This is a big day for the residents of the Commonwealth of Massachusetts with respect to “when does the MA Estate Tax kick in?”  While MA is still one of  only a handful of states that have an estate tax (a tax assessed on the value of our Massachusetts property when we pass away), we are no longer the worst.

On October 4, 2023, with the Governor’s signing of the “An Act to improve the Commonwealth’s competitiveness, affordability, and equity,” the threshold for those of us who pass as residents of Massachusetts will not be subject to that tax unless we, individually, have assets that exceed $2,000,000. This doubles the previous threshold of $1,000,000.

Another significant change, is that we will no longer be taxed on ALL of it, just the amount OVER the $2,000,000.

Lastly, this new threshold applies to anyone who passed as a Massachusetts resident as of January 1, 2023.  If you were involved in an estate of someone who passed this year and you have already paid the estate tax, please check back with your CPA to see if any refund is possible.  If you are in the process of filing a Massachusetts Estate Tax Return, also check back in with your CPA.

A few “downsides,” –  this rate is a ‘use it or lose it’ opportunity for couples with respect to trust planning.  One spouse’s exemption cannot  be transferred or “ported” to the surviving spouse.  Also this level is NOT indexed for inflation currently so $2,000,000 will stay $2,000,000.

As a ‘heads up,’ this is great news for us on a state level.  Federally, the current $12,000,000+ federal threshold is due to return to its previous $5,000,000 (indexed for inflation) in 2026 without any further Congressional action.  That rate is 40% over the threshold.  We will keep you posted.

Please contact us to learn more.

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