Massachusetts State Estate Tax
Massachusetts residents are subject to an estate tax for estates of more than $1 million. This tax falls on the estate of the person who died; the beneficiaries or heirs inherit what's left. There is no inheritance tax in Massachusetts, this would be tax that falls on the heirs and beneficiaries, not on the estate of the person who died. The maximum rate for the Massachusetts estate tax is 16%, signficantly lower than the maximum federal rate of 40%.
This state estate tax is in addtion to the federal estate tax, which also falls on the estate of the person who died, not on the people who inherit that property. There is a federal tax exemption of $10 million, which is indexed to inflation and is currently $11,400,000, and only people who die with an estate larger than that exemption will have to pay estate tax. It is estimated that only the richest .14% of Americans will be subject to the estate tax at all, or only two out of every 1,000 people who die.
If someone dies in Massachusetts with less than the exemption amount (currently $11,400,000), their estate doesn't owe any federal estate tax, and if someone dies in Massachusetts with an estate worth less than $1 million, there is no Massachusetts estate tax, either. The heirs and beneficiaries inherit the property free of tax. They don't pay income tax on it, either, because inherited property is not ordinary income. The only exception to this are inherited retirement accounts, which are subject to income tax as the assets are withdrawn.
Information and tax forms can be found at the State of Masschusetts Department of Revenue's website.
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