Does Massachusetts Have an Estate Tax? Threshold and Rates

Yes, Massachusetts has an estate tax. It applies to estates valued above $2 million, with graduated rates running from 0.8% up to a top rate of 16%, and a credit of up to $99,600 that shields the first $2 million from tax.¹ The threshold is far lower than the federal exemption of $15 million for 2026, so the Massachusetts estate tax reaches many families whose estates owe nothing at the federal level.²

The $2 Million Threshold and How the Credit Works

Under Chapter 65C of the Massachusetts General Laws, an estate must file a return when the gross estate plus any adjusted taxable gifts made during the person’s lifetime exceeds $2 million.³ This threshold is not indexed for inflation. It stays at $2 million regardless of changes in property values or the cost of living.

For deaths on or after January 1, 2023, no tax is owed if the federal taxable estate — the gross estate minus allowable deductions — is $2 million or less.⁴ An estate with a gross value above $2 million can still owe no tax if deductions bring the taxable amount down to that level, though the executor must still file.

When tax is owed, the law provides a credit of up to $99,600 against the calculated tax.⁴ This credit offsets the tax that would otherwise apply to the first $2 million, so only value above that mark produces an actual payment. Before the 2023 change, exceeding the threshold by even a single dollar meant the entire estate was taxed. The credit replaced that old cliff.¹

What Counts Toward the $2 Million

The gross estate includes the fair market value of everything the person owned or held certain interests in at death. For Massachusetts residents, that covers all property regardless of where it sits. Common categories:

Real estate — primary homes, vacation properties, rental and commercial buildings, in Massachusetts or elsewhere.
Bank, brokerage, and investment accounts, including CDs, stocks, bonds, and mutual funds.
Retirement accounts and annuities, including IRAs, 401(k) plans, and pensions, regardless of named beneficiaries.
Life insurance proceeds, if the deceased owned the policy, held control over it, or made the estate the beneficiary.
Business interests, including closely held companies, partnerships, and LLCs.
Personal property — vehicles, jewelry, art, collectibles, household items.

Each asset is valued at fair market value, the price a willing buyer and seller would agree on. Appraisals are commonly used for real estate, business interests, and unique personal property to produce a figure the Department of Revenue will accept.

Jointly Held Property

For property held in joint tenancy with right of survivorship between non-spouses, the full value is generally included in the deceased owner’s estate unless the surviving co-owner can prove they contributed their own money toward buying it.⁵ If the survivor paid for part, only the deceased owner’s proportional share is included.

For property held jointly between spouses, exactly one-half of the value is included in the estate of the first spouse to die, regardless of who paid for it.⁵ That applies both to tenancy by the entirety and to joint tenancy with survivorship between spouses.

Lifetime Gifts Added Back

Massachusetts adds adjusted taxable gifts — gifts made during life that exceeded the federal annual exclusion — back to the gross estate when testing the $2 million threshold.³ For 2026 the federal annual exclusion is $19,000 per recipient, so gifts up to that amount per person per year are not added back.²

Someone who made $500,000 in taxable gifts over their lifetime and dies with a $1.7 million estate would exceed the threshold ($1.7 million + $500,000 = $2.2 million) and would need to file, even though the estate alone is under $2 million. Massachusetts computes adjusted taxable gifts using the Internal Revenue Code as it existed on December 31, 2000.³

Deductions That Reduce the Taxable Estate

Several deductions can pull the taxable estate below $2 million or shrink the tax owed above it. Massachusetts law allows the estate to subtract funeral expenses, claims against the estate such as outstanding debts, and unpaid mortgages on property included in the gross estate.⁶

Because the Massachusetts tax is calculated from the federal taxable estate, the federal marital deduction and charitable deduction also apply. Property passing to a surviving spouse, either outright or through a qualifying trust, can be deducted in full. Property left to qualifying charities does the same.

How Much Tax You’d Actually Pay

Massachusetts calculates the tax using a graduated rate table tied to the old federal credit for state death taxes, frozen as it existed on December 31, 2000.⁴ Rates start at 0.8% on the lowest taxable amounts and climb through more than twenty brackets to a top marginal rate of 16% on value above roughly $10.04 million.³

The $99,600 credit wipes out tax on the first $2 million. An estate worth $2.5 million calculates total tax on the full amount using the rate table, then subtracts the credit to arrive at what’s owed.⁴ Sample brackets from the Department of Revenue’s rate table (measured against the “adjusted taxable estate,” which is the federal taxable estate minus $60,000):

$440,000–$640,000: 4.0%
$1,040,000–$1,540,000: 6.4%
$2,040,000–$2,540,000: 8.0%
$5,040,000–$6,040,000: 12.0%
Over $10,040,000: 16.0%

The full table is published in the Massachusetts Estate Tax Guide.³

Non-Residents Who Own Massachusetts Property

Non-residents can still owe Massachusetts estate tax, but only on real estate and tangible personal property physically located in the Commonwealth at the time of death.⁴ Intangible assets like stocks, bonds, and bank accounts are not counted for non-residents.

The tax is calculated by apportionment: compute the full tax as if the person were a resident, then multiply by the ratio of Massachusetts property value to the total federal gross estate.³ A non-resident with a $5 million total estate and a $1 million Massachusetts vacation home would owe roughly 20% of the computed tax. The executor files Form M-706 along with a Massachusetts Nonresident Decedent Affidavit (Form M-NRA).

