Quick Summary: The estate tax in Massachusetts applies to estates worth more than $2 million. That threshold is far lower than the $15 million federal exemption, which means many Massachusetts families owe state estate tax even when they owe nothing to the IRS. Tax rates range from 0.8% to 16%, and the bill can surprise families who don't think of themselves as wealthy.

 

Key Takeaways:

• $2 million threshold: Any Massachusetts estate exceeding $2 million is subject to the state estate tax, regardless of the federal exemption.
• Life insurance counts: Death benefits from life insurance policies are included in your gross estate, which is the detail that pushes many families over the line.
• No portability for married couples: Massachusetts does not let a surviving spouse use the deceased spouse's unused exemption, so without a trust, you lose one $2 million exemption entirely.
• Filing deadline: The personal representative has 9 months from the date of death to file Form M-706 with the Massachusetts Department of Revenue.
• Planning reduces the bill: Credit shelter trusts, lifetime gifting, and irrevocable life insurance trusts are the primary tools Massachusetts families use to lower or eliminate the estate tax.

You own a home in Massachusetts. You have a 401(k), maybe a pension, and a life insurance policy through work. None of that feels like wealth on paper, and you've probably never thought of yourself as someone who'd owe an estate tax.

 

But the estate tax in Massachusetts starts at $2 million. In a state where the median single-family home sold for $638,000 in 2025, a paid-off house plus retirement savings gets you closer to that number than you'd expect. The federal estate tax exemption sits at $15 million per person. 

 

That number gets the headlines. But Massachusetts has its own estate tax with its own rules, and the state doesn't care what the IRS threshold is. That gap catches families off guard every year.

 

What Is the Estate Tax in Massachusetts?

 

Massachusetts is one of about a dozen states that impose their own estate tax, separate from the federal system. If your gross estate exceeds $2 million at the time of your death, the state taxes the amount above that threshold at graduated rates. 

 

Those rates range from 0.8% to 16%, and the tax is governed by Massachusetts General Laws Chapter 65C.

 

The $2 million figure works as a threshold rather than a cliff. Before 2023, crossing the line meant the entire estate was taxed from the first dollar. The legislature changed that and added a $99,600 credit that fully offsets the tax for an estate at the $2 million mark.

 

Massachusetts does not have an inheritance tax. The estate pays the bill before anything is distributed to beneficiaries. That distinction matters.

 

What Counts Toward Your Estate (and What Catches People Off Guard)

 

Your gross estate includes everything you own or have a financial interest in at the time of your death. That means your home, your retirement accounts, your bank and investment balances, any business interests, and your life insurance death benefits.

 

Life insurance is the one that surprises most people. A $500,000 term policy through your employer doesn't feel like part of your estate because you'll never see that money. But the full death benefit counts toward the $2 million threshold.

 

Run the numbers on a typical MetroWest Massachusetts family: a home worth $650,000, retirement accounts totaling $800,000, a $500,000 life insurance policy, and $200,000 in savings. That's $2.15 million. Nobody in that family considers themselves wealthy, but they're over the line.

 

How Massachusetts Estate Tax Rates Work

 

The Massachusetts estate tax is not a simple percentage applied to the amount over $2 million. The tax is calculated from a graduated schedule, the federal credit for state death taxes as it existed under the Internal Revenue Code on December 31, 2000. 

 

The Department of Revenue publishes this as the Table B schedule. Massachusetts adopted it when the state decoupled from the federal system, and it still governs the calculation today.

 

The Table B schedule applies to your adjusted taxable estate, which is your taxable estate reduced by a $60,000 adjustment. Marginal rates on that schedule run from 0.8% on the smallest taxable amounts up to 16% at the highest levels.

 

The $99,600 credit then reduces the result dollar for dollar. The credit is set so that an estate right at the $2 million mark owes nothing. The schedule produces a tax of $99,600 at that point, and the credit cancels it out exactly. 

 

Above $2 million, the credit no longer covers the full amount, and the remaining tax is what the estate owes. This is why the bill climbs faster above the threshold than a flat rate on the excess would suggest.

 

What You'd Owe at Different Estate Sizes

 

Here is how the tax scales, calculated from the Table B state death tax credit schedule and reduced by the $99,600 credit. The values below are the Massachusetts taxable estate, which is the value of the estate after debts, expenses, and allowable deductions. 

 

It is not the same as the gross estate, so an estate's gross value would generally be higher than the figure shown here.

 

Massachusetts Taxable Estate	Estimated MA Tax (After $99,600 Credit)
$2,000,000	$0
$2,500,000	$39,200
$3,000,000	$82,400
$5,000,000	$292,000

 

These figures assume an estate with no out-of-state property and no deductions beyond the standard $60,000 adjustment. A real estate's tax depends on its specific composition, including debts, deductions, and any property located outside Massachusetts. 

 

An estate planning attorney can calculate the exact number for a given situation. The pattern is clear: the tax is zero at the threshold and rises steeply above it.

