BOSTON — Gov. Charlie Baker is proposing a buffet of tax cuts and other financial relief as part of his preliminary $48.5 billion budget for the next fiscal year.

The spending package, submitted to the Legislature Wednesday, calls for adjusting state income tax laws and boosting rent deductions to provide relief for low-income residents, expanding tax credits for housing and child care, and an overhaul of the estate tax to ease a “fiscal cliff” for middle-class households.

“This proposal will help working families keep more of their hard earned money to pay for things like childcare and housing,” the second-term Republican told reporters at a briefing. “The cost of just about everything is going up, and these tax breaks will help offset some of those costs for families.”

Baker said his preliminary budget — his eighth and final as governor — is balanced and “fiscally responsible” and doesn’t call for raising taxes or new fees. It would also plow $749 million in capital gains tax collections into the state’s ‘rainy day’ reserve funds, bringing the fund to a historic level of $6.6 billion.

The proposal calls for boosting state aid to cities and towns by $31.5 million, or 2.7%, to more than $1.15 billion in the next fiscal year.

It also pumps more money into Chapter 70 education funding, special education and charter school reimbursements. Chapter 70 aid would increase by $485 million to more than $5.98 billion next year.

The extra money for schools would also keep the state on track to fully fund the Student Opportunity Act, which was approved by the Legislature in 2019. The law calls for diverting $1.5 billion to schools over seven years.

But the centerpiece of the spending package are plans to provide nearly $700 million in tax cuts and expanded tax credits.

One of the proposals would overhaul the estate tax, which is charged to charged to a decedent’s estate when their assets pass on to their beneficiaries.

Massachusetts is one of a dozen states to charge a “death” tax, which applies to an estate worth more than $1 million in value. Assets can include stocks and proceeds from life insurance policies, boats, vehicles and other earthly possessions. Massachusetts is tied with Oregon for having the lowest triggering level.

Baker’s proposal would double that threshold to $2 million, which the administration estimates would save about 2,500 taxpayers more than $231 million.

Another tax break would increase the adjusted gross income threshold for not paying state income taxes to reach the federal level. The Baker administration estimates that would provide about $41 million in relief to more than 234,000 low income taxpayers.

The plan also calls for increasing the rent deduction cap for income tax filers from $3,000 to $5,000, which would provide about $77 million in relief for 881,000 taxpayers. It also calls for increasing tax credits for dependence and childcare and senior housing.

The tax cuts would be fully funded, Baker administration officials said, due largely to better-than-expected tax collections and an influx of federal relief money.

“From a fiscal point of view, Massachusetts is in a very strong financial position, and able to offer this tax relief while continuing to make big investments in our people, our schools and our communities,” Baker said Wednesday.

Baker’s budget plan also calls for increased funding for job training, housing production, dealing with opioid addiction and expanding behavioral health services.

The Republican is also taking another crack at using the budget to implement a voter-approved tax deduction law that has been delayed by more than 20 years.

Under the law, individuals would be allowed to claim charitable contributions against their Part B adjusted gross income on their state taxes. Voters approved the deduction in 2000 as part of a referendum rolling back the personal income tax rate to 5%, but the Legislature has put the law on hold several times.

Another outside section of the budget allows online Lottery sales by authorizing the use of debit cards. That could drum up $35 million next fiscal year.

Reaction to Baker’s preliminary spending package was mixed, with some praising the push for tax cuts and others criticizing the proposal for being stingy on funding for local governments and schools.

Representatives of municipal governments say the proposed local aid funding falls short of expectations, given the state’s solid financial footing.

“Unfortunately, the local aid funding in the administration’s fiscal 2023 budget is too low,” Geoff Beckwith, executive director of the Massachusetts Municipal Association. “State tax revenue growth is through the roof — 22% higher than original projections — but aid to cities and towns would remain almost flat.”

The budget now moves to the House Ways & Means Committee, which will review Baker’s proposal and file its own package. The fiscal year begins July 1.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@northofboston.com

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