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State Incentives/Tax Breaks

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The Commonwealth of Massachusetts offers various incentives, all of which can be found below or on the Commonwealth's Tax Incentive Program Website. 

General Incentives

Economic Development Incentive Program (EDIP): Participating companies may apply for state and local tax incentives in exchange for full-time job creation, job retention, and private investment commitments. Companies can also request local Tax Increment Financing (TIF) agreements with specific municipalities. 

 10% Research & Development Tax Credit: Massachusetts has a 10% R&D Tax Credit, and the % can increase with collaboration with a local college or university. In Massachusetts, any costs which would qualify for the Federal R&D tax credit are eligible for a 10% R&D Tax Credit. This credit can be used in addition to Investment Tax Credits. Further, a 15% R&D Tax Credit is available for costs related to donations and contributions made to research organizations such as hospitals and universities. The R&D credit is permanent but cannot reduce a corporation’s tax liability below the minimum of $456 and cannot reduce any tax liability over $25,000 by more than 75%. However, a corporation may carry forward for an unlimited period of time any portion of the R&D credit, which cannot be allowed in a particular tax year because of this limit. 

BioTech/Life Sciences Incentives

Massachusetts Life Sciences Center Tax Incentives: Awarding up to $25 million in tax incentives each year, the Massachusetts Life Sciences Center provides tax incentives to Massachusetts-based companies engaged in life sciences research and development, commercialization and manufacturing.

Angel  Investor Tax Credit: The Angel Investor Tax Credit program is offered to investors interested in funding early-stage companies engaged in life sciences research and development, commercialization and manufacturing in Massachusetts. The program provides a taxpayer investor a credit of 20% of the qualifying investment, or 30% if the business is located in a gateway municipality, in a business that has no more than $500,000 in gross revenues in the year prior to eligibility.

Credits are available up to $50,000 in any one taxable year for qualifying investments of up to $125,000 per qualifying business per year and up to $250,000 in cumulative qualifying investments for each qualifying business.

Incentives for Manufacturers
 
3% Manufacturers Investment Tax Credit: A company is eligible to claim a 3% ITC on depreciable assets as a DOR-registered manufacturer. Manufacturing entities will most likely be eligible to take advantage of the 3% Investment Tax Credit. The credit is calculated by computing 3% of the total capital investment in qualified equipment and facility leasehold improvements. This amount can be applied directly against any Massachusetts tax obligation. The maximum amount of credits, otherwise allowable in any one taxable year to a corporation, may not exceed fifty percent of its excise. A corporation may carry over and apply to its excise for one or more of the next succeeding three taxable years the portion of those credits, as reduced from year to year.

Sales and Use Tax Exemption: Materials, tools, fuel, machinery, and replacement parts used in manufacturing and research and development may qualify for exemption from sales and use taxes.

Single Sales Tax Treatment: Massachusetts single weights sales when assessing apportionment taxes for manufacturers. The single sales factor apportionment is the ratio of Massachusetts sales to overall sales. Net income subject to Massachusetts tax is determined by multiplying overall net income by the apportionment factor. Many other states use three-factor apportionment, which weighs the state sales, property, and payroll as a percent of overall sales, property, and payroll. This is advantageous for companies with significant property and employees, as it won’t be a factor in determining the amount of tax. Additionally, this provision does not penalize companies for continually investing in the business or hiring more employees.

Massachusetts Manufacturing Accelerate Program (MMMA): The MMAP runs annually, utilizing a streamlined application and approval process to ease the burden on manufacturers and to create an immediate impact on your company's growth.

  • Provides CAPITAL: Through necessary capital equipment purchases, you, as the manufacturer, will have access to new supply chain connections, new opportunities, and growth. (For what qualifies as capital, refer to the procurement page)
  • Creates PARTNERSHIPS: This program aims to connect manufacturing and non-profit partners (such as MassMEP, Academic Institutions, MassHire, Economic Development Councils, MassRobotics, etc.). Depending on the partner, these partnerships will assist with technical support, workforce development support, business connections, or other means of assistance to help manufacturers drive efficiencies and scale their business.

Workforce Development Incentives

Workforce Training Grant, Commonwealth Corporation: 

  • General Grant up to $250k
  • Express Grant funds are limited to $30,000 per company per calendar year and $3,000 per employee per course.
  • Small Business Direct Access Program addresses smaller-scale training needs by making training slots in popular topics available, free of charge, to eligible businesses. A business may access up to $15,000 in grant funds per calendar year through the Massachusetts Training Exchange.