 

Why the Federal Exemption Does Not Protect You

 

The federal estate tax exemption is $15 million per person in 2026, extended under the One Big Beautiful Bill Act. If your estate is under $15 million, you owe nothing to the IRS. Many people hear that number and stop worrying. That's a mistake if you live in Massachusetts.

 

The state estate tax in Massachusetts operates on a completely separate track. It has its own threshold, its own rate table, its own filing requirements, and its own deadline. An estate worth $5 million owes zero federal estate tax but could owe Massachusetts well over $100,000. The federal exemption protects you from the federal bill. It does nothing for the state tax.

 

Filing the Massachusetts Estate Tax Return

 

When someone dies with an estate exceeding $2 million, the personal representative must file Form M-706 with the Massachusetts Department of Revenue. The filing requirement under Chapter 65C, Section 3A sets the deadline at 9 months from the date of death. Extensions are available, but interest accrues on any unpaid tax from that point.

 

The return requires a full inventory of assets, with appraisals for real estate and closely held business interests. If the estate falls between $2 million and $15 million, you file only with Massachusetts. There's no federal estate tax return required at that level. Many families assume one filing triggers the other. They don't.

 

Strategies to Reduce Your Massachusetts Estate Tax

 

Knowing the tax exists is one thing. Doing something about it while you still can is another. These are the strategies Massachusetts families use most often to reduce or avoid the estate tax in Massachusetts.

 

The Portability Problem for Married Couples

 

At the federal level, when the first spouse dies, any unused portion of their $15 million exemption transfers to the surviving spouse. Massachusetts does not allow this. When the first spouse dies, their $2 million exemption disappears unless the estate plan captured it.

 

A credit shelter trust (also called a bypass trust) holds assets up to the exemption amount when the first spouse dies. Those assets pass outside the surviving spouse's estate. The couple uses both $2 million exemptions instead of losing one.

 

Some families also use a QTIP (Qualified Terminable Interest Property) election, which lets the surviving spouse benefit from trust assets during their lifetime while still keeping those assets out of their taxable estate. 

 

Your estate planning attorney can help determine which trust structure fits your situation. For married couples with a combined estate above $2 million, getting this piece right is the single most important planning step.

 

Gifting and Life Insurance Trusts

 

The annual federal gift tax exclusion allows you to give up to $19,000 per recipient per year without touching your lifetime exemption. Consistent gifting reduces the taxable estate over time. A family with three adult children and two grandchildren could move $95,000 out of the estate each year with no gift tax consequences.

 

An irrevocable life insurance trust removes policy proceeds from your taxable estate entirely. You transfer ownership of the policy to the trust, and the death benefit goes to the trust rather than your estate. For families where life insurance is what pushes the estate over $2 million, this one move can eliminate the tax bill.

 

The trust must be structured correctly under Massachusetts estate tax law, and the transfer must happen at least three years before death to take effect.

 

Talk to a Massachusetts Estate Tax Attorney About Your Plan

 

What started as an abstract number at the top of this page may feel more personal now. The $2 million threshold, the assets that count, and the planning moves available to you all look different once you apply them to your own family's situation.

 

Kristine Romano Law is an estate planning and elder law practice in Northborough and Natick Massachusetts. We help families across the state build plans that account for the Massachusetts estate tax. 

 

If your estate is approaching or exceeding $2 million, a conversation about trusts, gifting strategies, and beneficiary designations is worth having sooner rather than later.

Contact Kristine Romano Law to schedule a consultation.

 

FAQs About Massachusetts Estate Tax

 

How much can you inherit without paying estate tax in Massachusetts?

 

Massachusetts taxes estates, not inheritances. The estate itself is taxed if it exceeds $2 million. As a beneficiary, you don't pay estate tax directly. The tax comes out of the estate before distributions are made, and there is no separate inheritance tax in Massachusetts.

 

How do you calculate Massachusetts’ estate tax?

 

Start with the gross estate value, including real estate, retirement accounts, and life insurance. Subtract debts, expenses, and allowable deductions to reach the taxable estate, then reduce that by a $60,000 adjustment. Apply the Table B state death tax credit schedule to that adjusted figure, and subtract the $99,600 credit to find the tax owed. An estate at $2 million owes nothing; the bill climbs from there. 

 

Is there a way to avoid estate tax in Massachusetts?

 

You can reduce or potentially eliminate the tax through planning. Credit shelter trusts preserve both spouses' $2 million exemptions. Lifetime gifting shrinks the taxable estate over time. Irrevocable life insurance trusts remove policy proceeds from the estate. The right approach depends on your estate size and family structure.

 

Does Massachusetts have an inheritance tax?

 

No. Massachusetts has an estate tax but no inheritance tax. An estate tax is paid by the estate before assets are distributed. An inheritance tax would be paid by the person receiving the assets. In Massachusetts, your beneficiaries don't owe a separate tax on what they inherit.