The Endless Marathon of Massachusetts Taxes

Elite athletes and amateurs from all over the world will flock to Boston on April 21 to participate in the Boston Marathon. A talented few will even finish on the podium – with cash prize in hand.

But there’s no outrunning taxes – no matter how fast you are. Massachusetts treats prize money as income earned in the Commonwealth; therefore, the state taxes runners’ prize earnings even if they don’t live in Massachusetts.

We broke down what the 2025 marathon prizes might look like after taxes are deducted. The bottom line: factoring in federal and state income taxes takes a $150,000 first place reward down to just over $100,000. That’s a 32 percent decrease in value:

Although a simplified estimate (this doesn’t take into account additional taxes that could be deducted by a runner’s state or country of residence if they are not Massachusetts residents) it is a reminder that in Massachusetts especially, high tax rates seem to be an endless marathon for residents.

Currently, the base state income tax rate sits at 5 percent, with a surtax of 4 percent for all income above roughly $1 million (adjusted for inflation annually). This surtax applies to all income that pushes a taxpayer over $1 million in adjusted gross income, including gains earned through sale of a home or business. 

Taxpayer migration data from the U.S. Internal Revenue Service reveals this could be pushing Massachusetts’ high-earners and younger potential high-earners out of state, who are leaving for better income tax environments. In fact, former residents leaving for no-income tax states like New Hampshire and Florida cited taxes as the primary reason for leaving.

To the current administration’s credit, Massachusetts lawmakers passed some tax cuts back in 2023 to ease burdens on residents – including expanding the child tax credit, increasing the allowable deduction for rent payments, and changes to the estate tax and short term capital gains taxes on investment income.

However, in a Fall 2024 poll of Massachusetts voters, 82 percent reported they believe their taxes are too high. A majority also say reducing the overall cost of living or lowering taxes are their top priorities for Massachusetts lawmakers going forward. 

If Massachusetts wants to stay ahead of the pack in the great race of taxation, we must ensure state taxes don’t slow Bay Staters down.