On October 4, 2023, Gov. Maura Healey signed House Bill 4104, “an Act to improve the Commonwealth’s competitiveness, affordability and equity,” which makes a number of changes to Massachusetts tax laws. Of particular importance are the changes to the Massachusetts estate tax law.
The law increases the estate tax threshold from $1,000,000 to $2,000,000. There is now no tax due on an estate valued at $2,000,000 or less. If your estate is under $2,000,000 and you believe it is unlikely to exceed that value, planning to mitigate the Massachusetts estate tax may no longer be a concern.
Additionally, for estates that exceed $2,000,000, the tax now will only be on the amount above $2,000,000. The bill provides for a uniform credit of $99,600 (which is the amount of the tax on a $2,000,000 estate). That means that $2,000,000 is now a true exemption. Under the prior law, once an estate reached the $1,000,000 mark, the entire estate was subject to tax, not just the excess above the $1,000,000. This credit serves to further reduce – and will in some cases eliminate – the estate tax for many Massachusetts residents.
The change applies to Massachusetts residents (or persons who owned property in Massachusetts) who passed away on or after January 1, 2023. Personal Representatives of estates and trustees of trusts that have already filed their returns for decedents who died this year may need to file for an abatement, or amend the estate’s return.
The new change in the law could alter how your estate plan is currently structured and presents an opportunity, with proper planning, to preserve double the threshold amount.
If you think your estate plan may be affected by this change, or if you have questions about the impact of the new law on your estate plan, please reach out to the attorneys in Prince Lobel’s Trusts & Estates Group: Katelyn Versiackas and Lexie Delgado-Boone, the authors of this Alert, and/or Jen Fleming, the Practice Group Chair.