Massachusetts Estates Benefit from Recent Tax Relief Package
October 11, 2023
Vice President, Principal Trust Officer
Washington Trust Wealth Management
Massachusetts Governor Maura Healy signed sweeping tax reforms into law on October 4, 2023, totaling $1 billion.1 One provision under this tax relief package doubled the Massachusetts estate tax exemption from the current $1 million threshold at which an estate became taxable, to $2 million. The legislation also makes this exemption increase retroactive to January 1, 2023. Furthermore, Massachusetts now has a uniform tax credit of $100,000 which eliminates the “cliff effect” whereby once an estate reached the exemption threshold, the entire gross estate was taxed, not simply the amount exceeding the threshold. All good news for Massachusetts estates and beneficiaries of those estates. Less estate tax paid means larger inheritances passing to your heirs.2
In comparison, Massachusetts decedent estates now have a higher exemption amount than Rhode Island, but not as high as Connecticut. The estate tax exemption amount effective January 1, 2023, for Rhode Island estates is $1,733,264, adjusted annually for inflation. In Connecticut, an estate is not subject to estate taxation unless it exceeds $12,920,000. Effective January 1, 2023, Connecticut matched its estate tax exemption amount to the Federal exemption.
For Massachusetts estate tax returns that have already been filed for decedents who passed away in 2023 with a taxable estate based on the former, lower estate tax exemption, those returns should be amended. The Massachusetts Department of Revenue will be issuing amended forms, instructions, and procedures for doing this. We will be monitoring this and taking appropriate action.
What should you do now, if you are a Massachusetts resident, or own real estate in Massachusetts? We recommend that you review your estate plan with your professional advisors to be sure it takes full advantage of this change in the tax law. Your heirs will thank you.
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1 Governor Healey signs first tax cuts in more than 20 years. Mass.gov. (n.d.). https://www.mass.gov/news/gove...
2 Gross, S. J. J. (2023, October 4). Healey signs $1 billion tax package into law. here’s what it means for your wallet. The Boston Globe.
This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.
Any views or opinions expressed are those of Washington Trust Wealth Management and are subject to change based on product changes, market, and other conditions. All information is current as of the date of this material and is subject to change without notice. This document, and the information contained herein, is not, and does not constitute, a public or retail offer to buy, sell, or hold a security or a public or retail solicitation of an offer to buy, sell, or hold, any fund, units or shares of any fund, security or other instrument, or to participate in any investment strategy, or an offer to render any wealth management services. Past Performance is No Guarantee of Future Results.
It is important to remember that investing entails risk. Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in foreign markets through issuers or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, or other conditions. Emerging markets can have less market structure, depth, and regulatory oversight and greater political, social, and economic instability than developed markets. Fixed Income investments, including floating rate bonds, involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. The value of a portfolio will fluctuate based on market conditions and the value of the underlying securities. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss. Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio.
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This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.
Any views or opinions expressed are those of Washington Trust Wealth Management and are subject to change based on product changes, market, and other conditions. All information is current as of the date of this material and is subject to change without notice. This document, and the information contained herein, is not, and does not constitute, a public or retail offer to buy, sell, or hold a security or a public or retail solicitation of an offer to buy, sell, or hold, any fund, units or shares of any fund, security or other instrument, or to participate in any investment strategy, or an offer to render any wealth management services. Past Performance is No Guarantee of Future Results.
It is important to remember that investing entails risk. Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in foreign markets through issuers or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, or other conditions. Emerging markets can have less market structure, depth, and regulatory oversight and greater political, social, and economic instability than developed markets. Fixed Income investments, including floating rate bonds, involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. The value of a portfolio will fluctuate based on market conditions and the value of the underlying securities. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss. Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio.