Are Union Dues Tax Deductible in Massachusetts?

Union membership often involves regular dues payments, and understanding their tax implications is important. Tax laws, both federal and state, determine whether these payments can reduce your taxable income, with rules differing across government levels.

Understanding Federal Tax Treatment

Federal tax laws regarding union dues have undergone substantial changes. Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, union dues were generally deductible as a miscellaneous itemized deduction, subject to a 2% adjusted gross income (AGI) floor.

However, the TCJA suspended most miscellaneous itemized deductions, including unreimbursed employee business expenses like union dues, for tax years 2018 through 2025. This means that for most employees, union dues are currently not deductible on federal income tax returns. The suspension is set to expire at the end of 2025, which could lead to changes in deductibility in subsequent tax years. Certain exceptions exist for specific professions, such as Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials. Self-employed individuals can still deduct union dues as a business expense on Schedule C if the union is related to their business.

Massachusetts State Tax Treatment

While federal law largely restricts the deduction of union dues for many, Massachusetts allows them to be deductible on state income tax returns. The deduction for union dues in Massachusetts is typically treated as an adjustment to income, which reduces your Massachusetts adjusted gross income and can lower your overall state tax liability. This deduction is generally claimed on Massachusetts Form 1 or 1-NR/PY, specifically on Schedule Y.

Identifying Deductible Union Dues

Not all payments made to a union qualify as deductible dues for tax purposes in Massachusetts. It is important to distinguish between regular membership dues and other types of assessments or contributions. Generally, payments that directly relate to the core functions of the union, such as regular membership dues, initiation fees, and fees for collective bargaining representation, are considered deductible.

Conversely, payments that are not directly related to the ordinary and necessary activities of the union’s primary purpose are typically not deductible. Examples of non-deductible union expenses include political contributions, payments to union-sponsored political action committees (PACs), voluntary contributions to strike funds, union-sponsored charities, or premiums for union-provided insurance. Your union statements or Form W-2, Box 14, may provide information on the amounts paid for union dues.

Steps to Claim the Massachusetts Deduction

To claim the union dues deduction on your Massachusetts state income tax return, gather your records. The total amount of your deductible union dues can usually be found on your union statements or in Box 14 of your Form W-2, if your employer reports it there. Ensure the amount adheres to the qualifying criteria for deductible dues, as outlined previously.

Once you have the correct deductible amount, report this on your Massachusetts tax forms. For residents, this typically involves Massachusetts Form 1. Enter the deductible union dues amount on Line 14 of Schedule Y, under “Employee expenses (union dues, etc.)”. This entry will then reduce your Massachusetts adjusted gross income, impacting your state tax calculation.