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 are completely tax-free—at both federal and state levels. For Massachusetts residents, this means escaping both the state tax burden and federal taxation entirely.
Federal Tax-Free
Policy loans bypass federal income tax entirely. No 22-37% federal tax on your retirement income.
State Tax-Free
No Massachusetts state income tax on policy loans. Your retirement income stays tax-free at the state level.
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 are not income. They do not count toward the millionaire threshold. They are not federally taxed. In a state that just declared war on high earners, that is your defense."
— 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 are not taxable income—they avoid this entirely.
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, then access tax-free retirement income later.
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 keep your retirement income below any threshold—they are not counted as income.
Should I leave Massachusetts for a lower-tax state?
Many people are leaving, but Section 7702 offers an alternative. Tax-free retirement income works whether you stay in Boston or eventually relocate. You are protected either way.
My income fluctuates. Some years I hit $1M, some I do not.
That is exactly why Section 7702 is valuable. Policy loans are not income, so they do not push you over thresholds in any year. Consistent tax-free income regardless of other earnings.
Ready for Massachusetts Tax Freedom?
Discover how Section 7702 can eliminate both state and federal taxes on your retirement income. Schedule your free analysis today.
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