Discovering Massachusetts: A Great Place to Live
Is Massachusetts a great place to live? In a word, yes. Whether it is the beautiful beaches of Cape Cod, the relaxing vibe of the Berkshires or the charming capital city of Boston steeped in history, the “Commonwealth” as it is often referred to by the locals, is as desirable a destination as any. For someone who has spent more than 20 years here I may be a little biased, but there are many reasons one could point to that make it a desirable destination. Don’t take my word for it. In 2024, Wallethub.com ranked Massachusetts the #1 state to raise a family for the second year in a row. It has consistently been considered as having among the best public-school education in the nation. (Yahoo News- #1, U.S. News and World Report – #3). The husband of a teacher and with three children in these well-regarded schools, they have earned that reputation.

Despite my love for the Commonwealth, the state does not stack up nearly as favorably when it comes to planning for and living in retirement. The challenge for many retirees comes in the form of affordability, where Massachusetts ranks 44th. The higher cost of living coupled with the flat income tax and a comparatively lower estate tax exemption are hardly reasons to stay. There are a few key areas that are burdensome such as total tax burden- 20th, property tax – 35th and cost of a single-family home is 3rd. If Massachusetts wants to retain its older residents, there is an opportunity to modify the tax code, like many other states to help seniors manage their tax outlays. On a bright note, known for its world class hospitals and thriving Biotech industry, that same WalletHub study ranked the Bay State in the top three for healthcare and quality of life, which is remarkable!
Let’s get into the particulars….
Education & College Funding: As mentioned above, education is a big draw for the state. With 13.6 students per teacher, well below the national average of 15.5, young families look to educate their children here to give them a leg up. Higher education brings college students from across the globe, ebbing and flowing in and out of the towns and cities every fall and spring bringing a sense of perpetual vitality. Massachusetts is home to some of the most prestigious educational institutions, including Harvard University, MIT, Tufts University, and Boston College.
Massachusetts recently enacted laws designed to encourage funding education including a 529 plan called the U.Plan which offers a tax deduction of up to $1,000 for an individual and up to $2,000 for a couple, to prepaid tuition programs for those residents that contribute to the state sponsored plan.
Estate Tax/Inheritance Tax: Whereas the Federal estate tax exemption is up over $13.6 million, any estate above $2 Million is subject to 0.8% – 16% marginal rates. Proper planning can help protect families against onerous and often unexpected tax bills while grieving the loss of a loved one.
Taxation of retirement funds: Government pensions are not taxed in Massachusetts but distributions from retirement plans that have not yet been taxed by Massachusetts, are taxable in the state. IRA accounts, private pensions and annuities fit this bill.
Taxation of Social Security: Social Security is not taxed at the state level in Massachusetts. Federally, Social Security benefits are taxable at the following levels. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income — or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple. If you receive less than $25,000 as an individual and $32,000 as a couple, Social Security benefits are not taxed.
Property Tax Credit for Seniors: This is for residents who are over the age of sixty-five and is referred to as the Senior Circuit Breaker Tax Credit, which was $2,590 for 2023 and rises with inflation.
Millionaire Tax: This tax was introduced in 2023 and equates to an extra 4% on income over $1 Million. There are planning options here to help mitigate the impact.
Pass Through Entity Tax: This applies to Pass Through Entities such as S Corps, LLCs, partnerships, and certain trusts, allowing an elective pass-through entity (PTE) excise in response to the $10,000 cap on the federal state and local tax (SALT) deduction added in the 2017 federal Tax Cuts and Jobs Act.
History & Culture: The birthplace of 4 US Presidents, Massachusetts’ history spans the country’s existence from the Mayflower to the Boston Tea Party, and the many battles from Bunker Hill to Lexington. For history buffs it is a popular vacation destination; it is not uncommon to find a visitor walking parts of Paul Revere’s Freedom Trail during the day before heading to Fenway Park to take in a ball game at night. Or head to Salem which sees huge crowds around Halloween as it was made famous for the witch trials from the late 1600’s. The sandy beaches off Cape Cod, Nantucket and Martha’s Vineyard have been a popular escape for politicians, artists, performers alike for over a century. Did I mention the food? As one of the early homes to immigrant populations, the state is a melting pot offering great cuisine from Italian (North End) to seafood (Gloucester/Provincetown) or the sausage and peppers on Jersey St (formerly Yawkey Way). For those looking for some of the “finer arts” with world-class museums, theaters, galleries, and performance venues, for a state with a population less than the island of Manhattan, it punches above its weight. The Museum of Fine Arts and the Boston Symphony Orchestra are bucket list worthy, I can assure you.
Sports: Once referred to as Title Town, Massachusetts tradition from the Beanpot to the Boston Marathon complement sustainably successful organizations like the Celtics, Bruins, Patriots and Red Sox. Walk up and down any city in the US and you are likely to see a transplant whose loyalty to their Boston teams ranks right up there with religion.
Economic Opportunities: Massachusetts has a robust economy driven by industries such as biotechnology, healthcare, finance, education, and technology. The Greater Boston area is a hub for innovation and entrepreneurship, offering abundant job opportunities and a high standard of living. The professional success that so many experience during working years helps to buffer resident balance sheets.
Healthcare: Massachusetts is known for its excellent healthcare system, with top-rated hospitals, medical research facilities, and healthcare professionals. The state pioneered healthcare reform with the implementation of mandatory health insurance coverage which was the model for the Affordable Care Act which many consider a transformational piece of legislation. As we age, access to world class doctors and medical facilities make Massachusetts an appealing place to spend our later years if we can afford it.
In summary, Massachusetts is not only a great place to visit, but also a great place to live. Despite a higher cost of living, the state offers a four-season climate, culture, history, and opportunity. With its mix of urban entertainment and natural beauty, the state truly offers its residents a high quality of life, at any stage. Like most living decisions there is a lot that goes into it and having an advisor that knows the landscape well makes for an even better experience. Knowledge of what is available to residents and proper planning can help families navigate both obstacles and opportunities alike.
Sources: irs.gov, mass.gov, wallethub.com, yahoo.com, usnews.com
The views expressed represent the opinions of Breakwater Capital Group as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.
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