Clients are relocating from Massachusetts to lower-tax states, according to a new report from the Massachusetts Society of CPAs.

For the report, MassCPAs surveyed nearly 200 CPAs representing around 4,600 high-income clients earning over $1 million and found 70% of the respondents reported that clients changed their tax domicile in 2024. The main reasons cited were lower taxes (47%) and cost of living (17%). States including Florida, New Hampshire, Texas and South Carolina are the main ones attracting these clients due to their tax-friendly policies.

Business clients who have remained in the state for now are contemplating a move, with 27% of CPAs’ business clients reconsidering their presence in Massachusetts, up from 22% in 2023 in the annual survey. The top barriers to growth include the “sting tax” (30%), the individual income tax rate (27%) and the estate tax threshold (23%). The sting tax is an entity-level tax of approximately 2% on S corporations with gross receipts between $6 million and $9 million, with an additional 2.9% tax on S corps with gross receipts over $9 million. MassCPAs has been advocating for eliminating or at least reforming the sting tax, which dates back to the 1980s, viewing it as a deterrent to business growth and investment in the Commonwealth.

The survey found that 49% of the respondents believe Massachusetts is becoming less competitive than other states, while only 6% believe it is more competitive. 

To deal with the talent shortage, 42% of the CPA respondents’ clients have increased their focus on retention of talent to maintain a competitive edge in a tight labor market, while 21% of those surveyed are also turning to contractors and gig workers, reflecting a growing preference for flexible staffing models. However, economic uncertainty has led only 5% of them to implement hiring freezes or layoffs as they navigate financial pressures. Massachusetts’ own efforts, such as the Internship Tax Credit, aim to strengthen the talent pipeline but need to be expanded to counter ongoing workforce shortages, according to the report.

In terms of their overall economic outlook, 33% of respondents remain neutral or cautiously optimistic, while 18% express a pessimistic economic outlook due to inflation, interest rates and market uncertainty. However, nearly half (49%) of the CPAs surveyed believe Massachusetts is becoming less competitive than other states, and only 6% see the state as significantly more competitive.

“This year’s survey echoes what we hear regularly from firms and financial leaders across the state: Massachusetts is losing its competitive edge,” said MassCPAs president and CEO Zach Donah in a statement Wednesday. “While the findings in this report are concerning, what’s even more troubling is what’s not captured, the individuals and businesses who won’t ever consider Massachusetts because of policies that make us an outlier. State leaders have a real opportunity to build on the momentum from the 2023 tax reform initiative to position Massachusetts for long-term success.”    

The report offers a number of recommendations, in addition to eliminating or reforming the sting tax on S corporations. Other suggestions include decoupling from the Section 163(j) business interest expense limitation to support capital investment and raising the estate tax threshold to $5 million. 

With federal tax policy changes on the horizon and signs of continued economic volatility, the report urges state leaders to act now to help Massachusetts avoid further outmigration, stabilize revenue and position itself as a leading destination for innovation and opportunity.

The Public Company Accounting Oversight Board posted videos on its new quality control standard.

The staff presentation videos aim to help firms implement the four components of QC 1000, A Firm’s System of Quality Control. The four topics are acceptance and continuance, engagement performance, governance and leadership, and information and communication.

The acceptance and continuance video addresses the processes when considering whether to accept or continue an engagement. Engagement performance includes firm personnel activities throughout all phases of the design and execution of an engagement. The governance and leadership video addresses the environment that enables the oversight and operation of the QC system and directs the firm’s culture, decision-making processes, organizational structure and leadership. Finally, the information and communication video addresses a firm’s processes for obtaining, generating and using information to enable the design, implementation and operation of the QC system and its engagements’ performance, and for communicating information within the firm and to external parties. 

More QC implementation-related videos, resources and tools can be found on the Implementation Resources for PCAOB Standards and Rules page.

The state and local tax deduction — the subject of one of the most contentious fiscal fights in Congress — is a write-off that most Americans will never claim, even in the districts of the lawmakers fighting hardest to increase the tax break, data analyzed by Bloomberg News shows. 

Congress will draft its multitrillion tax cut proposal in the coming weeks, and the priorities of a small minority of high-earning constituents in a handful of districts in New York, New Jersey and California will almost certainly be reflected in the final version.

Republicans led by President Donald Trump, who vowed to expand the SALT cap on the campaign trail, are on track to increase the $10,000 cap on the deduction. The president in his first term limited the deduction — which is claimed by roughly 10% of people who have itemized their taxes in recent years — as a way to pay for other tax cuts.

But SALT has become a politically important tax break in key areas, and it’s receiving such outsize attention because of legislative math. The House cannot pass a tax bill this year without placating a handful of swing districts, where the local taxes and property values are high enough that the SALT deduction is a big deal.

Six House Republicans — Mike Lawler, Nick LaLota, Nicole Malliotakis and Andrew Garbarino of New York, New Jersey’s Tom Kean Jr. and California’s Young Kim — have vowed to oppose any bill that doesn’t sufficiently raise the SALT cap, and that a proposal to raise it to $25,000 falls short. Lawler introduced a bill to hike the threshold to $100,000. 

The data shows that even in these SALT-heavy districts, the average person isn’t much affected by the cap. For all six Republicans who are members of the bipartisan SALT Caucus, the average amount of state, local and property taxes paid is far below $10,000 per year.

Most taxpayers don’t have enough deductions from $10,000 in SALT, mortgage interest write-offs and charitable donation tax breaks to itemize. Instead, about 90% of taxpayers opt for the standard deduction: $15,000 for individuals or twice that for joint filers in 2025. 

It’s only about the 10% of taxpayers who itemize who are even eligible to claim SALT — many of them with expensive homes, high incomes and large property tax bills. That means they can’t claim SALT, though advocates note that a higher cap would mean it would make financial sense for more people to itemize.

The need to include a SALT cap increase to benefit these taxpayers means that other tax breaks likely will have to be curtailed or spending cuts increased to keep within a maximum $5.8 trillion deficit increase target.

Support from the six core Republicans standing firm on the SALT issue are crucial to the success of the tax bill, which Republicans are looking to ram through Congress this summer without the help of any Democrats. The GOP’s razor-thin majority means they can only lose a handful of votes on any piece of legislation.

Republicans will also likely need to hold these seats in the New York City and southern California areas if they are to retain control of the House in the 2026 midterms, a reason Trump has cited for the necessity to raise the SALT deduction.