Some people say that there are only two certainties in life. Death and taxes are the two absolutes that affect almost every human living in the United States. Everyone dies, and the vast majority of people pay taxes before they do.
In some cases, people may technically continue to owe taxes even after they die. The property that belongs to a deceased individual becomes their estate unless they have made prior arrangements. Those resources can then sometimes be subject to estate taxes. The federal estate tax is notorious for consuming a substantial amount of large estates if people do not plan carefully.
The maximum tax rate at the federal level is a staggering 40%, and Massachusetts state estate taxes can consume up to another 16% of the estate’s value. Thankfully, the law permits an exemption, allowing many estates to completely bypass estate taxes. The exemption threshold shifts annually. How much property can people exempt before they owe estate taxes?
The 2026 limit is the highest ever
Annual adjustments to the federal estate tax exemption may make regular estate planning reviews necessary. As people’s resources appreciate in value and the amount that they can exempt changes, they may need to adjust their plans accordingly. For those who died in 2025, the maximum exempt value of an estate was $13.99 million.
The same progressive tax rate applies in 2026, but the exception limit is significantly higher. An individual who passes in 2026 can exempt up to $15 million in estate assets before federal estate taxes are a concern. The state exemption is lower, at just $2 million.
Individuals with large investment portfolios, businesses and multiple real property holdings could be at risk of estate taxes. They may need to make strategic plans in advance. Recording new deeds, submitting transfer on death designations to financial institutions, making strategic gifts, donating resources to charitable causes and transferring resources to trusts are all ways that people reduce their estate tax obligations.
Discussing personal priorities and holdings with an attorney familiar with estate tax regulations can help people optimize their estate plans. The right strategies can help testators minimize the tax rate that applies or completely avoid estate tax obligations.