Even in Death, Mass Taxpayers Can’t Rest in Peace
In Massachusetts, the Grim Reaper doesn’t come alone – he brings the tax collector with him.
The Commonwealth is one of just 12 states to impose an estate tax, ensuring that even in death, Massachusetts taxpayers can’t rest in peace.
Here’s how it works: When a Massachusetts resident passes away, the state collects a tax on the combined value of their home and all assets over $2 million, which combined is called an “estate.” These assets can include cars, furniture, checking and savings accounts, retirement savings, and more.
Two million dollars might sound steep, but with inflation rising and home prices soaring across the state, more people meet the threshold than you might expect, including some middle-class families and small business owners.
Left unaddressed, the growing estate tax could spook current and prospective residents, who might think twice about putting down roots in the Bay State — an outcome with haunting implications for our fiscal future.
Let’s take a closer look.
A Haunted Tax
The estate tax may sound like it only affects the ultra-wealthy, but in Massachusetts, that is far from the truth. With some of the highest housing costs in the nation — and one in seven Massachusetts cities and towns now topping $1 million for a typical single-family home — many longtime homeowners find their estates exceeding the threshold after retirement savings and life insurance are factored in.
Governor Healey and the legislature made some progress in 2023, when a reform package aimed at making Massachusetts more competitive raised the estate tax threshold from $1 million up to $2 million. While a good first step, there’s still a long way to go to restore our state’s competitive edge.
Indeed, the Bay State still has one of the most aggressive estate tax policies in the nation, with one of the lowest thresholds for estate eligibility.
For context, the federal estate tax does not apply to estates valued under $13.99 million. Meanwhile, the few states that still levy their own are finding ways to ease the burden — raising thresholds, reducing rates, or repealing the tax entirely. Connecticut’s exemption, for example, matches the federal level at $13.99 million. And Maine and Vermont have $7 million and $5 million thresholds, respectively. Key competitor states such as Florida, Texas, and North Carolina have eliminated their estate taxes, reducing the costs of living — and dying — compared to Massachusetts.
The Estate Tax Has Residents Feeling Spooked
Polling shows that voters are uneasy about the harm caused by the state’s existing death tax. In MOA’s latest monthly poll of Massachusetts voters, 84% of respondents said they are concerned about the negative impacts of the estate tax on residents, businesses, and the state’s economy.
The results also show that the frustration with the estate tax isn’t confined to the wealthy, but shared by a vast majority of voters across the economic spectrum. Roughly 80% of residents earning an annual income of less than $50,000, 83% earning between $50,000 to $99,000, and 87% earning $100,000 or more said they were concerned with the tax’s effects.
Another thing most people can agree on? We need reform. Fifty-nine percent of respondents said they would support eliminating the estate tax altogether to bring Massachusetts in line with most other states.
The Cost of Keeping the Death Tax Alive
The consequences of this policy go beyond individual estates. The estate tax adds to the financial strain facing Massachusetts families by targeting property and savings that have already been subjected to state and federal taxation during a person’s lifetime. Some people who inherit assets, such as a family home or business, are even forced to sell in order to cover the hefty tax.
Keeping one of the nation’s lowest estate tax thresholds also makes the state an expensive outlier among its neighbors, pushing residents and their wealth across state lines.
Recent MOA polling found that high taxes are among the top reasons residents considered leaving the Commonwealth, a sentiment reflected in the latest Internal Revenue Service taxpayer data showing a net loss of over 45,000 taxpayers from Massachusetts as of 2022. For all the harm it causes, the estate tax contributes only a small percentage of the total state tax revenue, a meager return for a policy that drives people and prosperity away.
If lawmakers want to keep Massachusetts competitive, they should lay this death tax to rest once and for all, before it haunts another generation of Massachusetts families.
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