Fortunately, the Massachusetts estate tax is not as high as the federal tax. It starts at.8% for assets over $40,000, and peaks at 16% for assets over $10 million. If the taxable estate is valued at less than $1 million, the tax doesn’t apply, but once that threshold is crossed, the tax applies and begins chipping away at the estate beginning at the $40,000 mark.
One quirk of this type of tax assessment is that some people with estates over the threshold may prefer to divest some of those assets during their lifetimes to avoid the tax on their estates. For example, an estate with taxable assets of $1.2 million would owe approximately $50,000 in taxes. Face with that reality, some people would choose to divest the estate of $200,001, e.g., by making qualifying gifts, to bring the taxable estate under the $1 million threshold.
Estimated Estate Taxes in Massachusetts
|
TAXABLE ESTATE |
ESTATE TAX (ESTIMATED) |
|
$ 1,000,000 |
$ 35,000 |
|
$ 1,500,000 |
$ 70,000 |
|
$ 2,000,000 |
$ 100,000 |
Reducing Your Massachusetts Estate Tax Burden
If you are a Massachusetts resident (or couple) with virtually no chance of having an estate worth over $1 million, you can skip ahead to the next section. But if there’s any chance that your estate will be valued at over $1 million, then you should keep reading to learn how to reduce the estate tax burden.