Massachusetts taxes estates above $2 million per person, with rates climbing from 0.8% up to 16% — and unlike the federal exemption, the MA exemption is not portable between spouses. That means a married couple in Boston with $4 million in assets can easily owe Massachusetts six figures in estate tax that a couple living in Florida or New Hampshire would never pay.
This is the single most overlooked planning issue I see with retirees in the $1M–$10M range. People focus on the federal estate tax exemption ($15 million per person in 2026) and assume they’re fine. They aren’t — not in Massachusetts.
Below is what every Massachusetts household needs to know about the state’s estate tax, what changed in 2023, the planning strategies that actually work, and where the real “cliff” lives.
What is the Massachusetts estate tax?
Massachusetts is one of only twelve states (plus D.C.) that imposes its own estate tax separate from the federal estate tax. The MA exemption is $2 million per person. Estates valued above that threshold owe tax on the taxable estate, with rates ranging from 0.8% to 16%.
Two things make Massachusetts unusually punitive for affluent families:
- The exemption is far lower than the federal exemption of $15 million per person.
- The exemption is not portable between spouses, unlike the federal estate tax. Without proper planning, a surviving spouse only gets one $2M exemption — not two.
The estate is valued at fair market value on the date of death, and includes everything: home equity, retirement accounts, taxable investment accounts, life insurance proceeds (if you owned the policy), business interests, even personal property and collectibles.
What changed in October 2023?
For decades, the Massachusetts estate tax exemption sat at $1 million, with no inflation adjustment. Worse, the structure was a true cliff: cross the $1M threshold by even one dollar, and the entire estate was subject to tax — not just the amount above $1M.
In October 2023, Massachusetts reformed the law:
- Exemption raised to $2 million (still no inflation adjustment going forward).
- A $99,600 credit was added that effectively offsets the tax on the first $2 million of estate value.
- Estates valued at $2 million or less owe nothing and don’t need to file.
The credit largely solves the old “cliff” problem at the $2M line. Estates just above $2M no longer get hammered for tax on the whole amount. But “largely” is the operative word. The tax is still computed using rate tables on the full taxable estate, then the $99,600 credit is subtracted. The rate schedule above $2M ramps up faster than people expect.
How much tax will my estate actually owe?
Here are the approximate Massachusetts estate tax bills at common estate sizes for a single individual after applying the $99,600 credit:
| Taxable Estate | Approximate MA Tax | Effective Rate on Amount Over $2M |
|---|---|---|
| $2,000,000 | $0 | 0% |
| $2,500,000 | ~$39,200 | ~7.8% |
| $3,000,000 | ~$82,400 | ~8.2% |
| $4,000,000 | ~$182,000 | ~9.1% |
| $5,000,000 | ~$292,000 | ~9.7% |
| $7,500,000 | ~$613,200 | ~11.2% |
| $10,000,000 | ~$1,015,200 | ~12.7% |
These are estimates using the standard rate table; actual figures depend on deductions and the structure of the estate. The point is the average rate on the excess over $2M climbs steeply, not gradually.
For a couple with proper planning that uses both spouses’ exemptions, the effective threshold doubles to $4 million before any tax is owed. Without that planning, the survivor only has $2M of exemption to work with.
Why the “no portability” rule is the real cliff
Federal estate tax has a feature called portability. When the first spouse dies, any unused federal exemption transfers to the surviving spouse. So a couple with $20 million in assets pays no federal estate tax even if the first spouse leaves everything to the second outright.
Massachusetts does not allow portability. If the first spouse dies and leaves everything to the survivor (using the unlimited marital deduction), the survivor’s estate now controls all $4M (or more) — but only has a $2M exemption. The first spouse’s $2M exemption is simply lost.
Here’s the math for a married couple with $4M in assets:
- No planning: First spouse leaves everything to survivor. Survivor’s estate = $4M. MA tax owed at survivor’s death ≈ $182,000.
- With a credit shelter trust: First $2M passes into a trust at the first death (using the first spouse’s exemption). Remaining $2M passes to survivor. Survivor’s estate = $2M. MA tax owed at survivor’s death = $0.
That’s six figures of tax saved by getting the structure right. For the families I work with — typically holding a $1.5M–$3M home in towns like Newton, Wellesley, Lexington, or Concord, plus retirement accounts and investments — this is a frequent and avoidable issue.
What about gifting? Can I just give it away?
Massachusetts has no state gift tax. That’s a meaningful planning lever.
The federal annual gift tax exclusion in 2026 is $19,000 per recipient, per donor. A married couple can jointly give $38,000 to each child, grandchild, or other recipient annually with no gift tax consequences and no use of any lifetime exemption.
Lifetime gifts above the annual exclusion count against the federal lifetime exemption ($15M in 2026), but they reduce your taxable Massachusetts estate. This is one of the cleanest tools for high-asset MA families: gifts you make during life don’t show up on the MA estate tax return.
A few important caveats:
- Gifts made within 3 years of death may be pulled back into the MA gross estate under certain rules.
- Gifting appreciated assets eliminates step-up in basis. For low-basis stock, this is often a poor trade.
- Gifting a home you still live in creates a retained interest problem and won’t achieve the goal.
This is the kind of decision where the math changes dramatically based on cost basis, age, and what the asset is. It’s worth running specific numbers, not following a rule of thumb.
What about life insurance and retirement accounts?
A common surprise: life insurance proceeds you owned at death are included in your taxable Massachusetts estate. A $1M life insurance policy on a parent of two who already has $1.5M in assets pushes the estate over the $2M threshold and triggers tax that wouldn’t have existed otherwise.
