Massachusetts Estate Tax: A Quick Overview
The Massachusetts estate tax applies to estates worth over $1 million. Learn why Massachusetts has an estate tax and what it means.
The Massachusetts estate tax applies when a taxable estate crosses the state threshold. In 2023, lawmakers doubled that threshold to $2 million and fixed a long-criticized “cliff,” changes that still apply in 2025. The new law uses a $99,600 credit so that only value over $2 million is taxed.
Massachusetts uses its own threshold and credit, so estates between $2 million and the very high federal exemption can face Massachusetts estate tax without owing anything federally. That’s why many households watch the state line more closely than the federal one.
A Brief History of the Massachusetts Estate Tax
Massachusetts first adopted an estate tax in the 1970s, then for years used the federal “state death tax credit” (often called a sponge or pick-up tax). When Congress phased out that credit in the early 2000s, Massachusetts “decoupled” and created its own stand-alone system effective for estates of people passing on or after January 1, 2003.
For decades the exemption effectively settled at $1 million, among the lowest in the country. In October 2023 the commonwealth enacted tax relief that raised the effective exemption to $2 million (retroactive to Jan. 1, 2023). It also eliminated the cliff effect for smaller estates just over the line. The policy goal: improve affordability and competitiveness while keeping a progressive levy in place.
States use estate or inheritance taxes to raise revenue from large estates and to keep the overall tax system progressive—asking more from larger accumulations of wealth. Massachusetts retains an estate tax (and not an inheritance tax) for these reasons, while relying on state-level rules rather than federal thresholds. For context, only very large estates face the federal estate tax, while Massachusetts estates can owe at much lower levels.
Who files: If the gross estate exceeds $2 million, the estate generally files Form M-706 and computes the Massachusetts estate tax using state instructions, even if no federal estate tax return is required.
Threshold/credit: A $99,600 credit effectively shields the first $2,000,000 from tax for dates of passing on/after Jan. 1, 2023. Amounts above $2 million follow the Massachusetts tables.
Residents vs. nonresidents: Massachusetts taxes the Massachusetts portion of an estate. Recent changes also updated how out-of-state property factors into the calculation for residents.
Examples of the Tax in Action
Example 1: Just over the line. An estate valued at $2.05 million now pays tax only on $50,000 (the excess over $2 million). That puts the bill at roughly $3,600—a night-and-day improvement from the old cliff rule that could have triggered a five-figure tax.
Example 2: Below the line. A $1.9 million estate owes no Massachusetts estate tax and need not file M-706. (Note: the federal exemption is far higher, so no federal estate tax is due in either example.)
Example 3: Nonresident with Massachusetts property. A New Hampshire resident owns a Cape Cod condo worth $800,000 and other non-Massachusetts assets worth $1.5 million. They may have a filing requirement if the overall gross estate exceeds $2 million. The Massachusetts share falls under state rules.
(Read More: Learn about revocable trusts in Massachusetts versus Nevada.)