- Applies only to compensation reported on a W-2, 1099, or similar statements.
- The deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) over $150,000 ($300,000 for joint filers).
- Taxpayers must include their Social Security number on their tax return and file jointly if married.
Employers are required to report total qualified overtime compensation to the IRS and provide statements to employees. The overtime deduction is available for both itemizing and non-itemizing taxpayers.
Transition Relief and Next Steps
For workers in industries where tipping or overtime is common, these deductions represent a significant opportunity to reduce taxable income.
Stay tuned for updates as the IRS publishes more detailed guidance to support taxpayers and employers adjusting to these new reporting requirements ahead of the 2025 tax season. If you have questions about how to prepare or ensure compliance, our team is here to help.
Increased Tax Relief for Retirees (2025–2028)
The One Big Beautiful Bill Act introduces an additional $6,000 tax deduction for individuals aged 65 and older, effective for tax years 2025 through 2028. Married couples where both spouses qualify can claim up to $12,000 total.
Please note, you do not need to be collecting social security or be retired to be eligible for this deduction.
Phase-out Limits Based on Income
This deduction begins to phase out once modified adjusted gross income (MAGI) exceeds:
- $75,000 for single filers (and heads of household),
- $150,000 for married couples filing jointly.
How It Works with Other Deductions
This deduction can be claimed alongside the additional standard deduction already available to seniors.
Why This Matters & What to Watch
- Temporary, but Substantial Relief
While this additional deduction delivers meaningful savings now, it’s important to note that it is temporary—set to expire after 2028. Planning ahead is essential to maximize benefits while they last. - Income Eligibility Is Key
Middle- and lower-income retirees benefit most. If your MAGI exceeds the phase-out threshold, the deduction begins phasing out—and could disappear for higher-income retirees. The deduction can be used to offset all income sources, not just Social Security income. - Tax Strategy Implications
For many retirees, this offers a chance to reduce taxable income significantly. It may influence decisions around itemizing, Roth conversions, or timing of income recognition.
The tax changes and impacts in the One Big Beautiful Bill Act are vast and complex. If you’d like help navigating these updates, please call us at (401) 921-2000 or contact us here.
Rhode Island recently launched its Secure Choice Retirement Savings Program, a significant step toward addressing the retirement savings gap in the state. This initiative is designed to provide workers without access to employer-sponsored retirement plans an opportunity to save for their future, ensuring greater financial security in retirement.
What is Rhode Island Secure Choice?
The Rhode Island Secure Choice Retirement Savings Program is a state-administered, low-cost retirement savings solution designed to address the growing retirement savings crisis. Signed into law in 2024, this program mandates certain employers to provide a retirement savings option to their employees through payroll deductions.
Key Features and Requirements
- Purpose: Enables private-sector employees to save for retirement conveniently and affordably.
- Mandatory Participation: Applies to employers with 5 or more employees who do not already offer a retirement plan.
- Phased Implementation: Employers with over 100 employees must comply within 12 months, those with over 50 within 24 months, and all eligible employers within 36 months of the program’s launch.
- Employee-Centric: Employees are automatically enrolled but may opt out anytime. Savings are portable (can be taken to different employers) and owned by the employee.
Benefits for Small Businesses
- Enhanced Employee Retention: Offering a retirement plan helps attract and retain talent, showing employees you value their future.
- Compliance Ease: The program minimizes administrative burdens and legal liabilities for employers, as it is state-managed.
- Cost-Effective Solution: Employers face no setup fees, and the program is structured to reduce ongoing costs.
Why Retirement Savings Matter
Retirement savings programs not only secure employees’ financial futures but also enhance workplace morale and loyalty. With nearly 70% of workers at small businesses lacking retirement savings options, Secure Choice offers a practical solution.
Take Action Today!
Ensure compliance and support your employees’ financial well-being. Let us help you navigate these changes with confidence. For expert guidance on implementing the Rhode Island Secure Choice Retirement Savings Program and aligning it with your business’s financial strategy, please call us at (401) 921-2000 or contact us here.
The IRS has released the updated retirement plan contribution limits for 2025, effective as of January 1, 2025. This annual adjustment, designed to reflect cost-of-living changes, provides opportunities for individuals to bolster their retirement savings with slightly higher contribution limits. Here’s a breakdown of the key changes.
