Does Massachusetts Tax 401k Withdrawal? Free MA Tax Calculator

Massachusetts taxes 401(k) withdrawals as Massachusetts income when the distribution is taxable federally. Traditional 401(k) withdrawals are generally taxable, while qualified Roth 401(k) distributions are generally tax-free. Qualified rollovers are generally not taxable.

KEY
POINTS

Traditional 401(k) withdrawals are generally taxable in Massachusetts.
Qualified Roth 401(k) withdrawals are generally tax free.
Early withdrawals may face a 10% federal penalty.
Direct 401(k) rollovers are generally tax free.
Lump sum withdrawals are generally taxable.
Massachusetts taxes taxable 401(k) income at 5%.

A 401(k) withdrawal can add to your Massachusetts taxable income for the year it is received.

Traditional 401(k) distributions are generally taxable in Massachusetts when they are included in federal gross income.

Certain distributions may receive different treatment under Massachusetts tax rules.

Want to Keep More of Your 401(k) in Retirement?

See which states don’t tax 401(k) withdrawals, plus states with full or partial retirement tax exemptions.

View Full State List WEALTH
FOR SENIORS RETIREMENT GUIDE

Massachusetts Tax Calculator

Estimate your MA state income tax, retirement tax breakdown, refund or amount due

Tax Details

Tax Year iMassachusetts rules (surtax threshold, exemptions) are updated each tax year.

Filing Status iDetermines your MA personal exemption amount.

Residency iFull-year residents file Form 1. Part-year residents and nonresidents file Form 1-NR/PY.

Taxpayer is 65 or older

Taxpayer is legally blind

Number of Dependents iMassachusetts allows a $1,000 exemption per qualifying dependent.

Employment & Business Income

W-2 Wages / Salary iTotal Box 1 wages before pre-tax retirement contributions are added back.

Self-Employment / Business Income iNet Schedule C, partnership, or S-corp income.

Retirement Income

Traditional 401(k)/403(b)/457(b) Contribution iGenerally excluded from MA wages to the same extent as federal, reducing taxable income.

Traditional 401(k)/IRA/TSP Distributions iGenerally fully taxable as MA income.

Roth 401(k)/IRA Qualified Distributions iQualified Roth distributions are generally MA tax-free.

Pension Income (private/taxable) iTreatment varies by pension type; many private pensions are fully taxable, some government pensions are excluded.

Social Security Benefits iMassachusetts does not tax Social Security benefits, even if partly taxable federally.

Investment Income

Interest & Dividends iPart A income, generally taxed at 5%.

Short-Term Capital Gains iTaxed at 8.5% in Massachusetts.

Long-Term Capital Gains iPart C income, generally taxed at 5% (collectibles taxed separately at 12%).

Advanced: Deductions, Credits & Payments

Annual MA Rent Paid i50% of rent is deductible, capped at $4,000 ($2,000 if MFS).

FICA / Medicare Paid iDeductible up to $2,000 per taxpayer.

Tax Credits iEITC, Child & Family Tax Credit, Senior Circuit Breaker, etc.

Other MA Deductions iCommuter, tuition, student loan interest, 529 contributions, etc.

MA Tax Withheld iFrom W-2s and 1099s, box for MA state tax withheld.

Estimated Payments Made iQuarterly estimated MA payments already made for the year.

Results update automatically as you type — the button is optional

Your 2026 Estimated Massachusetts Tax iNet MA tax after credits, before withholding and estimated payments.

—

Sample figures shown below — edit any field to see it update

Breakdown of Your Massachusetts Tax iMassachusetts splits income into Part A (interest/dividends/ST gains), Part B (ordinary income) and Part C (LT gains), each taxed differently.

Calculation	Amount
— No calculation yet —

Where Your Income Goes iHover or tap a slice for the exact dollar amount.

Effective MA Tax Rate	—
Marginal MA Rate	—

Disclaimer: This is a simplified, unofficial estimate for general informational purposes only — not tax, legal, or financial advice. It uses approximate MA rates and thresholds and does not capture every rule, credit, or exception. Verify against official Massachusetts DOR forms or a tax professional before filing.

How Massachusetts Taxes Traditional 401(k) Withdrawals

Traditional 401(k) withdrawals are included in Massachusetts gross income and taxed as taxable income.

Massachusetts does not exempt or preferentially treat private retirement withdrawals.

401(k) Activity	Massachusetts Tax	Notes
Traditional contributions	Not taxed now	You generally don't pay MA income tax on the money you contribute.
Investment growth	Not taxed now	Your investment growth generally isn't taxed while it stays in the 401(k).
Traditional withdrawal	Generally taxable	Massachusetts generally taxes traditional 401(k) money when you take it out.
Qualified rollover	Generally not taxable	A proper rollover generally lets you move the money without paying tax now.
Withdrawal before age 59½	Generally taxable	You may owe MA tax, plus a separate federal 10% early-withdrawal tax unless an exception applies.
Roth 401(k) qualified withdrawal	Generally not taxable	You paid tax on the contributions already; qualified withdrawals are generally tax-free.

