In Brief: Massachusetts Lowers Tax on Banks to 10.5%

BOSTON - Massachusetts Gov. William Weld has signed legislation lowering the state's bank tax to 10.5% from 12.5% over the next five years.

That will bring the bank tax rate, one of the highest in the country, in line with the state's corporate tax rate.

The new law's nexus provisions will also tax out-of-state banks that do a substantial amount of business in the state, such as credit card operations. And it will tax only income of Massachusetts banks that was earned in the state, eliminating the risk of double taxation.

The Massachusetts Bankers Association, which has pushed for the new law for several years, expects that the nexus provisions will be challenged in court but won't be overturned because other states have similar laws, said association executive director Robert Fichter.

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