Bill > H2528

This bill proposes changes to how certain types of income, specifically "unearned income" which generally refers to income not derived from active work like interest, dividends, and capital gains, are taxed. It introduces exemptions for individuals and married couples based on their adjusted gross income, allowing them to deduct a portion of their Part A and Part C taxable income, which are categories of income that include capital gains, interest, and dividends. For instance, a single person with a federal adjusted gross income under $40,000 could see an exemption of up to $2,500, while a married couple filing jointly with an income under $80,000 could get an exemption of up to $5,000. The bill also establishes a new, higher tax rate of 8.95% for Part A taxable income (capital gains, interest, and dividends) and Part C taxable income (other unearned income) for tax years starting January 1, 2016. However, there's a special provision for certain investments in newly formed Massachusetts companies (incorporated on or after January 1, 2011, with less than $50 million in assets at the time of investment) that are held for at least three years, which would be taxed at a lower rate of 3%, provided the investment is made within five years of the company's incorporation and meets specific federal "qualified small business stock" criteria.