The Massachusetts Society of CPAs (MassCPAs), has released its 2025 Public Policy and State Competitiveness Report, a data-driven look at the Commonwealth’s current economic climate and policy challenges. Now in its third year, the report analyzes insights from nearly 200 CPAs representing approximately 4,600 high-income clients and dozens of in-state business leaders, offering a critical pulse on the tax, workforce and business trends shaping Massachusetts’ future.
While the state has made progress with the 2023 $1 billion tax reform package, findings show that high-income individuals and businesses are continuing to relocate, driven largely by tax policy, cost of living and economic uncertainty. Massachusetts’ revenue remains dependent on volatile surtax collections, while concerns about long-term competitiveness continue to mount.
Key Findings:
- High-Income Outmigration: 70% of CPAs surveyed reported that clients changed their tax domicile in 2024. The primary reasons cited were lower taxes (47%) and cost of living (17%). States like Florida, New Hampshire, Texas and South Carolina continue to attract these individuals.
- Business Relocation and Growth Concerns: 27% of CPAs’ business clients are reconsidering their presence in Massachusetts, up from 22% in 2023. Top barriers to growth include the sting tax (30%), the individual income tax rate (27%) and the estate tax threshold (23%).
- Declining Competitiveness: 49% of respondents believe Massachusetts is becoming less competitive than other states, while only 6% believe it is more competitive.
- Workforce and Talent Retention: 42% of businesses are prioritizing talent retention through increased flexibility and benefits. Additionally, 21% are shifting toward contractors and gig workers to meet workforce needs.
- Economic Outlook: While 33% of respondents remain neutral or cautiously optimistic, 18% express a pessimistic economic outlook due to inflation, interest rates and market uncertainty.
“This year’s survey echoes what we hear regularly from firms and financial leaders across the state: Massachusetts is losing its competitive edge,” said Zach Donah, CAE, president and CEO of the Massachusetts Society of CPAs. “While the findings in this report are concerning, what’s even more troubling is what’s not captured, the individuals and businesses who won’t ever consider Massachusetts because of policies that make us an outlier. State leaders have a real opportunity to build on the momentum from the 2023 tax reform initiative to position Massachusetts for long-term success.”
The report outlines several key recommendations, including eliminating or reforming the sting tax on S-corporations, decoupling from Section 163(j) to support capital investment and raising the estate tax threshold to $5 million. These reforms aim to create a more predictable and competitive environment for residents and employers alike.
With federal tax policy changes looming and signs of continued economic volatility, the report urges state leaders to act now. Strategic reforms can help Massachusetts avoid further outmigration, stabilize revenue and position itself as a leading hub for innovation and opportunity.
To download the full report and explore the data, visit masscpas.org/ppscreport25.
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