The United States has taxed the estates of decedents since 1916, and gifts since 1924, with tax rates and exemption levels that have varied greatly over the last two decades.
Massachusetts is one of several states in the country that has a state estate tax. In 2023, Massachusetts passed significant estate tax legislation, adjusting estate tax thresholds that have been in place for decades. As we approach year end, I thought it would be helpful to outline some key forms and current thresholds relating to estate & gift tax.
Form 706 – United States Estate (and Generation-Skipping Transfer) Tax Return
Various dollar amounts and limitations in Form 706 are indexed for inflation. For individuals taxpayers who died in 2023, the following amounts are applicable:
Form 709 – United States Gift (and Generation-Skipping Transfer) Tax Return
Various dollar amounts and limitations in Form 709 are indexed for inflation. For gifts made in 2023, the following amounts are applicable:
Form M-706 – Massachusetts Estate Tax Return
For decedents who died in 2023, the following amounts are applicable:
Although Massachusetts estate tax legislation changes were passed in October, the new law retroactively applies to decedents dying on or after January 1, 2023. Unlike the 2022 $1M exemption, the new legislation eliminates the so-called “cliff-effect” – so if your estate goes over $2M, only the difference above $2M is taxed, not the entire estate, as it was previously.
If you have comments/questions on the estate thresholds blog or on other estate, gift and trust taxation items, leave a comment below, or feel free to reach out to me directly. I’m happy to help!