Estate Tax Exemption for 2022

Estate tax planning is never easy but one of the most important parts is keeping up with relevant changes in estate tax law. Things like the estate tax exemption can change from one year to the next so you’ll have to be on the lookout for changes.

In Massachusetts in 2022, for example, the estate tax exemption is currently $1 million. However, there’s a bill before the state legislature to increase that tax exemption to $2 million.

What is an Estate Tax Exemption?

You may be wondering, what does that $1 million estate tax exemption in MA mean? Simply put, the estate tax exemption is simply the amount under which an estate is not subject to estate taxes.

As an example, an estate worth $900,000 would not owe any estate tax in Massachusetts because it’s worth less than $1 million. An estate worth $1.1 million, however, would be subject to the state estate tax because the estate is larger than $1 million.

A unique feature of Massachusetts estate tax law is that the estate tax applies to the whole estate rather than just the value over the estate tax exemption.

So, in the previous example, the estate tax would apply to the whole $1.1 million of the $1.1 million estate instead of just $100,000 (the amount over the estate tax exemption).

Be aware that there is also a federal estate tax exemption that is much higher than the exemption in most states, Massachusetts included. An estate may not owe federal estate taxes and still be responsible for state estate taxes.

Avoiding Estate Tax in Massachusetts

Just because an estate is worth more than the $1 million estate tax exemption doesn’t guarantee that the estate will owe estate tax.

The estate can make several moves to decrease the value of the estate below that estate tax exemption. That way, the exemption will apply, and the estate won’t owe estate tax.

Some of the possible estate deductions include marital deductions (for property left to a surviving spouse), debts owed, various administrative costs of the estate, and charitable deductions.

Consult an Experienced Attorney

Estate taxes in Massachusetts are complicated. For help maneuvering the tax statutes governing estates in Massachusetts, contact estate Attorney Anthony Gemma. I have the experience and skills to address all your estate tax questions and give you peace of mind.

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