- Published: 24 June 2016
State and local tax relief options for seniors
Staying in the familiar surroundings of our own home is becoming more of a challenge each year as we age and as property taxes go up. Exemptions and “work off” opportunities can be a great help for people living on fixed incomes, but more could be done at the state and local levels to reduce the burden of the quarterly tax bill.
Property tax relief for seniors is by no means new. More than 50 years ago, the legislature enacted modest initiatives to ease the impact of the property tax on Massachusetts residents over the age of 70. Three decades later, the legislature took a much more comprehensive look at the issue and, in 1999, enacted two landmark laws: the Circuit Breaker and the Work-Off program.
Circuit Breaker offers eligible homeowners and renters 65 and over a state income tax credit, or refund if no taxes are due. The benefit for a given individual is equal to the amount by which property taxes plus one-half of your sewer and water bill exceeds ten percent of your income – up to $1,070, this year. Renters may qualify, too, if 25 percent of their rent payments exceed ten percent of their income. There are maximum income levels to participate ($40,000 for an individual, $60,000 for a couple) and a maximum valuation on your home of $600,000.
Circuit Breaker is quite familiar to many seniors and local officials. The Work-Off program may be less so and, in fact, may not be available in every community because it is a local option. The legislature gave cities and towns the freedom to adopt it or not and to establish criteria and maximum benefits.
The Work-Off program gives seniors the chance to share their skills and interests with their neighbors, as they work for the town – teaching classes, doing clerical work, etc. – while earning a credit against their taxes. Any proposal has to be approved by town officials, but there is really no limit to the creative ideas that might be offered. In some communities, seniors facing physical challenges can designate another person to do the volunteer work, while the senior receives the benefit.
People are credited for their time at the state’s minimum wage, currently $10 per hour. In some communities, participants can earn up to a $1,000 credit against their tax bill. Some towns have income criteria or put a limit on the number of people who can take part. Other towns do not. Separate slots are usually available for veterans of any age or their surviving spouse.
Seniors can combine the benefits of circuit breaker and the work off program for total tax relief this year of up to $2,070, depending on the exemption limits established in their community.
Another tax relief program called deferment and recovery can also be helpful to seniors. The program allows people over age 65 to put off paying their taxes, in whole or in part. Seniors can opt to pay, say, 25 percent of their tax bill or half or none and change that percentage from year to year, as long as the total accrued tax bill is less than half the value of their property. Unpaid taxes become a lien against your house and are paid when the property is sold. Communities can charge up to eight percent interest on the accumulated taxes. Some charge less. A five percent rate is not uncommon.
There are also a number of smaller, more targeted tax relief initiatives that can benefit seniors. For example, if you are determined to be legally blind, you qualify for a $500 annual property tax exemption.
Many seniors are not as familiar as they could be with the array of tax relief initiatives. Both state and local government could do a better job publicizing these programs, and both areas of government need to continually revisit and update relief initiatives to account for inflation and annual tax increases. As always, if you have thoughts about property tax reform or any other issue, feel free to get in touch with me through my district office in Williamsburg at 413-977-3580 or my State House office at 617-722-2380.