Updated October 16, 2026. Quick answer: Massachusetts taxes IRA withdrawals as income and its Form 1 instructions mention a decedent only for the decedent’s final return and for income received after death: “Taxable IRA/Keogh and Roth IRA distributions” are listed in gross income, and the instructions do not mention inherited IRAs.
Massachusetts at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income at a flat rate; no IRA exclusion in the documents read |
| Do the state’s documents address beneficiaries? | Narrowly: income of $100 or more received for a decedent after death is reported on Form 2, the fiduciary return |
| Retirement exclusion or credit | No general IRA exclusion; distributions are reduced by contributions Massachusetts already taxed, and certain government and military pensions are exempt |
| Rate in the documents read | 5.00% on most income; a 4% surtax on income above $1,107,750 for tax year 2026 |
| State inheritance or estate tax | The Department’s rates page says estates valued under $2 million are not subject to the estate tax |
| Changed for 2026? | The surtax threshold is $1,107,750 for tax year 2026 (it was $1,083,150 for 2025) |
What the Massachusetts documents say
The Form 1 instructions list “Taxable IRA/Keogh and Roth IRA distributions” in Massachusetts gross income and say “Income from most private pensions or annuity plans is taxable in Massachusetts”. The exemptions they list are for government and military pensions.
On decedents, the instructions say “Any income of $100 or more” received for the decedent after death, and for later years until the estate is completed, goes on Massachusetts Form 2, the fiduciary income tax return. That is about income received for the decedent, and the instructions do not mention inherited IRAs or a beneficiary’s own withdrawals.
The Department’s rates page lists 5.00% for dividends, interest, wages and other income and says “For income exceeding $1,107,750, there is an additional surtax of 4%”. It also notes that estates valued under $2 million are not subject to the estate tax.
The federal 10-year rule and your Massachusetts tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Massachusetts’s own death taxes, see Massachusetts estate tax.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- The IRA worksheet speaks of your contributions that were previously taxed; the documents do not say how that applies when the account was inherited.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Massachusetts’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Massachusetts preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Massachusetts taxes 401(k) and IRA withdrawals, Massachusetts retirement taxes, Massachusetts estate tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Massachusetts Form 1 Instruction Booklet: https://www.mass.gov/doc/2025-form-1-instructions/download
- Massachusetts Tax Rates: https://www.mass.gov/info-details/massachusetts-tax-rates
- M.G.L. c. 62 section 4 Rates of tax: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section4
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.