I. Repeal of Certain Deductions and Credits
1. Repeal of Deduction for Energy Patents
Under the law in effect for taxable years beginning before January 1, 2022, G.L. c. 62, § 2(a)(2)(G) and G.L. c. 63, § 30.3 allow taxpayers to deduct income from certain patents that are useful for energy conservation or alternative energy development. The FY22 Budget repeals the deduction effective for taxable years beginning on or after January 1, 2022. [27]
2. Repeal of Medical Device User Fee Credit
Under the law in effect for taxable years beginning before January 1, 2022, G.L. c. 62, § 6½ and G.L. c. 63, § 31L allow taxpayers that develop or manufacture medical devices in Massachusetts to claim a transferable credit equal to 100% of the user fees they pay when submitting certain medical device applications and supplements to the Food and Drug Administration. A taxpayer claiming the credit cannot carry forward the credit, but can transfer unused portions of the credit. [28] The transferee may carry over the credit, but must use it within five years of the credit’s transfer. [29]
The FY22 Budget repeals the deduction effective for taxable years beginning on or after January 1, 2022. [30] However, taxpayers will still be able to transfer previously awarded credits, and transferees will be able to apply unused amounts of the credit within five years of the credit’s transfer.
3. Repeal of Harbor Maintenance Credit
Under the law in effect for taxable years beginning before January 1, 2022, G.L. c. 63, § 38P allows taxpayers subject to the corporate excise to claim a nonrefundable, nontransferable credit equal to certain harbor maintenance taxes paid to the federal government to the extent the taxes are attributable to the shipment of break-bulk or containerized cargo by sea and ocean-going vessels through one of three designated Massachusetts ports. Unused portions of the credit may be carried forward for up to five years. [31] The FY22 Budget repeals the credit effective for taxable years beginning on or after January 1, 2022. [32] However, unused portions of the credit claimed in taxable years beginning before January 1, 2022 may continue to be carried forward.