Married Couples: No Portability

Massachusetts does not allow portability of a deceased spouse’s unused exemption. At the federal level, a surviving spouse can inherit any portion of their late spouse’s exemption that wasn’t used. Massachusetts has no equivalent. Each spouse has a $2 million threshold, and anything unused is lost when the first spouse dies.

That gap makes planning important for couples with combined estates above $2 million. A credit shelter trust (sometimes called a bypass or family trust) is one common approach: assets up to the first spouse’s $2 million exemption are placed in a trust that benefits the surviving spouse during their lifetime without being counted in the survivor’s estate.

Massachusetts also allows a Qualified Terminable Interest Property (QTIP) election on the state return, independent of any federal QTIP election.⁷ A QTIP election lets property qualify for the marital deduction while controlling where it ultimately passes after the surviving spouse dies. Because the state election is separate, different QTIP choices can be made for state and federal purposes. The election is made on the return by the filing deadline and is irrevocable once made.

Interaction with the Federal Estate Tax

For 2026, the federal estate tax exemption is $15 million per person.² Most estates that owe Massachusetts tax owe nothing federally. A $5 million estate would face Massachusetts tax on the amount above $2 million while falling well below the federal threshold.

For the rare estate that owes both, 26 U.S.C. § 2058 allows the Massachusetts tax actually paid to be subtracted from the federal taxable estate, reducing the federal bill.⁸ Future federal changes do not affect Massachusetts. The state’s tax is tied to the Internal Revenue Code as it existed on December 31, 2000, so any adjustment to the federal exemption leaves the Massachusetts threshold and rate structure untouched.⁴

Filing the Return

The executor or personal representative files Form M-706 for any estate that meets the filing threshold.⁹ The return and any tax payment are due within nine months of the date of death. Filing through MassTaxConnect results in faster processing and a quicker closing letter.¹⁰ Paper returns can also be mailed. The return must include a copy of the federal estate tax return (if one was filed) and a copy of the death certificate.

Once the Department processes the return and confirms full payment, it issues a Massachusetts Estate Tax Closing Letter and a Certificate Releasing Massachusetts Estate Lien for each piece of real estate.¹¹ The closing letter is typically required before the executor can safely distribute remaining assets. No closing letter will be issued without a copy of the federal closing letter, if a federal return was required.³

Extensions, Penalties, and Interest

If you need more time to file, Massachusetts grants an automatic six-month extension provided you pay at least 80% of the tax ultimately determined to be due within the original nine-month deadline.¹² You can request the extension through MassTaxConnect or by mailing Form M-4768.

A separate extension of time to pay (not to file) is available only for undue hardship. A standard payment extension runs six months. In cases of significant hardship, such as a situation where paying the tax would force a sale of property, the Department may grant up to three years from the original due date.¹²

Missing the filing deadline triggers a penalty of 1% of the tax due for each month or partial month the return is late, capped at 25%.¹³ Interest on unpaid tax starts running from the original nine-month due date at the federal short-term rate plus four percentage points, compounded daily and adjusted quarterly. For early 2025 the underpayment rate was 8%.¹⁴ Interest keeps accruing even when a filing extension is granted.

The Automatic Lien on Real Estate

Massachusetts automatically places a lien on all assets in the gross estate, including real property, for ten years from the date of death.¹⁵ The lien stays until the estate tax is paid in full, which can block the sale or refinancing of real estate owned by the deceased.

For estates required to file, the executor obtains a release by filing Form M-706, paying the tax, and submitting Form M-792 (Certificate Releasing Massachusetts Estate Tax Lien) for each piece of real property. The Department issues the certificate once it confirms full payment.¹⁵

For estates below the filing threshold, the executor can release the lien by recording a sworn affidavit in the appropriate registry of deeds stating that no filing is required. Signed under penalty of perjury, the affidavit serves as the release without a return or a certificate from the Department.¹⁵

1
Mass.gov. FAQs: New Estate Tax Changes
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
3
Massachusetts Department of Revenue. Massachusetts Estate Tax Guide
4
General Court of Massachusetts. Massachusetts General Laws Chapter 65C, Section 2A
5
Office of the Law Revision Counsel. 26 U.S. Code 2040 – Joint Interests
6
General Court of Massachusetts. Massachusetts General Laws Chapter 65C, Section 1 – Definitions
7
Mass.gov. TIR 86-4: M.G.L. c. 65C Massachusetts Estate Tax
8
Office of the Law Revision Counsel. 26 U.S. Code 2058 – State Death Taxes
9
Mass.gov. Instructions for Massachusetts Estate Tax Return Form M-706
10
Massachusetts Department of Revenue. File an Estate Tax Return
11
Massachusetts Department of Revenue. DOR Estate Tax Forms and Instructions
12
Mass.gov. Request an Extension to File and Pay Your Massachusetts Estate Tax
13
General Court of Massachusetts. Massachusetts General Laws Chapter 62C, Section 33
14
Massachusetts Department of Revenue. TIR 24-17: Interest Rate on Overpayments and Underpayments
15
Mass.gov. TIR 98-14: Release of Estate Tax Lien on Real Estate