EXAMPLE

A single taxpayer with a $50,000 traditional 401(k) distribution and no other income would generally report $50,000 on federal Form 1040, Line 5b, and on Massachusetts Form 1, Line 4.

For illustration, using the applicable tax assumptions, after the standard deduction, taxable federal income would be approximately $35,400. Using the stated federal tax brackets, federal income tax would be approximately $4,028. Massachusetts tax would be 5% of $50,000, or $2,500.

If married filing jointly with a $100,000 distribution and no other income, the same illustration would produce approximately $8,056 in federal income tax and $5,000 in Massachusetts tax.

Massachusetts does tax deferral; you generally don't pay Massachusetts income tax on eligible contributions or investment earnings while the money remains in the plan.

When you eventually take a taxable distribution, that income is generally subject to Massachusetts income tax.

Massachusetts Roth 401(k)

For a Roth 401(k), Massachusetts follows the federal tax treatment.

The key difference from a traditional 401(k) is when you pay the tax:

Qualified Roth 401(k): Federal taxable amount = $0, so Massachusetts receives $0. No state tax.
Non-qualified Roth 401(k): Federal taxable portion = (earnings portion), which Massachusetts taxes at 5%.

401(k) Activity	Massachusetts Tax	Notes
Roth contributions	Taxed now	You pay Massachusetts income tax on the money before it goes into the Roth 401(k).
Investment growth	Not taxed	Investment earnings generally aren't taxed while they remain in the Roth 401(k).
Qualified withdrawal	Generally not taxable	You can generally withdraw your contributions and earnings tax-free if the distribution meets the requirements.
Non-qualified withdrawal	Earnings may be taxable	If the withdrawal doesn't meet the requirements, the earnings portion may be taxable.
Qualified rollover	Generally not taxable	A qualifying rollover generally doesn't create current Massachusetts taxable income.

EXAMPLE

Suppose a taxpayer withdraws $50,000 from a Roth 401(k), and the distribution is qualified because the five-year rule is met and the taxpayer is age 59½ or older.

The federal taxable amount would be $0, so federal income tax would be $0. Massachusetts would likewise tax $0.

For a non-qualified $50,000 withdrawal consisting of $40,000 of contributions and $10,000 of earnings, the $10,000 of earnings would generally be taxable federally.

The taxpayer could also owe a 10% early-distribution penalty ($1,000), depending on the circumstances. Massachusetts would tax the $10,000 of earnings at 5%, resulting in $500 of Massachusetts tax. The $40,000 of contributions would generally not be taxed again.

Need Money From Your 401(k) Before Retirement?

You may have options for accessing your 401(k) early. Learn the withdrawal rules, potential taxes and penalties, and what to consider before taking the money out.

SEE YOUR 401(k) OPTIONS →

401(k)
CASH

Does Massachusetts Tax 401(k) Withdrawals Before Age 59½?

Yes, Federal law imposes a 10% penalty tax on early withdrawals, but Massachusetts has no analogous penalty.

The full amount of an early withdrawal is still included in income and taxed at 5% by Massachusetts, regardless of age. Only federal tax attaches to early withdrawals.

401(k) Activity	Massachusetts Tax	Notes
Traditional withdrawal before 59½	Generally taxable	The withdrawal is generally included in Massachusetts taxable income.
Federal early-withdrawal tax	Separate 10% tax	The IRS may charge an additional 10% on the taxable portion unless an exception applies.
Withdrawal that qualifies for a federal exception	Regular MA tax may still apply	Avoiding the federal 10% tax doesn't automatically make the withdrawal tax-free in Massachusetts.
Direct rollover	Generally not taxable	Moving the money directly to another eligible retirement account generally avoids current income tax.

Withholding:

States typically require withholding on any taxable distribution if federal withholding is done.

Massachusetts will apply its usual 5% withholding on the taxable portion when the distribution is paid.

Rollovers (Direct and Indirect)

Massachusetts follows federal rollover rules:

A direct rollover is not taxable to the participant provided all requirements are met.
An indirect rollover is taxable unless the full amount is redeposited in another plan or IRA within 60 days.

Example calculation (Rollover): Say you have a $50,000 distribution that you choose to roll over.

Rollover Method	Original Distribution	Taxes Withheld	Amount You Receive	Amount to Deposit	Tax Result
Direct rollover	$50,000	$0	$50,000	$50,000	Federal tax: $0 MA tax: $0
Indirect rollover — full rollover	$50,000	$12,500*	$37,500	$50,000	Federal tax: $0 MA tax: $0
Indirect rollover — only $37,500 rolled over	$50,000	$12,500*	$37,500	$37,500	$12,500 taxable Federal + MA tax may apply

*Mandatory 20% federal withholding applies to indirect rollovers of eligible employer plan distributions.

