In a significant shift in tax policy, Massachusetts enacted a new law that raised the estate tax threshold, marking a substantial change for estate planning and tax considerations within the state. This new legislation, which came into effect on January 1, 2023, increased the estate tax exemption from $1 million to $2 million. This adjustment is the first of its kind in over two decades and represents a pivotal move by the state to enhance its competitiveness and affordability for residents and businesses alike.
The estate tax, often referred to as the “death tax,” is levied on the estate of a deceased person before the distribution of their assets. The tax applies only to the value of an estate that exceeds the exemption threshold, which, prior to this law, was set at $1 million in Massachusetts. With the new threshold, estates valued at $2 million or less are exempt from the state’s estate tax, providing significant relief to many families and individuals.
It’s important to note that this change is not retroactive; it applies to estates of individuals who passed away on or after the effective date. For estates of decedents who died prior to this date, the previous threshold of $1 million still applies.
As with any tax law change, it’s advisable for individuals to consult with professional advisors to fully grasp the impact on their personal circumstances and to strategize accordingly.
