How do New York and Massachusetts differ on estate tax cliffs?

New York's cliff can reach the entire taxable estate

New York's estate tax cliff can make the entire taxable estate subject to tax after the estate crosses the cliff. Practitioner descriptions say the exemption disappears above the threshold, leaving the full estate taxable instead of only its excess.

For an owner, business interests, real estate, and private investments can contribute to the taxable estate being assessed. New York's cliff description focuses on whether the estate exceeds the exemption threshold, after which the entire taxable estate is exposed to tax under the described rule.

Massachusetts taxes only the excess over its threshold

Massachusetts taxes only assets above its estate tax threshold. Practitioners describe the Massachusetts rule as removing the cliff, so crossing the threshold does not make the entire estate taxable under that description.

Massachusetts practitioners describe a credit that effectively raises the estate tax threshold. The same practitioners say the threshold was raised from a lower amount, and that only assets above the stated threshold are taxed.

The tax base differs when an estate crosses a threshold

New York's cliff description concerns the whole taxable estate above its threshold. The central distinction is the amount of the estate included in the tax base after the applicable threshold is crossed.

For business owners, a closely held company interest may be part of the estate value considered under the state's applicable rule. Real estate holdings and private investments can also form part of an owner's estate. The state differences concern the estate's taxable value and the portion above the Massachusetts threshold.

Thresholds and rates change. Check the state's own current figures.