401(k), 403(b), and Most 457 Plans
The employee contribution limit for 401(k), 403(b), and most 457 plans will increase to $23,500 in 2025, up from $23,000 in 2024. This $500 increase may seem modest but is a valuable step up, offering employees a chance to put away a bit more in tax-advantaged savings over the coming year.
Catch-Up Contributions for Employees Aged 50 and Over
For individuals aged 50 and older, the catch-up contribution limit remains at $7,500. This means those eligible for catch-up contributions can contribute a total of $31,000 to their 401(k), 403(b), or 457 plan in 2025. This steady limit ensures that older employees still have ample opportunity to maximize their retirement savings.
As part of a change made in the SECURE 2.0 Act of 2022, there is a higher catch-up contribution for employees aged 60, 61, 62, and 63. For 2025 this catch-up amount is $11,250 instead of $7,500.
Individual Retirement Accounts (IRAs)
The contribution limits for Individual Retirement Accounts (IRAs) hold steady at $7,000 for 2025. Although there’s no increase this year, IRAs continue to offer a valuable option for individuals to build tax-deferred (or tax-free, in the case of Roth IRAs) retirement funds outside of employer-sponsored plans.
IRA Catch-Up Contributions
Individuals aged 50 and over can make an additional catch-up contribution of $1,000 to their IRAs, maintaining the total annual IRA contribution limit at $8,000 for this age group. This consistent catch-up provision remains an essential component for those looking to strengthen their retirement savings as they approach retirement.
Saver’s Credit Income Limits
The IRS has also adjusted the income thresholds for the Saver’s Credit, an incentive that provides a valuable tax credit to low- and moderate-income taxpayers who save for retirement. With these thresholds increasing for 2025, more individuals may qualify for this credit, further supporting retirement savings for those in lower income brackets.
What These Changes Mean for You
The 2025 updates reflect the IRS’s commitment to adjusting retirement savings opportunities to keep pace with inflation. For those already committed to retirement saving, the increased contribution limits provide a small but meaningful boost. For those just beginning or resuming contributions, the Saver’s Credit and catch-up provisions offer opportunities to build retirement security.
Remember, the 2025 contribution changes go into effect on January 1, 2025—an ideal time to review and adjust your retirement savings strategy to take full advantage of these updates.
If you have any questions about how these changes may apply to you, please call us at (401) 921-2000 or contact us here.
As part of the Fiscal year 2025 budget recently signed by the governor on July 29, 2024, the Massachusetts personal income tax code now conforms to the Internal Revenue Code as amended as of January 1, 2024.
The following six provisions are new or have been amended as a result of this legislation effective January 1, 2024.
Limitation on Noncorporate Excess Business Loans. Noncorporate taxpayers have been able to benefit from being able to deduct excess business losses up to $250,000, or $500,000 in the case of a joint return, since 2018 (adjusted for inflation). Under the Inflation Reduction Act of 2022, the loss limitation was extended through 2028 for federal tax instead of 2026. This limitation is also extended for Massachusetts personal income tax purposes through 2028 as well.
Change to Eligibility Requirements for Federal Charitable Contribution Deductions. Due to a code update Massachusetts conforms to any federal changes with respect to the charitable contribution deduction. Recent changes impact the eligibility requirements for qualified conservation contributions made bypass-through entities. Unless certain requirements are met, these contributions will not be treated as Qualified Conservation Contributions made bypass-through entities after December 29, 2022.
Repeal of Deduction of Interest and Dividends from Massachusetts Banks. Massachusetts will be repealing the deduction of interest and dividends from banks located in the state. This previously allowed for a deduction of $200 for a joint return or $100 for all other filing statuses. For tax years starting January 1st, 2024, the deduction will no longer be available.
Clarification on the Availability of the Title 5 Credit for Mandated Septic System Repairs, Replacements, Upgrades, or Sewer Connections. This provision provides clarity on what qualifies as eligible repairs, replacements, upgrades, or sewer connections that can be taken as a credit. Note to claim the credit the taxpayer must obtain a verification letter from the city or town in order to claim credit for the year the work was done.
