On Wednesday October 4, 2023, Massachusetts Governor Maura Healey signed into Law the Act to Improve the Commonwealth’s Competitiveness, Affordability and Equity.

Included in this law was doubling the Massachusetts estate tax filing threshold from $1,000,000 to $2,000,000.

What does this mean for you?

• If an individual passed away on January 1, 2023, or after and that individual’s taxable estate does not exceed $2,000,000, then a Massachusetts estate tax return will not need to be filed.

Benefit & Opportunity: This change in the law is particularly beneficial for modest estates which may have had to file an estate tax return primarily due to appreciation of their home value. With proper planning, this change allows a married couple to pass up to $4,000,000 to their heirs or devisees estate tax free.

Additional Elements Included in this New Law Change:

• Creates a true estate tax exemption and eliminates the so-called “cliff tax.”
• Increases the dependent tax credit from $180/dependent to $310/dependent in 2023 and $440/dependent in 2024, thereby helping larger families with more dependents.
• Reduces the Massachusetts short-term capital gains tax from 12% to 8.5%, making Massachusetts more competitive with other states.
  Note: Short term capital gains tax applies to the sale of capital assets which have been held for a year or less.
• Increases the rental deduction on a taxpayer’s principal residence from $3,000 to $4,000, benefiting renters.
• Requires taxpayers who file joint federal income tax returns to also file joint state income tax returns starting in 2024. Some taxpayers had been filing separate state income tax returns as a strategy to lower their household income tax liability because of the Massachusetts Millionaires Tax voted into law in November 2022. Learn more about the Millionaires Tax here.

Recommended Actions:

1. If you are the legal representative or family member of the estate of an individual who passed away after January 1, 2023, please contact one of the Trust and Estate Attorneys in our Private Client Services practice to review the estate administration process and filing or amending the estate tax return.
2. If you have any questions about this law and how it affects your estate plan or would like to discuss your estate planning goals, please reach out to us so we can assist you.

Call us at 781-2358-5500 or Contact us.

This article is not legal advice and should not be taken as such or relied upon as legal advice.