Massachusetts Septic Credit

Septic Credit
Schedule SC
Massachusetts Department of Revenue

Schedule SC
Septic Credit for Repairing or Replacing
a Failed Cesspool or Septic System
Name(s) as shown on Massachusetts Forms 1 or 1-NR/PY 		

2023

Social Security number

Street address of principal residence with a failed system (must be in Massachusetts; do not enter PO box)
City/Town 	

State 	

Zip 	

Part 1. General information

1a Date certificate of compliance or verification letter issued (mm/dd/yyyy). Retain a copy of certificate or letter

Phone number

1b Name of approving authority

2 If you were the sole owner of the property, enter 100%; otherwise enter the percentage of the total actual costs that you paid
List names, addresses and pct. of ownership of any co-owners of above property. If a condominium, list legal name of condominium association and total number of owners

For tax years 2022 and prior and claiming a carryforward credit, if you received a subsidized loan from the Commonwealth, or a betterment issued
by a municipality to complete repairs or replacement of a qualified cesspool or septic system, complete line 3 (you must also complete Part 5).
3a ● Subsidized loan issued under homeowner septic repair program
Name of participating lender 				

Amount of loan

Loan term (in months) 					

Interest rate (fill in one only)

● 0% ● 3% ● 5%
3b ● Loan issued by municipality and assessed as a betterment (see instructions) to your property tax bill
Name of municipality 					

Amount of betterment

Number of years to repay betterment 				

Interest rate

Part 2. Computation of Septic Credit

Complete Part 2 only if Certificate of Compliance or verification letter was issued in 2023.
4 Briefly describe the nature of expenditures made to comply with Title 5 or to connect to a municipal sewer system pursuant to a federal court
order, Administrative Consent Order, state court order, consent decree or similar mandate. Complete details must be available upon request. 		
Also include any actual costs incurred in 1995 through 2022.
a. Description

b. Date paid

5a	 Total actual costs to repair or replace a failed cesspool or septic system or to connect to a municipal sewer
system. Add all amounts in line 4, col. c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5a	
5b	 Enter amounts of grants or reimbursements received for amounts shown in line 5a.. . . . . . . . . . . . . . . . . . . . . . . 5b	
5c	 Subtract line 5b from line 5a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5c	

c. Actual cost

2023 SCHEDULE SC, PAGE 2
Name(s) as shown on Massachusetts Forms 1 or 1-NR/PY		

Part 2. Computation of Septic Credit

Social Security number

(continued)

6	 Maximum amount available for computation of the credit. Enter the smaller of line 5c or $30,000.. . . . . . . . . . . . .  6	
7	 Amount of actual costs available for the credit. Multiply line 6 by .60 (60%). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7	

Part 3. Current year credit
	
	

8	 Maximum Septic Credit available this year. If Certificate of Compliance or verification letter was issued in 2023, enter the
smaller of line 7 or $4,000. If claiming a carryover credit, enter the smaller of 2022 Schedule SC, line 14,
col. C or $1,500. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8	
9	 Adjusted Septic Credit. Multiply line 8 by the percentage in line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9	

10	 Interest subsidy received, if any (from Part 5, line 36) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10	
11	 Adjusted Septic Credit available for 2023. Subtract line 10 from line 9. Not less than 0. . . . . . . . . . . . . . . . . . . . . 11	
12	 Total tax from Form 1, line 28 or Form 1-NR/PY, line 32 less Limited Income Credit, and/or Credit for Taxes
	 Paid to Other Jurisdictions, and/or certain other credits, if any. Not less than 0. See instructions . . . . . . . . . . . . . 12	
13	 Massachusetts Septic Credit allowable this year. Enter the smaller of line 11 or line 12 here and on Schedule
	 CMS. You must enclose Schedule SC with your return. Failure to do so will result in this credit being
	 disallowed on your tax return and an adjustment of your reported tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13	

