The Massachusetts estate tax applies when a taxable estate crosses the state threshold. In 2023, lawmakers doubled that threshold to $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 and fixed a long-criticized "cliff," changes that still apply in 2026. The new law uses a $99,600 credit so that only value over $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 is taxed.
Massachusetts uses its own threshold and credit, so estates between $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 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 $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 (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.
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 $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026). 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 $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026. The Massachusetts share falls under state rules.
Many Massachusetts families explore estate planning strategies like revocable living trusts to help manage their assets and avoid probate, which costs 3-7% of an estate's value and takes 9 monthsM.G.L. c. 190B §§ 3-301, 3-306, 3-603, 3-706, 3-715, 3-719, 3-720, 3-803, 3-1201Verified May 14, 2026 to 14 monthsM.G.L. c. 190B §§ 3-301, 3-306, 3-603, 3-706, 3-715, 3-719, 3-720, 3-803, 3-1201Verified May 14, 2026 to complete. SimplyTrust helps families create these trusts affordably online, avoiding the lengthy and expensive probate process. (Read More: Learn about revocable trusts in Massachusetts versus Nevada and the cost of probate in Massachusetts.)
Frequently Asked Questions
Why Does Massachusetts Have an Estate Tax?
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 $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026, 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 $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 from tax for dates of passing on/after Jan. 1, 2023. Amounts above $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 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.
What is the Massachusetts estate tax rate?
Massachusetts uses a progressive rate structure that starts at 0.8% and increases to 16%M.G.L. c. 65C § 2AVerified May 14, 2026 for the largest estates. The $99,600 credit effectively exempts the first $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 from taxation, so only amounts above this threshold face the tax rates.
How does the Massachusetts estate tax compare to federal estate tax?
The federal estate tax exemption for 2026 is $15 million per person ($30 million for married couples), much higher than Massachusetts' $2,000,000M.G.L. c. 65C § 2AVerified May 14, 2026 effective exemption. This means many estates that owe Massachusetts estate tax will owe nothing to the federal government. Learn more about the differences between estate tax and inheritance tax.
Can estate planning help reduce Massachusetts estate tax?
Various estate planning strategies may help manage potential estate tax liability, including lifetime gifting, charitable giving, and trust structures. These strategies require careful planning and professional guidance to implement effectively.