Massachusetts 401(k) Tax vs. Federal Tax

The table below shows how federal and Massachusetts income taxes generally apply at each stage of a traditional or Roth 401(k), from contributions through withdrawals.

401(k) Event	Federal Tax	Massachusetts Tax
Traditional 401(k) contribution	Not taxed now	Not taxed now
Growth inside the 401(k)	Not taxed while in the account	Not taxed while in the account
Traditional 401(k) withdrawal	Generally taxed as income	Generally taxed as income
Roth 401(k) contribution	Taxed now	Taxed now
Qualified Roth 401(k) withdrawal	Generally tax-free	Generally tax-free
Early withdrawal before age 59½	May owe a 10% additional federal tax, plus income tax	Taxable amount generally remains subject to MA income tax

Massachusetts generally follows the federal tax treatment of 401(k) contributions, growth, and distributions.

So, the main difference for most employees is not when a 401(k) is taxed, but the tax rate that applies when taxable income is ultimately received.

Massachusetts Tax Rates and Amounts

Flat tax rate: Massachusetts income tax is 5% on taxable income. So, for any taxable retirement income, the state tax is simply 0.05×(taxable amount).

Scenario	Federal Tax	Massachusetts Tax
Single — $50k traditional 401(k) withdrawal	≈ $3,820	$2,500
Married — $100k traditional 401(k) withdrawal	≈ $7,640	$5,000
Single — $50k qualified Roth withdrawal	$0	$0
Single — $50k nonqualified Roth withdrawal	≈ $1,000 + possible $1,000 penalty	$500
Single — $20k early traditional 401(k) withdrawal	≈ $390 + possible $2,000 penalty	$1,000
$50k direct rollover	$0	$0
$50k indirect rollover — only $37.5k rolled over	Tax generally applies to $12.5k	$625

Examples are simplified estimates for illustration only. Actual federal tax depends on filing status, other income, deductions, credits, age, and whether an early-distribution exception applies.

Massachusetts tax can also differ based on the taxpayer's circumstances and applicable deductions or surtaxes.

Are There Any Massachusetts Tax Exemptions for 401(k) Withdrawals?

Massachusetts exempts certain retirement income sources from gross income, but not private 401(k) plans:

Retirement Income	Massachusetts Tax?	Notes
Social Security	No	Massachusetts does not tax Social Security.
U.S. Government Pension	Usually No	Certain contributory federal pensions are exempt.
Military Retirement	Generally No	Qualified military retirement income is generally exempt.
Massachusetts State/Local Pension	No	Qualifying contributory MA government pensions are exempt.
Other-State Government Pension	Depends	May be exempt if Massachusetts receives reciprocal treatment.
Private Pension	Yes	Most private pensions are taxable in Massachusetts.
Traditional 401(k)	Generally Yes	Taxable when distributed to the extent the distribution is federally taxable.
Roth 401(k)	Usually No if Qualified	Qualified distributions are generally not taxable.
Traditional IRA	Generally Yes	Taxable, but previously Massachusetts-taxed contributions aren't taxed again.
Roth IRA	Usually No if Qualified	Qualified distributions are generally not taxable.
Federal TSP	Yes	Distributions are generally taxable in Massachusetts.

MA does not exempt any portion of a 401(k) distribution except what is already excluded federally.

Massachusetts Tax on 401(k) Distributions FAQs

Is Any Part Of My 401(k) Distribution Tax-Free In Massachusetts?

No, Massachusetts generally taxes the full taxable distribution at 5%.

I Rolled My 401(k) Into An IRA. How Do I Report It?

If you made a direct rollover, you generally do not report it as Massachusetts income; if you made an indirect rollover, you report any amount that was not rolled over.

Are Roth 401(k) Withdrawals Taxed At 5%?

No, qualified Roth 401(k) withdrawals are not taxed, while nonqualified withdrawals are generally taxed only on the earnings portion.

What If I Lived In Another State When I Contributed To My 401(k)?

If you are a Massachusetts resident when you take the distribution, Massachusetts generally taxes the taxable distribution regardless of where you made the contributions.

Does Massachusetts Tax The Extra 10% Federal Penalty?

No, the 10% early-withdrawal penalty is a federal tax, but the taxable distribution may still be subject to Massachusetts income tax.

Is Withholding Required For A Small Distribution?

Yes, Massachusetts generally requires withholding when federal withholding applies, regardless of the distribution amount.

I Saw A 4% Surtax Mentioned. Does That Apply?

Yes, the 4% surtax applies to the portion of taxable income above the Massachusetts threshold, which is $1,107,750 in 2026.

What Forms Should I File?

If you are a Massachusetts resident, file Form 1 and report your 401(k) distribution on the appropriate line; nonresidents and part-year residents generally use Form 1-NR/PY.

References:

Does Massachusetts Tax 401k Withdrawal? Free MA Tax Calculator