The Governor signed the new tax bill today and now estates under $2 million in Massachusetts will no longer incur an estate tax. Previously, estates with more than $1 million were subject to the estate tax and were taxed on amounts over and under the $1 million. Now, there is a credit on the tax for amounts under $2 million and a tax for the amounts over that new threshold.

With the former, lower threshold amount of $1 million, many families in Massachusetts whose deceased loved one owned a home and had a retirement account would end up with an estate tax bill. The estate tax would create a lien against the home. Home values are high in Massachusetts with a Median sales price of $570,000 in August 2023 (per the Warren Group press release dated September 19, 2023). For these families they would often have to sell a home to pay the taxes while other wealthier families would be able to use cash in bank accounts to pay the estate tax and retain the home thereby preserving the asset for the next generation.

This new legislation will help some middle class families pass on wealth to the next generation. With the housing crisis, it is even more helpful if a family can leave a home to the next generation as home prices keep increasing and housing stock is low.