Updated October 5, 2026. Quick answer: Yes. Massachusetts counts distributions from annuity and pension plans in gross income “only to the extent includible” in federal gross income, and the Department of Revenue’s rate table prints 5.00% for income of the kind it describes as “dividends, interest, wages, and other income”. Income above a threshold carries an additional 4% surtax.
How Massachusetts treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed; distributions from annuity and pension plans count only to the extent they are federally taxable |
| Rate | 5.00% on this class of income, per the Department’s rate table |
| Surtax | An additional 4% on income over $1,083,150 for tax year 2025 and over $1,107,750 for tax year 2026 |
| Statute | M.G.L. c. 62, section 2, gross income |
A $24,000 example
A stream of $24,000 in annuity payments, all of it federally taxable, is taxed at 5.00%, computed as $24,000 x 5.00% = $1,200. The 4% surtax applies only above the threshold, so it does not touch these payments unless your total income is already over it.
What changes in 2026
The 2026 surtax threshold is $1,107,750, up from $1,083,150 for 2025; the rate table prints the same 5.00% for both years.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Massachusetts taxes pensions, how Massachusetts taxes retirement income, annuity income tax by state, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- M.G.L. c. 62 s. 2 Gross income (Massachusetts Legislature): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section2
- Tax Rates (Massachusetts Department of Revenue): https://www.mass.gov/info-details/massachusetts-tax-rates
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.