Updated October 5, 2026. Quick answer: Yes. The Department of Revenue’s rate table lists “from dividends, interest, wages, and other income 5.00%”, and the statute defines Part A income as “the total interest, dividends and capital gain income”. Income above a threshold carries a 4% surtax.
How Massachusetts treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed at the flat Part A rate |
| Rate | 5.00% on dividends, interest, wages and other income, per the Department’s table |
| Surtax | An additional 4% on income over $1,083,150 for tax year 2025 and over $1,107,750 for tax year 2026 |
| Municipal bonds | Section 2 adds back exempt interest “other than interest from any such obligation issued by the commonwealth”, so only out-of-state municipal interest is added |
| U.S. obligations | “Interest on obligations of the United States exempt from state income taxation” is deducted |
| Statute | M.G.L. c. 62, section 2 |
A $20,000 example
Dividends and interest of $20,000 are taxed at 5.00%, computed as $20,000 x 5.00% = $1,000. The 4% surtax applies only to income above the threshold, so it does not touch this income 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. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Massachusetts taxes capital gains, whether Massachusetts taxes pensions, how Massachusetts taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- Massachusetts Tax Rates (Mass.gov / Department of Revenue): https://www.mass.gov/info-details/massachusetts-tax-rates
- M.G.L. c. 62, section 2 (Massachusetts Legislature): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section2
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.