Death and Taxes May Be Inevitable, but Death Taxes Are Not

Death and taxes are said to be life’s only certainties. More and more states have decided the two don’t need to go hand in hand. Massachusetts has yet to follow.

The Commonwealth imposes one of the nation’s most burdensome estate taxes — or “death taxes” as they are often called — with one of the lowest thresholds for estate eligibility. Massachusetts is increasingly an outlier, as just 12 states still maintain the tax.

When a Massachusetts resident dies, the state may impose a tax on the combined value of their home, savings, retirement accounts, vehicles, and other assets once the total estate exceeds $2 million.

While estate taxes are not the only factor shaping economic growth, a growing divide between states that impose them and those that do not is becoming increasingly difficult to ignore. Since 2020, the top states for job growth have all lacked an estate tax. Meanwhile, 7 of the 10 worst-performing states still have these taxes on the books, including Massachusetts.

Massachusetts ranked as the fourth worst state in the country for job growth from 2020 to 2026, posting a 1.1% decline over that period. At the same time, states like Texas, Florida, and North Carolina – all states without an estate tax – saw strong employment growth and continued population gains. 

More States Are Moving Away From Estate Taxes

Other states have increasingly responded to those concerns by repealing their estate taxes altogether. In the past decade, states including North Carolina, New Jersey, Delaware, Tennessee, Indiana, and Ohio all repealed their estate taxes. Many of those states continued posting strong revenue growth after repeal.

Delaware and New Jersey, two of the most recent states to repeal their estate taxes, did so over concerns about competitiveness and economic impact. Delaware repealed its estate tax after lawmakers concluded it generated relatively little and unpredictable revenue while encouraging some residents to relocate to lower-tax states, costing the state personal income tax revenue. New Jersey similarly phased out its estate tax after lawmakers warned the state’s low exemption threshold made its tax system less competitive and imposed burdens on families and small business owners who were not traditionally considered wealthy.

These concerns did not come at the expense of state finances. Both states saw revenue growth in the year following repeal and, even after adjusting for inflation, have experienced stronger cumulative revenue growth than Massachusetts.

Conclusion

Economic competitiveness depends on more than a single tax policy, though tax structure still matters. States competing successfully for residents, businesses, and investment increasingly prioritize lower tax burdens and long-term affordability. 

Massachusetts, meanwhile, continues layering high taxes on top of an already expensive cost of living. Policymakers should consider whether maintaining one of the most aggressive estate taxes is worth the economic and competitive consequences that increasingly come with it.