Exemption from Joint Filing Requirement for Certain Married Couples. Amended the rule that a joint return had to be filed in Massachusetts if the couple were to file a joint federal return. If at least one spouse’s Massachusetts gross income did not exceed $8,000, a joint return does not have to be filed. This takes effect for tax year 2024.
Repeal of the Sales Tax Exemption for Certain Publications of Tax-Exempt Organizations. This provision repeals the sale tax exemption for sales of publications of any corporation, foundation, or institution organized under Code § 501(c)(3). This applies on all items except where the publications are produced in accessible format for individuals who cannot read print due to a disability. This is effective September 27, 2024.
Tax Amnesty Program for FY2025. This Act, which runs from November 1st through December 30, 2024, allows taxpayers to file any delinquent tax returns or pay unpaid tax debts with the benefit of penalties such as those for late filing or payment to be waived. During the 60-day period taxpayers can file proper returns but must pay the tax owed in a timely manner. This program will help benefit taxpayers who have not filed or have previously filed incorrect returns to get in compliance. Please review our other blog on this matter for further information.
For more information from the Commonwealth of Massachusetts website, click here.
If you have any questions about how this new legislation may apply to you, please call us at (401) 921-2000 or contact us here.
Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. Eligible taxpayers will be able to file delinquent or amended returns to take advantage of the program. This allows taxpayers to pay any outstanding tax and interest in exchange for the commissioner waiving most penalties.
When Does the Program Start?
The program will run from November 1, 2024, through December 30, 2024. This gives eligible taxpayers a short window to take advantage of the program before it expires at the end of the year.
Who is Eligible?
The amnesty program is available to any individual, business, trust, or estate not excluded under Section VII.A. This includes taxpayers who:
- Have failed to file a Massachusetts Tax Return due before December 31, 2024, or have not reported the full amount of tax properly due on previously filed tax returns before 2024-year end.
- Have filed an incorrect or insufficient Massachusetts return or has an assessment issued by the Commissioner of one of the following types:
- An unpaid and self-assessed tax liability before December 30, 2024; or
- A tax liability assessed by the Commissioner that remains unpaid on or before December 30, 2024.
All tax types (including sales, use, meals, and room occupancy) are eligible except for a few types. These include the deeds excise, abandoned bottle deposit, jet fuel excise, paid family and medical leave contributions, underground storage tank delivery fee, and health care coverage penalties.
Taxpayers who are participating in payment agreements currently will also be able to take advantage of the program. Any penalties already associated with the payment agreement plan will not be waived.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits to taxpayers. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, such as late filing and late payment penalties on most types of tax. Note the commissioner does not have the authority to waive interest.
The program also includes a limited look-back period for eligible non-filers who choose to participate. This look-back is limited to a three-year window which means taxpayers who have failed to file or pay taxes that were due before January 1, 2022. Eligible taxpayers will not be required to file or pay any taxes due for periods before January 1, 2022, if they participate in the amnesty program. The Massachusetts DOR will also not initiate any audits for those periods.
Procedures
In general, the DOR will issue letters (Tax Amnesty Eligibility Letter) to eligible taxpayers with existing tax liabilities, interest or penalties. Taxpayers who do not receive the letter will still be eligible if they meet the requirements listed in section III of the program.
All requests must be submitted via the MassTaxConnect portal. The request must be submitted by tax type, and multiple requests can be submitted during the period. Proper documentation, including unfiled tax returns for all applicable tax types, must be submitted electronically.
Limitations
The Amnesty program has a few limitations as to who can participate. This includes taxpayers already in any litigation process with the Commissioner, those seeking refunds of overpayments, taxpayers who submitted fraudulent amnesty requests, those who do not owe any Massachusetts taxes, taxpayers who have already entered into a settlement agreement with the Commissioner, taxpayers who have previously been granted amnesty with respect to the same tax type, or those who are in bankruptcy.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it is important to act quickly, as the program is only available for a limited time during the 60-day window starting November 1st through December 30th. You can read more about the Amnesty program in this article.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here.
The Internal Revenue Service has announced the increases in the annual gift tax exclusion and the lifetime estate and gift tax exemption for calendar year 2025.
