On Wednesday Oct. 4, Governor Maura Healey signed the Commonwealth’s first tax cuts in over 20 years. The package has many provisions costing almost $1 billion once completely phased in. Changes include deductions in rent, further investment in the Housing Development Incentive Program (HDIP) and student loan income exemptions, amongst many others.

In a statement, Healey highlighted the tax savings and stressed the need to make Massachusetts a much more competitive state.

Sean Wandrei, senior lecturer in accounting at the University of Massachusetts Amherst, noted some of the positive gains for students from the new changes, one being the rental deduction: “Students or anyone that pays rent, they can get a deduction for the first $8,000 of rent they pay [and] the deduction is 50 percent of the rent you pay.”

Wandrei explained that students can now deduct $4,000 from their income, lowering their tax burdens. He also highlighted the commuter benefits for graduating students who may need it for full-time work.

“But it [commuter benefits] could be an additional deduction, right after students graduate here. Now, they can deduct their public transportation costs up to $750 a year.” The commuter benefits also include non-traditional means of transportation like bikes.

He recommends students with investments to not only take advantage of the lower short-term capital gains tax (brought down from 12 to 8.5 percent,) but to hold their investments for a year and a day to get a lower rate on long-term capital gains tax, which is currently at 5 percent.

Joanne Comerford, State Senator for the Hampshire, Franklin, Worcester District (which includes Amherst,) discussed some of the benefits for students: “The student loan repayment exemption is going to help employers make sure that student loan payments are not treated as taxable compensation.” By doing so, the payments won’t increase and any taxes on employer-assistance given to students for repaying loans will be removed.

Comerford expressed how the state hopes the rental deduction will lower housing costs by incentivizing landlords to rent to lower-income populations, potentially making the rents stay “more manageable.”

However, she noted some issues with the HDIP program in housing affordability.

“[HDIP] leads to more what’s called market-rate or workforce housing and not enough for affordable housing…so HDIP investments are not focused on creating affordable housing.”

Comerford expressed some disappointment in the focus away from specifically affordable housing the tax bill took.

“There [are] differing opinions here about the utility of HDIP and what more we could do to make sure that HDIP is utilized better. We didn’t do that in this tax package but perhaps in the Housing Bond bill, which is coming up, we’ll take some measures to ensure the kind of local changes that will lead to a more targeted use and a better use of public funding for affordable housing.”

Jonathan Cohn, Policy Director at Progressive Massachusetts (a progressive policy advocacy group,) was disappointed at the new tax law as he felt it only focused on  cutting taxes.

Cohn explains that Massachusetts voters, in the most recent election, voted out a Republican governor who was fiscally conservative and passed an increase on taxes on the wealthy, called the Fair Share Amendment.

“Shifting the entire discussion to cutting taxes feels like ‘Wait, what just happened in the last election?’ It’s just not the best use of that in the political moment,” he said.

Cohn argues that the tax cuts do little to make Massachusetts an affordable place, referencing the Child Tax Credit Expansion: “…raising that child tax credit of $440 is ultimately not going far for people given how expensive children are. In Massachusetts, the cost of childcare is over $20,000 a year and saying that their tax credit is [going to] go up from $140 to $440 over a few years, that’s not a significant amount.”

He also argues that the rental deduction will do little to make Massachusetts more affordable: “What the expansion of the rental deduction means maybe $50 more for many renters… and many people see their rent increase each year by more than $50.”

Cohn criticized the short-term capital gains cuts and estate tax cuts, which mostly affect wealthier residents. He questions who the tax cuts are benefiting.

“Is it disproportionately benefiting those who already have high incomes or is it benefiting the people who are really struggling with being able to afford to live in Massachusetts?”

Sam Cavalheiro can be reached at scavalheiro@umass and followed on X @samcavalheiro1