Massachusetts has its own death tax. Most states do not. Ours starts at $2 million.
That number sounds big. For a lot of South Shore families, it is not. A paid-off house in Hingham or Marshfield, a pension, a life insurance policy, and a few retirement accounts can add up to $2 million faster than most people think.
Here is how the tax works, in plain words, and what you can do about it.
The old rule was worse
Before 2023, the line was $1 million. And it was a cliff. If you died with $1,000,001, the whole estate was taxed, not just the extra dollar.
In October 2023, the state changed the law. The line moved to $2 million. The cliff went away. Now an estate of exactly $2 million pays zero. An estate just over the line pays a small tax, not a huge one.
If you planned your estate before 2023, this is one reason to pull the binder out and look again. Some old plans were built around a $1 million cliff that no longer exists.
What counts toward the $2 million
Almost everything you own on the day you die. The state starts with the same list the federal government uses. That means:
- Your home and any other real estate in Massachusetts
- Bank accounts and investments
- Retirement accounts, like a 401(k) or IRA
- Life insurance you own, even though your family gets the money tax-free
- Cars, boats, jewelry, and other belongings
- Your share of anything you own with someone else
Some things come off the top. Debts, like a mortgage, reduce the number. Funeral costs and the cost of settling the estate reduce it too. They lower the tax. They do not change whether a return has to be filed.
One thing does not count anymore. A house or land outside Massachusetts is left out of the Massachusetts math. A 2024 law took it out, and it reaches back to anyone who died in 2023 or later. A Florida condo or a New Hampshire cabin does not push you over the line here. It can still count for other taxes, but not this one.
How much is the tax?
The state uses an old federal chart to figure the tax. Then it subtracts a credit of $99,600. The credit is set so that a $2 million estate comes out to exactly zero.
A few examples, using the state's own chart:
| Estate size | Massachusetts estate tax |
|---|---|
| $2,000,000 | $0 |
| $2,500,000 | $39,200 |
| $5,000,000 | $292,000 |
The rate goes up as the estate gets bigger. The top rate is 16 percent, but that only applies to very large estates. Most families who owe this tax owe far less than they fear.
Why a "normal" family can cross the line
Think about a retired firefighter and his wife in Weymouth. Their house is worth $750,000 and it is paid off. They have $600,000 in retirement accounts. He has a $500,000 life insurance policy through work. They have $200,000 in savings. That is $2,050,000.
They do not feel rich. But if one of them died owning all of that, the estate would be over the line.
This is the point of the article. The estate tax is not just for wealthy people. It is for South Shore homeowners who saved, kept their house, and kept their insurance.
The married couple trap
Here is the part that surprises people the most.
When the first spouse dies, there is usually no tax. Everything passes to the surviving spouse, and the law does not tax gifts between spouses.
The problem comes at the second death. Now one person owns everything. The $2 million line applies once, to the whole pile. The first spouse's $2 million allowance is gone. It did not carry over.
The federal government lets a surviving spouse keep the first spouse's unused allowance. Massachusetts does not.
The fix is a trust. With the right trust, the first spouse's share goes into a protected bucket when they die. The surviving spouse can still use it. But at the second death, that bucket is not counted again. The couple protects $4 million instead of $2 million.
This has to be set up while both spouses are alive. It cannot be fixed after the first death.
The lien on your house
One more thing most families do not know. When someone dies, the state automatically puts a lien on any Massachusetts real estate they owned. A lien is a legal hold on the property.
That lien has to be cleared before the house can be sold or refinanced. If the estate was over the line, the family gets a release from the Department of Revenue after the return is filed. If the estate was under the line, the person handling the estate signs a short sworn statement and records it at the Registry of Deeds.
Either way, it is a step. If nobody knows about it, a sale can stall at the closing table.
What you can do
Know your number. Add up what you own. Include the house, the accounts, and the face value of your life insurance. If you are near $2 million, or you are married and your combined number is near $2 million, it is time to plan.
If you are married, plan for two allowances. The right trust lets a couple protect $4 million. Most couples who end up paying this tax could have avoided it.
Give carefully. Gifts made during your life can lower the estate. But gifts have traps. They can create a MassHealth problem if you need nursing home care within five years. And large gifts still count toward whether a return must be filed. Do not give things away without a plan.
Check your life insurance. A big policy is often what pushes a family over the line. This matters a lot for firefighters and police officers with department coverage.
Update old plans. If your plan was written before 2023, it was written for a different law.
The bottom line
The $2 million line is real. On the South Shore, a lot of families are closer to it than they think. The good news is that the tax is one of the easiest problems in estate planning to fix, as long as you fix it ahead of time.
If you want to know where you stand, I offer free consultations for families across the South Shore and South Coast. We will add up your number, talk about what fits, and I will tell you honestly what I would recommend. No sales pitch. No pressure. Just a clear answer.
Jason Cullen, Esq.
Massachusetts estate planning and probate attorney serving the South Shore and South Coast. Career fire captain, paramedic, and Army veteran. Author of the Massachusetts Trustee Handbook.
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