Hair scrunchies, high waisted jeans, and cargo pants aren’t the only trends resurfacing this year. The Commonwealth of Massachusetts is reviving something special of its own—the charitable deduction for the 2023 tax year.

How the Massachusetts Charitable Deduction Works for 2023 Returns

For more than 20 years, Massachusetts has not allowed taxpayers to take a charitable deduction. This, despite a referendum in 2000, when 67 percent of voters approved the concept. But state lawmakers froze the charitable deduction due to budgetary shortfalls at the time. There was some discussion of implementing it for the 2021 tax year, but then the measure was delayed due to the pandemic, first until 2022, and again until 2023. So far, that date stands.

The Massachusetts charitable contribution deduction can only be taken against Part B taxable income (wages, pensions, business and rental income). Part-year residents may take the charitable deduction, but it must be pro-rated based on the number of days they are in Massachusetts during the calendar year.

What Constitutes an Eligible Charitable Deduction?

Your donations must meet IRS requirements for qualified charities. You may deduct donations in the form of cash, property, or appreciated stocks. Donations of household goods and used clothing are NOT deductible.

Please note, as well, that you do NOT need to itemize deductions on your 2023 federal return in order to deduct charitable donations on your Massachusetts return next year.

If the amount of your charitable contribution deduction exceeds your Part B adjusted gross income, the excess may be deducted in subsequent tax years. This is known as a “carry-over.”

With all this in mind, it’s a good time to keep careful track of your charitable deductions if you live in Massachusetts. Your generosity will benefit not only the worthy causes you support, but also you may also reap a reward in the form of lowered taxes for 2023, so long as the state legislature does not retroactively delay the charitable deduction yet again!

Image: “Sign, Harlingen, Texax, 1939” by Lee Russell, New York Public Library