Who wants to be a millionaire? Maybe not as many as before

Sean Tesoro


With the 2022 tax-filing behind us, the temptation is there for people and businesses to forget about next year’s filing for a while and enjoy the arrival of spring here in Massachusetts.

That, unfortunately, could be a costly mistake — thanks to the new Massachusetts Millionaires Tax, sometimes referred to as the Fair Share Amendment.

Approved by state voters in 2022, the tax adds a 4 percent income tax on the portion of annual income in excess of $1 million. However, it isn’t just high earners who are affected by this new tax.

On a one-time basis, it could also impact the sale of a home, a business, securities, or other assets.

It’s unlikely that voters realized how widespread this tax would be.

In 2022, 88,723 homes were sold in Massachusetts and 13,165, or 15 percent, sold for more than $1 million. In Essex County, 1,206 homes sold for $1 million.

As residents try to minimize the new law’s impact on their tax obligation, the added tax has several potential consequences including changes to how property sales are structured, installment sales for business owners, changes in filing status — particularly for married couples — and the possibility that residents and businesses will relocate to another state.

We’ve also seen a renewed interest in trust and estate planning, given the possibility of these vehicles being used to offset the impact of the tax.

In other words, people and business owners are already planning. And that’s a good thing.

Taxpayers need to ask:

  • Will I be impacted and, if so, when?
  • Have I explored options with my financial partners, such as my spouse or the co-owners of my business?

Regrettably, there are many unanswered questions, such as what the tax’s long-term effects will be on the state, its residents, and its businesses. New wealth taxes in California, among other states, are driving some residents and businesses to more “tax-friendly” states such as Texas and Florida.

Moreover, the expected revenue from the new tax was projected to be $1.3 billion. Will it reach that amount? Will it be more? And what will the lawmakers on Beacon Hill do if it doesn’t generate the expected income for the state?

Further complicating the matter for taxpayers are proposed changes to other taxes made by Gov. Maura Healey, such as the elimination of the estate tax for all estates valued up to $3 million and the reduction of the short-term capital-gains tax from 12 percent to 5 percent.

It’s unclear whether the House and Senate will embrace these changes and, if they don’t, how hard the governor will push back. If Healey is successful, however, these changes could possibly offset the increases brought by the Millionaires Tax.

Despite the uncertainty, we do know that our partners in the accounting industry are working on tailored solutions for their clients. Indeed, whether you are an accountant or an individual looking to preserve assets, the key to a successful 2023 tax-filing is to begin planning now.


Sean Tesoro is the President of Salem Five Wealth Management and Trust.