Part 4. Unused Septic Credit carryover
Complete only if line 7 is more than line 13, or if you have unused credits from prior years.
14	 For year of issuance of certificate of compliance.
					
c. Unused credit available
				
b. Portion used		Subtract col. b from col. a
			
a. 	
this year (2022
	
Year 		
Total credit available	
Sch. SC, line 13)	
Amount		
For
	
	
	
	
	
15	

2019 	
2020 	
2021 	
2022 	
2023 	

(2022 Sch. SC, line 14, col. c)) 	
(2022 Sch. SC, line 14, col. c)) 	
(2022 Sch. SC, line 14, col. c)) 	
(2022 Sch. SC, line 14, col. c)) 	
(2023 Sch. SC, line 7)		

_______________ 	
_______________	
______________ 	
_______________ 	
_______________ 	

________________ 	
________________ 	
________________ 	
________________ 	
________________ 	

________________ 	
________________ 	
________________ 	
________________ 	
________________ 	

Totals			
_______________	________________	________________	

2024
2024-2025
2024–2026
2024–2027
2024–2028

2023 SCHEDULE SC, PAGE 3
Name(s) as shown on Massachusetts Forms 1 or 1-NR/PY		

Social Security number

Part 5. Computation of interest subsidy. If certificate of compliance or verification letter was issued in 2022 or a prior year
and claiming a carryforward credit, complete all applicable lines.
16	 Total amount of loan or betterment outstanding during 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16	
17	 Number of days the loan or betterment was issued during 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17	
18	 Amount in line 16 × (number of days in line 17 ÷ 365) × 5.75%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18	
19	 Total amount of loan or betterment outstanding during 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19	
20	 Number of days the loan or betterment was issued during 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20	
21	 Amount in line 19 × (number of days in line 20 ÷ 365) × 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21	
22	 Total amount of loan or betterment outstanding during 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22	
23	 Number of days the loan or betterment was issued for during 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23	
24	 Amount in line 22 × (number of days in line 23 ÷ 365) × 5%.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24	
25	 Total amount of loan or betterment outstanding during 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25	
26	 Number of days the loan or betterment was issued for during 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26	
27	 Amount in line 25 × (number of days in line 26 ÷ 365) × 4%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27	
28	 Total amount of loan or betterment outstanding during 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28	
29	 Number of days the loan or betterment was issued for during 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29	
30	 Amount in line 28 × (number of days in line 29 ÷ 365) × 5.5%.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30	
31	 Total amount of loan or betterment outstanding during 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31	
32	 Number of days the loan or betterment was issued for during 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32	
33	 Amount in line 31 × (number of days in line 32 ÷ 365) × 8.25%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33	
34	 Total interest at market rate. Add lines 18, 21, 24, 27, 30 and 33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34	
35	 Total interest actually paid on the loan or betterment. If claiming a carryover credit, enter the total
interest paid during all periods listed above. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35	
36	 Amount of interest subsidy. Subtract line 35 from line 34. Enter result here and in Part 3, line 10.
Not less than 0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36	

Schedule SC Instructions
What is the Title 5 Septic Credit?

Effective for tax years beginning on or after January 1, 2023, the Septic
Credit is a credit equal to 60% of the actual costs incurred in the repair or
replacement of a failed septic system. The expenses are the lesser of the
taxpayer’s actual costs paid to repair and replace the system, or $30,000.
The maximum amount of the credit that may be claimed in any tax year is
$4,000. If your Certificate of Compliance or verification letter was issued
in 2022 or prior, the maximum amount of credit carryover that may be
claimed in any tax year is $1,500.
Note: If you moved during the taxable year and had more than one principal residence that qualified for the Septic Credit, you must file a separate Schedule SC for each of those principal residences. However, the
maximum amount of the combined Schedule SC credits cannot exceed
$4,000. Any excess credit amount may be used in the five tax years following the year in which the credit was initially claimed. The total amount
of credit that may be claimed by the owner for a residential property is
$18,000.

