Massachusetts is a high-income, high-cost state built on healthcare, biotech, education, finance, and tech. Greater Boston has one of the most skilled workforces in the country and median household incomes well above $100,000, but housing costs are among the highest in the nation — the Boston metro ranks in the top 5 nationally. The state has a flat 5% income tax with a 4% surtax on income above $1 million (pushing the effective rate to 9%). Outside of Boston, cities like Worcester, Springfield, and New Bedford offer dramatically lower housing costs, though wages are also lower. Massachusetts consistently ranks at or near the top for education, healthcare quality, and innovation, making the high cost a tradeoff for measurably better public services.
Massachusetts at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 7.0 million | 16th |
| Median household income | $96,505 | 2nd (behind Maryland) |
| Median home price | $580,000 | 3rd highest |
| Cost of living index | 135 | Very high |
| State income tax | 5% flat (+ 4% surtax on $1M+) | Above average |
| Sales tax | 6.25% | Average |
| Property tax (effective rate) | 1.15% | Above average |
Income by City/Area
| City/Area | Median Income | Key Industries |
|---|---|---|
| Boston (metro) | $94,000 | Biotech, finance, education, healthcare |
| Cambridge | $113,000 | Tech, biotech (Kendall Square) |
| Newton | $165,000 | Professional services |
| Worcester | $63,000 | Healthcare, education |
| Springfield | $45,000 | Healthcare, defense |
| Cape Cod/Islands | $72,000 | Tourism, healthcare |
| Lowell | $60,000 | Manufacturing, tech |
Housing: Boston Metro is the Story
| Area | Median Home Price | Median Rent (2BR) | Price-to-Income |
|---|---|---|---|
| Boston (city proper) | $720,000 | $3,200 | 7.7x |
| Cambridge | $850,000 | $3,400 | 7.5x |
| Newton/Brookline | $1,100,000 | $2,800 | 6.7x |
| Greater Boston (suburbs) | $600,000 | $2,400 | 5.5x |
| Worcester | $350,000 | $1,600 | 5.6x |
| Springfield | $230,000 | $1,250 | 5.1x |
| Cape Cod | $575,000 | $2,000 | 8.0x |
| New Bedford/Fall River | $380,000 | $1,400 | 5.8x |
Boston ranks among the most expensive housing markets in the US (top 5).
Tax Breakdown
| Income | Federal | MA State Tax | FICA | Take-Home Rate |
|---|---|---|---|---|
| $75,000 | $8,760 | $3,750 | $5,738 | 75.7% |
| $100,000 | $13,615 | $5,000 | $7,650 | 73.7% |
| $150,000 | $25,915 | $7,500 | $10,878 | 70.5% |
| $1,200,000 | $418,327 | $68,000 (includes 4% surtax) | $11,502 | 58.5% |
The 4% millionaire’s surtax pushes the effective rate on income above $1M to 9%.
Cost of Living Reality Check
| Category | Massachusetts | National Average |
|---|---|---|
| Housing | 180 | 100 |
| Groceries | 110 | 100 |
| Healthcare | 115 | 100 |
| Transportation | 110 | 100 |
| Overall | 135 | 100 |
Massachusetts Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| 2nd highest median income | Extremely high housing costs (Boston metro) |
| World-class healthcare (ranked #1) | 4% surtax on income over $1M |
| Biotech/tech economy (high paying jobs) | 135 COL index overall |
| Excellent public schools | Long, expensive winters (heating costs) |
| Strong worker protections | Traffic congestion (Boston metro) |
Related: Cost of Living by State | State Income Tax Rates | Property Tax by State