What Is the Massachusetts Senior Circuit Breaker Credit?

The Massachusetts Senior Circuit Breaker Credit is a state tax benefit aimed at providing financial relief to older residents facing high housing costs. It is designed to help seniors on fixed incomes by offsetting a portion of their property tax bills or rent payments. The credit is refundable, which means that even if an individual owes no state income tax, they can still receive the full amount of the credit as a payment from the state.

Eligibility Requirements for the Circuit Breaker Credit

A primary requirement is age; the taxpayer must be 65 years of age or older by the end of the tax year, which is December 31. This rule applies to both the applicant and their spouse if filing a joint return. There is no provision for prorating the credit if one spouse meets the age requirement and the other does not; at least one filer on the return must be 65 or older.

Residency is another condition. The applicant must be a Massachusetts resident for the entire tax year and occupy a property within the state as their principal residence. This includes houses, condominiums, or apartments. Individuals who are dependents of another taxpayer are not eligible to claim the credit. Similarly, those who receive a federal or state rent subsidy or who rent from a tax-exempt entity are disqualified from claiming the credit based on their rental payments.

The state sets income and property value limits that are updated periodically. For the 2024 tax year, total income cannot exceed $72,000 for a single individual, $91,000 for a head of household, and $109,000 for a married couple filing a joint return. This income calculation is comprehensive, including Social Security benefits, pensions, wages, interest, and dividends. For homeowners, the assessed value of their principal residence cannot have exceeded $1,172,000 for the 2024 tax year.

Calculating Your Potential Credit

The credit equals the amount by which eligible housing costs exceed 10% of the claimant’s total income. The final credit amount is capped, with the maximum for the 2024 tax year being $2,730. This cap prevents the credit from becoming excessively large for those with very high housing costs relative to their income.

For homeowners, the “eligible housing costs” used in the calculation are primarily the real estate taxes paid on their principal residence during the tax year. In addition to property taxes, one-half of the fees paid for water and sewer service can be included in the total housing cost figure. For example, if a homeowner paid $5,000 in property taxes and $600 in water and sewer bills, their eligible housing cost for the calculation would be $5,300 ($5,000 + $300).

For renters, the state uses a standardized portion of their rent to represent the property tax equivalent. “Eligible housing costs” for a renter are defined as 25% of the total rent they paid during the year. For instance, if a renter paid $1,500 per month in rent for the entire year, their total annual rent would be $18,000. Their eligible housing cost for the credit calculation would be 25% of that amount, which is $4,500.

To illustrate for a homeowner, consider a single individual with a total income of $30,000 who paid $4,500 in property taxes. First, 10% of their income is calculated ($30,000 x 0.10 = $3,000). The credit is the amount by which their property taxes exceed this threshold, so the calculation is $4,500 – $3,000 = $1,500. Since $1,500 is below the maximum credit of $2,730, they would be eligible for a $1,500 credit.

How to Claim the Credit on Your Tax Return

To claim the Circuit Breaker Credit, you must complete and file a specific state tax form, Massachusetts Schedule CB, Circuit Breaker Credit. This schedule must be attached to your annual state income tax return, which is Form 1 for full-year residents or Form 1-N/PY for part-year residents.

You will need your calculated total income, which must match the income reported on your main tax return. Homeowners must have their property’s assessed value from their municipal tax bill and the total amount of real estate taxes paid for the year. Renters will need the total annual rent paid, as well as the name and address of their landlord.

The process involves transferring these figures onto the appropriate lines of the Schedule CB to calculate the credit amount. Once the schedule is complete, the resulting credit amount is entered on the designated line of the state tax return. The filing is then submitted to the Massachusetts Department of Revenue.