Most Massachusetts families don't think of themselves as wealthy enough to worry about estate taxes. But if you own a home on the South Shore, have a retirement account, and carry a life insurance policy, you may already be over the $2 million threshold — and your family may owe Massachusetts estate tax when you die, even though they owe nothing to the federal government.

The Gap Between Massachusetts and Federal Estate Tax

The federal estate tax exemption for 2025 is $13.99 million. Massachusetts exempts only $2 million. That gap — over $11 million — means millions of Massachusetts families owe state estate tax on estates that are completely exempt at the federal level. Estates over $2 million pay tax on the entire taxable estate above the threshold. The maximum credit is $99,600, but the tax still begins at a meaningful amount and grows significantly as estate values rise.

The "Hidden" Assets That Push You Over $2 Million

Your home: Home values in Plymouth County and Norfolk County have risen substantially. A home purchased for $250,000 twenty years ago may now be worth $600,000 to $800,000 or more.

Retirement accounts: A 401(k) or IRA with $400,000–$600,000 adds significantly to your taxable estate.

Life insurance: Death benefits paid to your estate are included in your taxable estate. A $500,000 term life policy can push a $1.6 million estate over the threshold.

Other assets: Bank accounts, brokerage accounts, a vacation property, or a small business interest all contribute. A family that considers itself solidly middle-class can easily have a taxable estate of $2 to $3 million — with a potential state tax bill of $100,000 to $180,000 or more.

How Much Is the Tax?

Massachusetts estate tax rates range from 0.8% to 16% on the taxable estate. An estate just over $2 million may owe $36,000 to $40,000. An estate at $3 million may owe $170,000 or more. The tax is due within nine months of death.

Strategies to Reduce or Eliminate Massachusetts Estate Tax

Irrevocable Life Insurance Trusts (ILITs): Moving life insurance into a trust removes the death benefit from your taxable estate — often saving tens of thousands of dollars.

Gifting strategies: Annual gifts of up to $18,000 per recipient reduce your estate over time. Massachusetts has no gift tax, making systematic gifting particularly effective.

Credit shelter trusts for married couples: Properly drafted trusts can effectively double the exemption to $4 million by utilizing each spouse's exemption separately.

Charitable giving: Charitable remainder trusts and similar tools reduce taxable estate value while supporting causes important to you.

The Cost of Not Planning

Families that suffer most from Massachusetts estate tax are those whose loved ones did not plan ahead. Heirs face a tax bill — often $100,000 to $300,000 — due within nine months. If value is tied up in real estate or retirement accounts, heirs may be forced to sell assets at an inopportune time just to pay the tax.

Contact Sofio Law LLC

If you own a home on the South Shore and have retirement savings, you owe it to your family to understand whether estate tax affects your plan. Call today for a free consultation.

(774) 801-9774 | info@sofio.law
Serving Rockland, Hingham, Plymouth, Quincy, Norwell, Scituate, and throughout Plymouth and Norfolk Counties.