Massachusetts Raises Estate Tax Exemption to $2 Million

On October 4, 2023, Gov. Maura Healey signed Bill H.4104 (An Act to improve the Commonwealth’s competitiveness, affordability, and equity) into law, increasing the estate tax exemption in Massachusetts from $1 million to $2 million, effective January 1, 2023:

"This brings Massachusetts more in line with other states," explains Harry S. Margolis, a Massachusetts estate planning, elder law, and special needs planning lawyer. "Eighteen states currently have estate or inheritances taxes. Up until now, Massachusetts was tied with Oregon as having the lowest threshold at $1 million. The thresholds for other states range from $1,648,611 in Rhode Island to $9.1 million in Connecticut."

Update 10/14/2023: In Massachusetts Passes $1B Tax Reform Package (WealthManagement.com, 10/11/2023), Jody R. King & Aimee Fukuchi Bryant inform about two other estate changes that the new legislation made:

• "It eliminates the notorious 'cliff' effect by providing that only assets in excess of $2 million, rather than the decedent’s entire taxable estate, would be subject to the Massachusetts estate tax."
• "[I]t clarifies the calculation of the tax with regard to real and tangible personal property physically located outside of the state."

They also state that "[i]t's notable that the new exemption amount won't be indexed for inflation."