Massachusetts taxes estates worth more than $2 million, and a lot of families land over that line without realizing it. You can owe the state even when you owe the federal government nothing. At Roark & Mansur Law, our Massachusetts estate planning attorneys sit down with Merrimack Valley families and walk through what they owe and what to do.
What Is the Massachusetts Estate Tax?
The Massachusetts estate tax applies to the total value of what you own when you die, and it is separate from the federal estate tax with its own set of rules. Massachusetts is one of the few states that still tax estates, with a threshold among the lowest anywhere.
Every individual now gets a $2 million exemption, raised from $1 million in 2023. The figure that matters is your gross estate, meaning the combined value of everything you own at death: your property, your accounts, and the rest. If that total comes in under $2 million, the tax does not apply. If it goes over, only the part above $2 million is taxed.
The rate is graduated. An estate just over the line pays around 7.2 percent, and that increases on a graduated scale to 16 percent on anything above $10 million.
Who Owes the Massachusetts Estate Tax
You owe the Massachusetts estate tax if your estate exceeds $2 million. The federal exemption is far higher, at $15 million per individual (which is a permanent exemption level as of 2026), so most families here owe the state while owing the federal government nothing.
The estate pays the tax, not your heirs directly. Whoever settles the estate, usually the executor named in the will, files a Massachusetts estate tax return, Form M-706, within nine months of the death, according to the Department of Revenue’s Massachusetts estate tax guide.
Why So Many Families Cross the $2 Million Line
Most people never picture themselves as estate-tax territory, and then the numbers add up. Home values are usually what pushes a family over the line. A paid-off house around Greater Lowell, plus a retirement account or two, can move an estate past $2 million quickly.
Take a Chelmsford couple with a $700,000 home and $1.5 million in retirement and savings. They are already at $2.2 million. You do not have to feel wealthy to owe state estate taxes in Massachusetts.
Your gross estate includes more than most people count, such as:
- Real estate, including your primary home
- Bank and investment accounts
- Retirement accounts such as IRAs and 401(k)s
- Life insurance proceeds, if you owned the policy
- Business interests
When you add it all up, the total often exceeds $2 million. We start every plan with a plain inventory of everything you own, which is the real foundation of estate planning in Massachusetts.
The Portability Problem for Married Couples
Married couples lose ground to a gap in the Massachusetts rules. Portability, the federal rule that lets a surviving spouse keep the unused exemption of the spouse who died first, does not exist at the state level. Federal portability lets a couple protect up to $30 million between them; Massachusetts offers none of it.
If the first spouse dies with nothing set up ahead of time, that person’s $2 million exemption is just gone. The couple protects $2 million when they could have protected $4 million.
A credit shelter trust solves it. A credit shelter trust, sometimes called a bypass trust, holds up to $2 million of the first spouse’s assets when that spouse dies. The surviving spouse can still take income from it, and the principal if they need it, but the money stays out of their taxable estate. Both exemptions get used, and the family protects the full $4 million. For married couples, we reach for this kind of trust planning more than any other tool.
Reducing Your Massachusetts Estate Tax
A few moves can decrease or eliminate estate taxes. Which ones fit depends on what you own and what your family needs, so our Massachusetts estate planning lawyers match the options to your situation. We go through each one with you and weigh the pros and cons. Options can include:
- The credit shelter trust is the starting point for most married couples, because it doubles what the family keeps away from the tax.
- An irrevocable life insurance trust, or ILIT, owns your life insurance policy so the payout never counts as part of your taxable estate. A policy can add hundreds of thousands to an estate, so moving it out of your name can be the difference between owing tax and owing none.
- Annual gifting brings your estate down while you are alive. Massachusetts has no gift tax, and the federal annual exclusion lets you hand $19,000 to any one person in 2026 with no tax to anyone. A couple with three children can move $114,000 out of their estate every year.
- Charitable gifts come off the taxable estate dollar for dollar. Whatever you leave to a qualified charity is subtracted before the tax is calculated. Most families use two or three of these together, and the savings stack up.
The Estate Tax Most Massachusetts Families Don’t See Coming: Roark & Mansur Can Help
Reducing a Massachusetts estate tax bill is far easier before a death than after one, and it takes a lawyer who knows the state’s rules inside and out. At Roark & Mansur, we are a boutique firm, so you work directly with our Massachusetts estate planning attorneys, not a paralegal, and no question is too small to ask.
Daniel J. Mansur has been doing this work for close to 40 years. He and our entire legal team explain things in plain language and tell you honestly what we believe you should do.
The first conversation is a 30-minute conference at no charge. We go over your situation, weigh the advantages and disadvantages of each option, and by the end we have made a few tentative decisions together. When you are ready, contact Roark & Mansur online and tell us what you want to protect.