Massachusetts Tax Strategy: Beating the Millionaire Tax
Massachusetts has a 5% flat tax plus a new 4% surtax on income over $1M. Combined with federal rates, high earners face brutal taxation. Section 7702 provides escape.
The Massachusetts Millionaire Tax
The new 4% surtax on income over $1M pushes Massachusetts effective rate to 9% for high earners—plus federal taxes.
✅ The Good News
- Strong economy and job market
- Excellent healthcare and education
- Social Security exempt
- No tax on some pension income
⚠️ The Challenge
- 5% flat tax on all income
- 4% surtax over $1M (new)
- Federal taxes up to 37%
- Combined rate can exceed 46%
Massachusetts Tax By The Numbers
Section 7702: Your Tax Freedom Solution
Section 7702 of the IRS tax code creates a powerful opportunity: access your retirement funds through policy loans that can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. For Massachusetts residents, that is not an escape from every federal or state tax.
Loan tax treatment
Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal tax. Education only.
State Tax-Free
No Massachusetts state income tax on policy loans while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. Education only.
Massachusetts Professionals We Typically Serve
Tech Executives
Leaders at Boston biotech and tech companies
Healthcare Professionals
Physicians at Mass General, Brigham, and other systems
University Leaders
Executives and professors at Harvard, MIT, and others
Financial Professionals
Fidelity, State Street, and other financial services leaders
Biotech Founders
Entrepreneurs in Cambridge biotech corridor
Boston Attorneys
Partners at major Boston law firms
Massachusetts Areas We Serve
Matt Nye's Recommendation
"Massachusetts just became one of the worst states for high earners. The new 4% millionaire tax means 9% state tax for successful professionals—and that is before the IRS takes 22-37%."
"For my Boston biotech executives, Cambridge entrepreneurs, and Mass General physicians, Section 7702 is now urgent. The millionaire tax changed the game. Tax-free retirement income is no longer a nice-to-have—it is essential."
"Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only. In a state that just declared war on high earners, that is the distinction to understand."
— Matt Nye, 20-Year Industry Veteran
Frequently Asked Questions
What is the millionaire tax and how does it affect me?
Massachusetts added a 4% surtax on income over $1M in 2023. Combined with the 5% base rate, that is 9% state tax before federal. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC (lapse/MEC can make loans taxable). Education only.
I am a biotech executive with stock options. How does Section 7702 help?
When stock options vest or are exercised, they create taxable income that can trigger the millionaire tax. Use that income to fund Section 7702. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
I work at Mass General. Is the millionaire tax relevant for physicians?
Top physicians can absolutely hit the $1M threshold with salary plus other income. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
Should I leave Massachusetts for a lower-tax state?
Many people are leaving, but Section 7702 offers an alternative. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
My income fluctuates. Some years I hit $1M, some I do not.
That is exactly why Section 7702 can help. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Whether a loan counts toward MAGI depends on the facts. Education only.
Ready for Massachusetts Tax Freedom?
Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC (lapse/MEC can make loans taxable). That is not an escape from every federal or state tax. Education only. Schedule your free analysis today.
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