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Bill Summary – Healey Administration Partial Decoupling Proposal

January 16, 2026

The Healey Administration has filed legislation that would partially decouple Massachusetts from key federal tax changes enacted under the One Big Beautiful Bill Act (OBBBA). Rather than adopting the federal provisions as enacted, the proposal delays or phases in conformity over multiple years to limit near-term revenue impacts with the Commonwealth. MassCPAs believes the bill extends uncertainty for taxpayers, increases complexity and delays the economic benefits of pro-growth federal tax policy. 

The highlights are below: 

  • Section 174- Domestic Research and Experimental (R&E) Expenditures
    • Eliminates all retroactive conformity for R&E expensing.
    • Delays Massachusetts conformity to federal R&E expensing until January 1, 2026.
  • Section 179- Increased dollar limitations for expensing of certain depreciable business assets
    • Delays conformity until 2027.
  • Section 163(j)- Modification of limitation on business interest
    • Delays conformity until 2027.
  • Elective pass-through entity (PTE) expansion
    • Expands the elective PTE excise to income subject to the state’s 4% surtax.
    • Intended to provide federal SALT cap relief for certain high-income taxpayers.
  • Circuit breaker provision
    • Establishes a Virginia-style circuit breaker allowing the state to pause conformity to federal tax changes if the projected fiscal impact exceeds $20 million, whether the impact is positive or negative. 

Aligning Massachusetts tax law with federal rules reduces complexity for taxpayers and tax practitioners while strengthening the Commonwealth’s competitiveness. MassCPAs understands the fiscal pressures facing policymakers but strongly believes that any delays in conformity must be temporary, with full conformity restored in 2027. 

The bill was filed with the Legislature on January 15 and is expected to advance through the legislative process in the coming weeks. MassCPAs will continue to advocate for conformity that reduces complexity for tax practitioners and taxpayers while strengthening Massachusetts’ competitiveness.