The story of inheritance tax in Massachusetts spans more than a century and ends with the commonwealth levying an estate tax instead. Basically, beneficiaries don’t pay tax on what they receive. Instead, the estate itself may owe a state estate tax.
Massachusetts once imposed taxes on “legacies and successions” under Chapter 65—what many would call an inheritance tax. Over time, key provisions in Chapter 65 were repealed, reflecting a shift away from taxing heirs directly.
The big turning point came in the 1970s. In 1975, the Legislature enacted Chapter 65C, creating a Massachusetts estate tax for people passing on or after January 1, 1976. This move effectively supplanted the older inheritance-style system with a levy on the estate itself. So any conversation about inheritance tax in Massachusetts today is really about estate tax.
Updates to Inheritance Tax in Massachusetts
For years, the estate tax operated as a “pick-up” tax tied to the federal state death tax credit. When Congress phased out that credit in the early 2000s, Massachusetts “decoupled,” keeping its own stand-alone estate tax beginning in 2003. Since then, the Commonwealth has continued to tax estates—not heirs.
In 2023, lawmakers raised the effective threshold for the state estate tax to $2,000,000 and added a credit to smooth the old “cliff.” However, these changes did not revive an inheritance levy. Instead, they simply modernized the estate tax Massachusetts already had. So, beneficiaries remain outside the tax base—the estate is the payer.
Two Quick Illustrations
1) A Cambridge niece inherits $150,000. She doesn’t have to pay tax on that. If the decedent’s total estate is under the state threshold, no Massachusetts estate tax is due at all.
2) A Worcester estate totals $2.3 million. No inheritance tax in Massachusetts applies to the heirs. However, the estate may owe Massachusetts estate tax on the amount above the threshold, calculated under Chapter 65C.
Families with larger estates often use revocable trusts to streamline the transfer process and reduce administrative burdens, though trusts don’t eliminate estate tax obligations. (Read More: Learn about revocable trusts in Massachusetts versus Nevada and the cost of probate in Massachusetts.)