Bridge in Boston at night time

Why Invest in Massachusetts?

Tax Exemption

Interest income on most Massachusetts municipal bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986. In addition to the federal income tax relief the bonds provide, under existing law interest on such tax-exempt bonds and any profit made on the sale thereof are exempt from Massachusetts personal income taxes.

Under the Tax Cuts and Jobs Act of 2017, state and local tax (SALT) deductions against federal tax liabilities were capped at $10,000 per year. Municipal bonds provide an alternative for federal and state tax free income consequently lowering one’s tax burden.

The Commonwealth also regularly sells federally-taxable bonds, though still exempt from state income taxes. Outstanding taxable bonds include both regular Commonwealth bonds and special federally-taxable bonds sold under the American Recovery and Reinvestment Act, known as Build America Bonds (BABs) and Qualified School Construction Bonds (QSCBs).

Investors should check with their financial advisor or broker regarding the tax status of a bond and consult with their tax professional before making a purchase decision.

About the Bonds

Massachusetts issues three types of bonds; General Obligation, Special Obligation, and Grant Anticipation Notes. General Obligation (“GO”) bonds are issued to fund capital spending projects as outlined in the Capital Investment Plan and are subject to administrative limit known as the “bond cap.” Special Obligation (“SO”) bonds include the Commonwealth Transportation Fund (“CTF”) and Federal Grant Anticipation Notes (“GANS”), both of which support the Commonwealth’s transportation system. All three types of bonds are highly rated by the national rating agencies.

In addition to tax exemption, several key strengths often cited by the rating agencies are economic stability, education, and financial management. 

Economic Stability

Massachusetts benefits from a strong economy underpinned by a diversified employment base focused on the health care, education and technology sectors. The economic resiliency of these sectors provides a cushion against unstable economic cycles. This, in part, has led to Massachusetts GDP growth outpacing the regions over the past decade as well as a state unemployment rate that has historically been among the lowest in the nation.


Massachusetts has long prided itself on its commitment to education. Spending on primary education consistently exceeds the national average. The state ranks in the top third in the nation in terms of students receiving a high school diploma. Nearly one half of Massachusetts adults have completed a bachelor’s degree or higher creating a highly educated, elite workforce. These factors have created a very attractive environment for both new businesses as well as companies looking to relocate.

Financial Management

The Commonwealth has a long history of strong financial management and has consistently taken proactive measures to address budget gaps and other challenges. Both the executive and legislative branches have shown a commitment to maintaining the budget stabilization at a healthy level in order to support the Commonwealth throughout tough economic times.