POLLING: Income Tax Cut Will Boost Small Businesses, Create Jobs

Massachusetts is already one of the most expensive states in the country to live—let alone run a business. That reality is reflected in national rankings, where the Commonwealth consistently lands near the bottom for business friendliness and cost of doing business.

For many local employers already navigating rising costs, reducing the state’s income tax could provide meaningful relief and help strengthen the Commonwealth’s small business climate. 

MOA surveyed small business owners across the state about a proposed law that would lower the income tax from 5% to 4%.* The results show strong agreement that a lower income tax rate would benefit both businesses and the broader economy.

That impact would be especially significant for S-corporations, one of the most common structures used by small businesses. Because S-corps are “pass-through” entities where business income is taxed at the owner’s personal income tax rate, any reduction in the state income tax would directly lower the tax burden on these small businesses.

Income Tax Cut Would Strengthen Small Businesses

Small business owners say they are already operating under significant cost pressures. More than four in five respondents (84%) said current operating costs—including rent, labor, insurance, and energy—are challenging for their business. Not surprisingly, 92% of all small businesses said savings from an income tax cut would help them better manage rising expenses, including 93% of self-described pass-through entities.

Business owners also reported that lower taxes could support growth and day-to-day business activity. Nearly three-quarters of small businesses (75%) said an income tax cut would increase their ability to hire new employees, including 78% of pass-through entities. Meanwhile, 76% said the resulting savings could lead to increased customer activity for their business, rising to 81% among pass-through entities.

Small Businesses Believe Income Tax Cut Will Increase Overall State Competitiveness

Beyond its impact to individual businesses, respondents believe an income tax cut would have broader and longer-term economic benefits. More than 88% said this tax cut would strengthen the state’s overall business climate, while 84% believe it would help attract more businesses to Massachusetts. 

Additionally, 90% said a tax cut would increase their confidence in making long-term investments in their business in Massachusetts, rising to 94% among pass-through entities – an important signal given the large role these businesses play in local job creation and economic growth.

An income tax reduction from 5% to 4% is estimated to save the average taxpayer about $1,300 annually, and 86% of small business owners said those savings would help strengthen their local economy. 

Conclusion

Small business owners view income tax relief as more than just a simple tax change. Voters across Massachusetts support the proposal, with 75% backing a reduction in the state’s income tax rate. Economic research also suggests that lowering the income tax rate can even support stronger economic growth and higher GDP over time. 

These most recent findings show those benefits could extend directly to the businesses that power local economies. For many employers across Massachusetts, a lower income tax represents an opportunity to manage rising costs, invest in growth, and strengthen the Commonwealth’s economic competitiveness.

*The survey was conducted by Big Village among a sample of 153 small business owners or partners in Massachusetts whose business has less than 100 employees. This survey was live on February 26-March 4, 2026.