Estate Tax Reset

 "'When the estate tax was established in Massachusetts a million dollar was set as the threshold; very few families had estates equaling that amount. Fast forward a couple of decades and particularly given the real estate market here,  it;s actually quite easy for many families here to have an estate that crosses that million dollar threshold  ... "

 — State Sen. Julian Cyr

Massachusetts State Senator, Cape & Islands

What happened to Massachusetts estate tax?

Maybe you can't avoid death and taxes completely, but under new tax legislation signed into law last month by Massachusetts Governor Maura Healy, mere mortals without a conga line of tax advisors can avoid a little of each. The multi-faceted $1 billion tax package includes changes to the Estate Tax, aka the bill that comes due from the tax collector when someone dies. We met with state senator Julian Cyr to learn a little more about this particular portion of the larger tax reform package.

What is the estate tax?

When a person dies, the value their home, car, boat, cash, investments, and other items of monetary value become subject to an estate tax. 

What will the new legislation do to the estate tax?

The bill, which was signed into law in early October 2023, raises the trigger point of the estate tax from $1 million to $2 million. This means that estates valued at $2 million or less no longer owe an estate tax.

Why does the change to the estate tax matter?

While a $1 million estate may sound like a lot of money, in the current real estate market people often saw a basic family home trigger the estate tax threshold .... generating a hefty bill of nearly $100,000 in estate taxes. Families without ample resources had little choice but to sell a long-term family home in order the pay these estate taxes. The new $2 million threshold reflects current real estate realities and minimizes the impact on families who may have little wealth, but who owned homes that appreciated.

When does the law go into effect?

The law was signed in October 2023 but is retroactive to January 2023, thereby impacting the estates of those who died during 2023.

For more information:

• Announcement of new tax legislation
• Commonwealth of Massachusetts FAQ on 2023 estate tax changes