How Much Is Inheritance Tax in Massachusetts?

Massachusetts does not have an inheritance tax. What people often call the inheritance tax in Massachusetts is actually a state estate tax, paid by the estate itself before anything reaches heirs. Estates valued at $2 million or less owe nothing. Above that, the tax runs on a graduated scale from 0.8% to 16%, reduced by a built-in credit of $99,600. A $2.5 million taxable estate, for example, would owe roughly $39,200.¹

No Inheritance Tax, But There Is an Estate Tax

The difference matters. An inheritance tax would be charged to each person who receives assets, with the rate often depending on how closely related they were to the deceased. Massachusetts does not work that way. The estate pays the tax out of its total value before distributions are made, and the relationship between you and the person who died has no effect on the calculation.² A surviving spouse, a child, a sibling, or a friend named in the will all face the same math at the estate level.

So if you are the heir asking what you will personally owe Massachusetts: nothing, as a tax on the inheritance itself. What may affect how much you ultimately receive is whatever estate tax the estate pays before your share is distributed.

When the Estate Owes Tax

If the gross estate plus any adjusted taxable gifts made during the deceased’s lifetime totals $2 million or less, no Massachusetts estate tax is owed and no return has to be filed. This threshold applies to deaths on or after January 1, 2023, when the legislature raised it from the previous $1 million.³

Lifetime gifts count toward the threshold even if they shrank the estate below $2 million before death. Someone who gave away $500,000 during life and died with $1.8 million in assets has a combined figure of $2.3 million, and a return is required.¹

How Much the Estate Tax Is

Massachusetts uses a graduated rate table that was originally built around the old federal credit for state death taxes. The steps are not intuitive, but the arithmetic is simple.

Start with the taxable estate (gross estate minus deductions). Subtract $60,000 to get the “adjusted taxable estate.” Look that figure up on the state rate table, which runs from 0.8% on the first $90,000 up to 16% on amounts above $10,040,000. The table produces a tax amount. Subtract the $99,600 credit. What remains is the Massachusetts estate tax.¹

The credit was added in 2023 to fix a longstanding “cliff” problem. Under the old law, an estate worth $999,999 owed nothing while one worth $1,000,001 was taxed on its entire value. With the credit of up to $99,600, estates at or below $2 million now owe nothing, and only the value above $2 million generates real tax.⁴

Example: A $2.5 Million Taxable Estate

Suppose a Massachusetts resident dies with a gross estate of $2,580,000, no lifetime gifts, and $80,000 in deductible debts and expenses. The taxable estate is $2,500,000.

Adjusted taxable estate: $2,500,000 minus $60,000 = $2,440,000
That falls in the $2,040,000 to $2,540,000 bracket, which carries a base of $106,800 plus 8% on the excess over $2,040,000
Excess: $400,000 at 8% = $32,000
Tax before credit: $106,800 + $32,000 = $138,800
Tax after credit: $138,800 minus $99,600 = $39,200

The estate owes $39,200, an effective rate of about 1.6% on the taxable estate.¹ Effective rates rise with estate size, reaching roughly 10% for estates around $10 million.

Example: Just Over the Threshold

For a $2,050,000 taxable estate, the adjusted taxable estate is $1,990,000, which falls in the 7.2% marginal bracket. The computed tax works out to $103,200, and after the $99,600 credit the estate owes $3,600. In effect, the $50,000 above the $2 million mark is taxed at about 7.2%.⁴

What Counts Toward the Estate

The gross estate is the fair market value of everything the deceased owned or had an interest in at death. That is broader than what passes through probate.¹ The main categories:

Real estate, including a primary home, vacation property, and investment property.
Financial accounts: bank, brokerage, stocks, bonds, mutual funds.
Retirement accounts: IRAs, 401(k)s, pensions, and annuities.
Life insurance proceeds from policies the deceased owned or controlled, even when paid directly to a named beneficiary.
Jointly held property, to the extent of the deceased’s interest.
Trust assets, including revocable trusts and trusts where the deceased retained certain powers.
Business interests in closely held companies, partnerships, and LLCs.
Personal property such as vehicles, jewelry, and art.

