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Massachusetts lawmakers file bill changing state treatment of certain foreign earnings
Summary
A group of Massachusetts legislators led by Jason M. Lewis filed Senate bill No. 2033 on Jan. 16, 2025, proposing changes to how amounts included under federal Internal Revenue Code sections 951 and 951A are treated under state tax law, including a 50% inclusion/deduction treatment for section 951A amounts and an effective date of Jan. 1, 2025.
BOSTON — Senate bill No. 2033, titled “An Act combating offshore tax avoidance,” was filed with the Massachusetts Senate on Jan. 16, 2025, proposing changes to state tax law that would alter how amounts included in federal gross income under Internal Revenue Code sections 951 and 951A are treated for Massachusetts tax purposes.
The bill, presented by Sen. Jason M. Lewis and petitioned by a group of legislators from across the state, would amend multiple provisions of Massachusetts General Laws chapters 62 and 63. The legislation would explicitly treat amounts included under IRC section 951 as dividends for state-tax purposes while specifying that amounts included under IRC section 951A would not be treated as dividends.
Why it matters: The proposal changes the state tax treatment of certain foreign-source income that U.S. taxpayers currently include under federal law. It also adds a distinct 50 percent treatment for amounts reported under section 951A in several places in the state tax code and sets an effective date that could apply to tax years beginning Jan. 1, 2025.
Key provisions: The bill would (1) amend subsection (e) of section 1 of chapter 62 to treat amounts included under IRC section 951 as dividends and to specify that amounts included under IRC section 951A are not treated as dividends; (2) add a Part B item equal to “fifty percent of amounts included in federal gross income pursuant to section 951A of the Code” to section 3 of chapter 62; (3) revise the definition of “Net income” in chapter 63 to mirror the section 951/951A distinction; (4) permit a deduction equal to 50 percent of amounts included pursuant to section 951A in the deductions list tied to certain code sections (including references to Code sections 245A, 250 and 965(c)); and (5) clarify that amounts under section 951 and section 951A shall not be considered receipts in the context of section 2A of chapter 63.
The bill text also amends paragraph references and clauses across chapter 63 to insert the 50 percent treatment for section 951A amounts and to adjust related deduction language. The final section of the bill states: “The provisions of this Act shall apply to all tax years beginning on or after January 1, 2025.”
What the filing does not show: This document is the filed bill text and the petitioners’ list; it does not record committee referral, hearings, votes, fiscal estimates, or floor action. The filing itself does not enact law; further legislative steps would be required for the changes to take effect.
The bill was filed under Senate docket No. 1684 and designated Senate bill No. 2033 on Jan. 16, 2025. Further legislative activity on the measure is not recorded in the filing.