The fix is an Irrevocable Life Insurance Trust (ILIT) — the trust owns the policy and the proceeds pass outside the estate. ILITs need to be set up at least 3 years before death to fully avoid inclusion.
Retirement accounts (401(k)s, IRAs, Roth IRAs) are also included in your taxable estate at full value. There’s no exemption for them. For people who have done well saving in tax-deferred accounts — common in our client base — this is often what pushes the estate over $2M. Strategies that reduce future RMDs, like Roth conversions during early retirement, can shrink the taxable estate at death too.
How does the federal exemption interact with this?
For most Massachusetts families, the federal estate tax is not a concern. The 2026 federal exemption is $15 million per person, $30 million per couple with portability. The OBBBA made these levels permanent.
But state-level Massachusetts estate tax kicks in at $2M with no portability. So you can have an estate with zero federal estate tax exposure that still owes Massachusetts hundreds of thousands of dollars. That gap is where most of the planning work lives.
What planning options actually work?
For Massachusetts families above (or approaching) $2M per spouse, the most common strategies:
- Credit shelter trust (a/k/a bypass trust or B trust): Captures the first spouse’s $2M exemption at death so it isn’t wasted. Foundational for married couples.
- Lifetime gifting program: Use annual exclusions ($19K per recipient, per donor) and consider larger gifts that exceed the annual amount but stay under the federal lifetime exemption.
- Irrevocable Life Insurance Trust (ILIT): Removes life insurance proceeds from the taxable estate.
- Qualified Personal Residence Trust (QPRT): Transfers a primary or vacation home to heirs at a discounted gift value while you continue to live in it for a term of years.
- Charitable planning: Charitable bequests, donor-advised funds, and charitable remainder trusts can reduce the taxable estate while supporting causes you care about.
- Domicile change: Moving residency to a no-estate-tax state (New Hampshire, Florida, etc.) is the nuclear option. It works, but it requires a real change of domicile, not just owning a second home.
These are not DIY decisions. The right structure depends on your asset mix, family situation, age, and what you actually want to happen with the money. But ignoring the issue is the worst possible plan, because Massachusetts will tax your estate by default.
How Evergreen approaches estate planning for Boston families
I’m Nick Stevens, CFP®, and I founded Evergreen Wealth Management in Boston as a fee-only fiduciary firm with a flat-fee structure. We charge a fixed monthly fee regardless of portfolio size — typically a flat monthly fee — rather than a percentage of assets under management.
This pricing model matters specifically for estate planning conversations. An advisor charging 1% of AUM has a financial disincentive to recommend strategies like lifetime gifting, charitable trusts, or moving assets out of accounts they manage — because those strategies shrink their fee. We don’t have that conflict. Whether your portfolio is $2M or $7M, our flat monthly fee is the same, and so is our recommendation. You can read more about how this works at our fee structure page.
Estate planning isn’t a one-time event. The right structure changes as your assets grow, as tax law shifts, and as family circumstances evolve. We coordinate with our clients’ estate attorneys to make sure the planning reflects current law and current goals — and we revisit it on a regular cadence, not just when something breaks. For the broader context on how this fits into a complete plan, see our piece on estate planning in a changing landscape.
Retirement accounts deserve extra attention in this analysis, because they carry a second tax bill after they clear the estate. The same traditional IRA that pushes an estate over the $2 million line is the account your children must drain under the inherited IRA 10-year rule — usually during their highest earning years.
Frequently Asked Questions
Does the Massachusetts estate tax apply if I move to Florida before I die?
If you successfully change your domicile to Florida before death, your worldwide assets are no longer subject to MA estate tax. However, any real estate located in Massachusetts (a vacation home in Cape Cod, a condo in Boston) will still be subject to MA estate tax based on its value. Domicile changes need to be real and documented — driver’s license, voter registration, primary residence, where you spend more than half the year, and so on.
What is the Massachusetts estate tax rate?
Rates are progressive, ranging from 0.8% on small taxable estates to 16% on the largest. The effective average rate on the amount above $2M tends to land between 8% and 13% for estates in the $2.5M–$10M range, after applying the $99,600 credit.
Do I need to file a Massachusetts estate tax return if my estate is under $2 million?
No. Massachusetts requires Form M-706 only when the gross estate exceeds $2 million. However, if you’re close to the threshold or own assets that may appreciate significantly, it’s worth working with a planner now to understand where you’d land at death.
Can a flat-fee advisor really help with estate planning?
Yes — and arguably better than a percentage-based advisor. Many of the best estate planning moves (gifting, charitable trusts, ILITs) reduce the asset base an AUM advisor charges on. At Evergreen Wealth Management, our flat monthly fee doesn’t change based on what we recommend, so the advice is driven by what’s best for the family, not what protects our revenue.
Credit shelter planning only works if your documents and account titling are set up for it. For a plain-English look at when a revocable trust is worth it for Massachusetts families, and when a will plus beneficiary designations is enough, see do you need a trust in Massachusetts?
Where to go from here
If you live in Massachusetts and your assets (including home equity, retirement accounts, and life insurance) total more than $2 million per spouse, you have a real estate tax exposure. The planning solutions exist, they aren’t expensive to implement, and they can save your family six figures or more.
If you’d like to talk through your specific situation, you can learn more about working with us or look at how our investment management approach integrates with estate planning. For broader retirement context, see our piece on how much you actually need to retire in Massachusetts.
Nick Stevens, CFP® is the founder of Evergreen Wealth Management in Boston, a flat-fee financial planning and investment management firm. Evergreen charges a fixed monthly fee regardless of portfolio size. Learn more about how we work at /fee-structure/ or get in touch at /contact-us/.