Who is Qualified to Claim the Credit?
To claim the Septic Credit, you:

• Must be the owner of the residential property located in Massachusetts;
• Must occupy the property as your principal residence; and
• May not be the dependent of another taxpayer.
You are the owner of the residential property if you have legal title to the
property. Co-owners of the residential property who meet each of the
above requirements may claim the credit proportionate to the amount
of actual costs paid by each such co-owner, up to the total maximum
amount of the credit of $4,000 per year ($1,500 for prior year carryforwards). A principle residence is generally the residence that you live in
most of the time. If another taxpayer may claim you as a dependent on
his or her 2023 Massachusetts income tax form you are not eligible to
claim the credit.	

What are Actual Costs?

Actual costs are the reasonable and necessary costs paid by the owner
to repair and replace a failed septic system, including the costs for materials, equipment, demolition, relocation, design, engineering, testing and
inspection, reduced by grants and reimbursements received. Expenses
incurred by the owner in 1995 through 2022 to repair or replace a failed
system are also actual costs. Actual costs do not include costs paid for:
• The repair and replacement of any system that is not a failed system;
• The repair and replacement of any system not undertaken pursuant to
the relevant Department of Environmental Protection (DEP) regulations; or
• The replacement of landscaping.
A copy of the Certificate of Compliance or verification letter issued to the
owner by the appropriate authority stating that the system has been repaired or replaced in compliance with the relevant DEP regulations must
be kept with your records.

What is an Interest Subsidy?

For tax years 2022 and prior only, the Commonwealth, through the
efforts of the DEP, and the Massachusetts Housing Finance Agency
(MHFA) and the state’s cities and towns, offers qualified owners interest
subsidies in the form of low interest rate loans and betterments for the
repair and replacement of failed septic systems. If an owner has received
an interest subsidy, the amount of the Title 5 credit that the owner may
claim is reduced by the amount of the interest subsidy the owner receives. Generally, the amount of the interest subsidy is the difference between the nonsubsidized interest rate determined under MGL ch 62C, §
32(a) in effect at the time the owner receives the subsidy and the amount
of interest the owner actually pays.

How Do I Claim the Credit?

To claim the credit, you must complete and enclose Schedule SC with
your return. Failure to do so will result in this credit being disallowed on
your tax return and an adjustment of your reported tax.
You must retain for your records:
• A copy of the Certificate of Compliance or verification letter;
• If you have received an interest subsidy from the Commonwealth, a
copy of a truth in lending statement or similar document from the lender
stating the lender’s name, the amount of the loan, the interest rate imposed, the length of the repayment term, and the amount of the loan that
you have repaid; and/or
• If the interest subsidy is in the form of a betterment, the relevant property
tax bill(s) or other documents received from the taxpayer’s city or town
stating the name of the city or town, the amount of the betterment, the
interest rate imposed, the length of the repayment term, and the amount
of the betterment that you have repaid.
For more information on the Septic Credit, see Technical Information Releases 97-12, 98-8, 99-5 and 99-20 and DOR Directive 01-6.

What If I Am Taking the Septic Credit
and Another Credit On My Tax Return?

If you are taking another credit in addition to the Septic Credit on your tax
return, you must reduce the amount of tax reported in line 12 of Schedule SC (from Form 1, line 28 or Form 1-NR/PY, line 32) by any Limited
Income Credit and/or Credit for Taxes Paid to Other Jurisdiction and any
other credits you may be eligible for. These include but are not limited
to the Solar and Wind Energy Credit, Lead Paint Credit, Economic Opportunity Area Credit, Economic Development Incentive Program Credit,
Brownfields Credit, Low-Income Housing Credit, Historic Rehabilitation
Credit, Film Incentive Credit, Medical Device Credit, Farming and Fisheries Credit, Low-Income Housing Donation Credit and Veterans Hire Credit.
Note: It is more advantageous to use the credit(s) that is going to expire
first.