USA – MASSACHUSETTS Law and Practice Contributed by: Patricia M. Annino, Rimon, P.C.
1. Tax 1.1 Tax Regimes Income Tax
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 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 1.5 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 it is where the decedent resided with an intention to remain permanently or indefinitely and without any specific purpose to return to a former residence. Dom - icile 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 QTIP election. Differ - ent elections for federal and Massachusetts QTIPs 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Family-Owned Business Interest (QFOBI) deduction The Qualified Family-Owned Business Interest (QFO - BI) deduction was repealed for federal purposes in
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 2025 tax year, Massachusetts imposed a 5% tax on earned and unearned income. In addition, Massachusetts Gen - eral 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 on income exceeding that amount. The figure is indexed annually for inflation and for 2026 will be USD1,107,750. 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 deaths on or after 1 August 2025, Massachusetts changes its estate tax calculation so that a resident’s out of state real and tangible personal property is removed from the Massachusetts tax base for the state estate tax computation and Massachusetts qualified terminable interest property (QTIP) not oth - erwise in the federal gross estate is added back in. 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.
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