USA – MASSACHUSETTS Law and Practice Contributed by: Patricia Annino, Rimon, P.C.
1. Tax 1.1 Tax Regimes Income Tax
located outside of Massachusetts and the real prop - erty and tangible property (such as furniture, cars and art) physically located in Massachusetts but owned by non-resident decedents. See 1.4 Taxation of Real Estate Owned by Non-Residents . Domicile for estate tax purposes A decedent is resident in Massachusetts if domiciled in Massachusetts at death. Domicile is different for estate taxes than for income taxes. Domicile for estate tax purposes is where a person’s true, fixed and permanent home is and where the decedent resided with an intention to remain permanently or indefinitely and without any specific purpose to return to a former residence. Domicile for estate tax purposes is determined by common law and the facts of each case. Portability between spouses Massachusetts does not recognise portability between spouses. Massachusetts recognises the unlimited marital deduction for a decedent who was married to a US citizen and allows a state-only qualified terminable interest property election. Different elections for fed - eral and Massachusetts qualified terminable interest properties are common. Charitable deductions Massachusetts follows the federal estate tax law for charitable deductions. Qualified Family Owned Business Interest (QFOBI) deduction The Qualified Family Owned Business Interest (QFO - BI) deduction was repealed for federal purposes in 2004; however, it is still permitted in Massachusetts. The amount of the elected QFOBI deduction cannot exceed the lesser of the adjusted value of the qualified family owned business interests of the decedent oth - erwise includable in the gross estate or USD675,000. Inheritance tax, gift tax or generation-skipping transfer tax Massachusetts does not have an inheritance tax, gift tax or generation-skipping transfer tax.
Massachusetts imposes an income tax for residents. A resident earning more than USD8,000 a year is required to file an income tax return. For the 2024 tax year, Massachusetts imposed a 5% tax on earned and unearned income. In addition, Massachusetts General Law chapter 62, Section 4 (d) (MGL c 62 4 (d)) states that any resident whose income is more than USD1 million annually will be subject to an additional 4% tax for a total of 9%. Estate Tax The Massachusetts estate tax applies to any dece - dent who at death was either a Massachusetts resi - dent or a non-resident who owned an interest in real property and/or tangible personal property located in Massachusetts (MGL c 65C). It applies to the gross estate of resident decedents (except for certain interests in real property and tangi - ble personal property that are located outside of Mas - sachusetts) and the real property and tangible per - sonal property physically located in Massachusetts but owned by non-resident decedents. For decedents resident in Massachusetts dying on or after 1 January 2023, an estate tax return must be filed for an estate with a value of USD2 million or more (MGL c 65C, Section 2A(g)). For decedents dying between 1 January 2006 and 31 December 2022, an estate tax return was required to be filed for estates with a value of USD1 million (the then filing threshold) or more. The progressive Massachusetts estate tax rate is graduated, beginning at 0.8% and topping out at 16%. Foreign death taxes There is no credit for the payment of foreign death taxes. The Massachusetts estate tax applies to the gross estate of resident decedents, except for certain inter - ests in real and tangible personal property that are
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