On October 4, 2023, Massachusetts Governor, Maura Healey, enacted comprehensive tax legislation that will modify a wide range of Massachusetts tax laws, including those related to estate tax.
Key Changes in the Massachusetts Estate Tax Law:
- The estate tax exemption threshold in Massachusetts has been increased from $1 million per person to $2 million per person.
- A noteworthy adjustment has been made regarding the ‘cliff effect.’ With this, only assets surpassing the $2 million exemption face taxation, in contrast to the prior regime that taxed the entire estate, starting with the first dollar, once the estate exceeded the $1 million exemption.
- For estates possessing real estate beyond Massachusetts borders, a revision in the estate tax calculation has been introduced, seemingly superseding previous legal interpretations.
These modifications are retroactive to January 1, 2023. This means that for individuals who passed away after January 1, 2023 and held assets with a value less than or equal to $2 million, their estates are not subject to estate tax. Estate taxation comes into play exclusively for estates valued above $2 million.
For most Massachusetts residents, these changes will not necessitate adjustments to their estate plans due to the inherent flexibility with which estate documents are usually crafted. However, couples with combined assets over $4 million may want to review the titling of their assets to ensure they are taking full advantage of the new exemption. Please feel free to reach out to your manager at Howland Capital with any questions.
Additionally, the new tax legislation includes income tax modifications. We advise a consultation with your accounting professional for a comprehensive understanding.