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Navigating Recent Tax Law Changes

As a homeowner, you may be impacted by recent changes to federal and state tax laws.

In the past few years, with the adoption of the so-called "Millionaire’s Tax," changes to the Massachusetts estate tax, and the 2025 overhaul of federal tax laws, you may wish to reconsider your approach to itemizing deductions, estate planning, and retirement planning.

This page includes general information about these recent tax reforms. If you have personal financial questions, talk to your estate planning attorney or tax professional.

State and Local Tax Deduction

Included in a tax reform package signed into law in July 2025, the expansion of the state and local tax (SALT) deduction allows filers with an adjusted gross income (AGI) up to $500,000 to deduct up to $40,000 in state and local tax payments. Previously, this deduction was capped at $10,000.

The SALT deduction increase will benefit homeowners with higher property tax bills in particular, but you must itemize your deductions in order to take advantage of it. When filing your return, be sure to compare your options before deciding whether to itemize your deductions or take the standard deduction.

Estate Tax

Passed in October 2023, a tax reform bill made significant changes to Massachusetts estate tax law, including:

  • Raising the estate tax application threshold from $1 million to $2 million
  • Eliminating the "Cliff Effect," subjecting only the portion of an estate over $2 million to the estate tax
  • Establishing that estates with out-of-state-properties will have any estate tax owed reduced proportionally to the value of those properties
The "Cliff Effect" repeal is notable, because the first $2 million of an estate is now exempt from estate taxes. Under the previous law, taxes applied to the entire value of an estate, if valued at $1 million or more.

“Millionaire's Tax”

Enacted in January 2023 after voters approved a constitutional amendment, the "Millionaire’s Tax" imposes an additional 4% surcharge on taxpayer income over $1 million. What began as a $1 million cut-off is now adjusted for inflation annually.

This 4% surcharge could affect property or business sales for retirement funding. If you plan to sell your property or business to finance retirement, proceeds from the sale could be taxed as income, and therefore subject to the surcharge.