Basics of the New 2023 Massachusetts Estate Tax Law
The new Massachusetts estate tax law will be much more straightforward to deal with. There is no estate tax below $2,000,000.00. Once your estate went over $1,000,000.00 under the old law, everything under $1,000,000.00 had also gotten taxed, but that’s no longer the case. Everybody now gets a credit of $99,600.00, which is what the tax would be on all amounts up to $2,000,000.00. The “net estate,” in general, is the amount of wealth being transmitted, minus debts, expenses, amounts going to spouses or charities, or certain types of trusts for spouses or charities. The tax on the net estate can be calculated using the following chart, with the top tax rate being 16%:
| Value of Net Estate | Tax before credit | Tax after credit | Tax rate until next bracket |
| $2,000,000.00 | $99,600.00 | $0.00 | 7.2 |
| $2,100,000.00 | $106,800.00 | $7,200.00 | 8.0 |
| $2,600,000.00 | $146,800.00 | $47,200.00 | 8.8 |
| $3,100,000.00 | $190,800.00 | $91,200.00 | 9.6 |
| $3,600,000.00 | $238,800.00 | $139,200.00 | 10.4 |
| $4,100,000.00 | $290,800.00 | $191,200.00 | 11.2 |
| $5,100,000.00 | $402,800.00 | $303,200.00 | 12.0 |
| $6,100,000.00 | $522,800.00 | $423,200.00 | 12.8 |
| $7,100,000.00 | $650,800.00 | $551,200.00 | 13.6 |
| $8,100,000.00 | $786,800.00 | $687,200.00 | 14.4 |
| $9,100,000.00 | $930,800.00 | $831,200.00 | 15.2 |
| $10,100,000.00 | $1,082,800.00 | $983,200.00 | 16.0 |
Out-of-state real estate will be taxed. Under the old law, non-Massachusetts real estate was not included, but under the new law it will be included on the Federal Estate Tax Return that needs to be prepared. If a decedent has real estate or tangible personal property located outside of Massachusetts, a determination has to be made as to what percentage those assets are of the gross estate, then the Massachusetts estate tax is reduced by that percentage.
What this means for many people is that they need to relook at how they own non-Massachusetts real estate, as if it’s in their own name, the estate tax is proportionately reduced. It is important to note that real estate held in a business entity such as an LLC or corporation is treated as intangible personal property, not as real estate. While there are considerations other than the Massachusetts estate tax exposure in deciding how to own non-Massachusetts assets for purposes of estate and creditor protection planning, from a pure tax standpoint it would be better not to own non-Massachusetts real estate in a business entity so that the percentage reduction would then apply.
Massachusetts Estate Planning, Probate & Elder Law 