What are Gift Tax Exclusions?
The annual gift tax exclusion allows taxpayers to transfer gifts to unlimited donees without experiencing gift taxes up to a designated annual amount. The lifetime estate and gift tax exemption provides the limit for lifetime gifts as of the date of the gift or date of death before incurring a gift or estate tax liability.
What’s Changing?
For the 2025 tax year, the annual gift tax exclusion is increased by $1,000 to a total of $19,000. The exclusion covers gifts an individual makes to each donee per year. Married taxpayers can combine their gift tax exclusion as they can share their two annual exclusions. As an example, married taxpayers with three children could potentially transfer $38,000 a year to each child or a total of $114,000 without incurring any gift taxes.
The annual gift tax exclusion is also an important consideration for estate planning purposes. Taxpayers can make gifts up to that amount before utilizing any of their lifetime estate and gift tax exemption. The value of any gifts in excess of the annual gift tax exclusion would then be subtracted from the lifetime exemption. As the lifetime exemption gets used over the taxpayer’s lifetime, the amount that can be excluded from the taxable estate upon death also decreases. For 2025, the lifetime exemption will increase by $380,000 to $13,990,000. The total available to a married couple will be $27,980,000 in 2025.
Questions?
If you have any questions regarding estates, gifts, or any topics in this area, give us a call at (401) 921-2000, or fill out our contact form.
In order to enhance transparency in the financial statement presentation and disclosure of supplier finance programs, the Financial Accounting Standards Board (FASB) issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations and related amendments.
Supplier finance programs (AKA structured payables, payables finance, or reverse factoring) allow buyers to offer early payment for goods or services purchased from a supplier by way of an intermediary, which is essentially a third-party lender.
While each of the three parties involved have various motivations for participating in these agreements, the key advantage to a buyer is the ability to obtain extended payment terms and potential monetary benefits passed down to the buyer from the intermediary.
FASB Requires the Following Disclosures
Qualitative Disclosures
- Key terms of the program, including a description of the payment terms (i.e. payment timing and basis for determination).
- Assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider.
- A description of where the obligations are presented in the balance sheet.
Quantitative Disclosures
- Amounts outstanding that remain unpaid by the buyer as of the end of the period.
- Rollforward of obligations stated in the balance sheet. This includes the amount confirmed and outstanding at the start of the period, the amount added during, the amount settled during, and the amount outstanding at period end.
These required disclosures do not impact the recognition, measurement, or financial statement presentation of the obligations covered by supplier finance programs.
The majority of these required disclosures became effective in 2023. Disclosure of the rollforward information described above became effective in 2024.
Questions on Supplier Finance Programs?
Are you looking for more information on supplier finance arrangements, and related tracking and reporting of these programs? If so, you may contact us at (401) 921-2000, or fill out our contact form.
The rules of 401(k) plan eligibility for Long-Term Part-Time employees (LTPT) have significantly changed. This is a result of the SECURE Act of 2019 and SECURE Act 2.0 of 2022. The new rules took effect at the beginning of 2024 and have widened the circle of eligible 401(k) plan participants for many employers. This includes part-time employees on their payroll.
To stay compliant, employers are required to closely scrutinize, and perhaps modify, how payroll and labor hours are tracked. Under the old rules, employees who completed one full year of employment (~1,000 hours of service) were eligible to participate in a 401(k) plan.
401(k) Plan Updates for LTPT Employees
As of January 2024, part-time employees over 21 who work for at least 500 hours over three consecutive years are permitted to contribute to a 401(k). Beginning in 2025, the consecutive annual requirement drops to over two years.
While the rule change will affect many employers, certain exclusions from LTPT qualification do apply. These include:
- Employees covered by a collective bargaining agreement.
- Non-resident aliens who receive no US sourced earned income.
The rules related to employer contributions have not changed. Though free to do so, employers aren’t required to make employer contributions through matching or non-elective contributions for LTPT employees.
Questions?
Need information on whether any of your employees qualify as LTPT, when they become eligible to participate in your 401(k) plan, or related reporting requirements? Call us at (401) 921-2000 or fill out our contact form.