BNA reports that the Department has issued for comment a draft directive on the state income tax treatment of such contributions. According to BNA, the agency explained in the proposed directive that under the federal Internal Revenue Code, partners and sole proprietors are allowed to deduct these contributions from income, but under Massachusetts law they are not.
The new rule would allow 401(k) elective and matching contributions to be deducted from income and would apply to tax years beginning on or after January 1, 2008.
Comments should be submitted by March 7 by emailing RulesandRegs@dor.state.ma.us .
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