One technical point: Massachusetts computes the gross estate using the Internal Revenue Code as it existed on December 31, 2000, not the current federal code. For certain trusts and gift adjustments this can produce a different number than the federal estate calculation.¹

Deductions That Lower the Bill

Several deductions reduce the gross estate to the taxable estate, which is the figure the rate table applies to.

Marital deduction: an unlimited deduction for property passing to a surviving spouse. An estate left entirely to a spouse can avoid Massachusetts estate tax completely, regardless of size.⁵
Charitable deduction: bequests to qualified charities are fully deductible.
Debts and liabilities: mortgages, credit card balances, medical bills, and other debts owed at death.
Funeral and administration costs: burial, executor fees, attorney fees, and appraisal costs.

The marital deduction is the strongest of these, but it only defers the tax, because the assets end up in the surviving spouse’s estate at the second death. And Massachusetts, unlike the federal system, does not allow a surviving spouse to inherit the deceased spouse’s unused $2 million threshold through a portability election.⁶ Without planning, a couple can effectively waste one spouse’s threshold entirely.

Deadlines for Filing and Paying

The Massachusetts estate tax return (Form M-706) and any tax owed are due within nine months of the date of death. The return is filed with the Massachusetts Department of Revenue.⁷

An automatic six-month extension to file is available, but it is conditional. The estate must pay at least 80% of the tax ultimately determined to be due by the original nine-month deadline. Falling short triggers penalties and interest calculated from the original due date.

A separate extension to pay can be requested when the estate faces genuine financial hardship, such as illiquid assets that cannot be sold quickly. That extension can run up to three years, but interest keeps accruing on the unpaid balance the entire time. Interest runs at the federal short-term rate plus four percentage points, compounded daily.⁸ Late payment penalties add 1% of the unpaid tax per month, up to 25%.

Planning to Reduce What the Estate Owes

Because the Massachusetts threshold is far lower than the federal one, families with moderate wealth often find themselves exposed to a state estate tax they did not expect. A few strategies are commonly used to reduce or eliminate it.

Credit Shelter Trusts

For married couples, a credit shelter trust (sometimes called a bypass trust) holds up to $2 million in assets when the first spouse dies. The surviving spouse can receive income and, in some conditions, principal, but the trust assets are not counted in the surviving spouse’s estate at the second death. Without portability, this is the main way to use both spouses’ $2 million thresholds.

Irrevocable Life Insurance Trusts

Life insurance proceeds are included in your gross estate if you own the policy. An irrevocable life insurance trust (ILIT) removes those proceeds by making the trust the owner and beneficiary. If you transfer an existing policy into the trust, you must survive at least three years for the proceeds to stay out of your estate. Policies the trust purchases directly from the start avoid that waiting period.

Lifetime Gifting

Massachusetts has no gift tax, and gifts made during life reduce the size of the estate. Keep in mind that adjusted taxable gifts are added back for purposes of determining whether the $2 million filing threshold is met. Annual exclusion gifts (up to $19,000 per recipient in 2026) that are not taxable gifts for federal purposes remain a steady way to move wealth out of the estate over time.

Charitable Bequests

Gifts to qualified charities at death are fully deductible. For an estate just above $2 million, a charitable bequest can bring the taxable estate below the threshold and eliminate the state tax on the rest. Charitable remainder trusts can also provide income to family for a period before the remainder passes to charity.

1
Mass.gov. Massachusetts Estate Tax Guide
2
Mass.gov. Estate Tax
3
Mass.gov. FAQs: New Estate Tax Changes
4
General Court of Massachusetts. Massachusetts General Laws Chapter 65C Section 2A
5
Mass.gov. Directive 95-1: The Massachusetts Unlimited Marital Deduction
6
Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
7
Mass.gov. Request an Extension to File and Pay Your Massachusetts Estate Tax
8
Legal Information Institute. 830 CMR 62C.33.1 – Interest, Penalties, and Application of Payments