Maryland Estate Tax: $5M Exemption, 16% Rate, Plus Inheritance Tax

The Maryland estate tax applies to estates over $5 million at rates up to 16 percent, and Maryland is the only state that also charges a separate inheritance tax.1

So two separate death taxes can touch one family: the estate tax hits large estates, the inheritance tax hits certain heirs no matter the estate's size. This guide covers both, who pays each, the rate brackets, and how Maryland's taxes differ from the federal estate tax and from Medicaid estate recovery.

In This Guide

• Maryland Estate Tax at a Glance
• How the Maryland Estate Tax Works
• The Maryland Inheritance Tax
• Estate Tax vs. Inheritance Tax
• The Federal Estate Tax Is Separate
• This Is Not Medicaid Estate Recovery
• Frequently Asked Questions
• Next Steps

Maryland Estate Tax at a Glance

Here is the whole picture in one place. Maryland is unusual because two columns of this story can both apply.

Two things stand out. The estate tax exemption is a fixed $5,000,000 that does not adjust for inflation, and Maryland is the only state that pairs an estate tax with an inheritance tax.1 The two taxes are separate, with different payers and different rules.

How the Maryland Estate Tax Works

The estate tax is paid by the estate, out of the deceased person's assets, before heirs are paid. It applies only to larger estates.

The exemption. The first $5,000,000 of a Maryland estate passes estate tax free.1 This figure is fixed and not indexed for inflation, so unlike many states it does not creep up each year. It is implemented through a unified credit of $1,945,800.1

The rates. Above the exemption, Maryland's estate tax is graduated up to a top rate of 16 percent.1 Larger estates pay a higher effective rate as more value falls into the upper brackets.

Portability. Maryland allows portability of a deceased spouse's unused exclusion to the surviving spouse, so a married couple can shelter more than one $5,000,000 exemption with proper filing.1 As with the federal version, portability is only preserved if the first estate files to elect it. Property passing outright to a surviving spouse also generally qualifies for the marital deduction, so a first-to-die estate left entirely to the spouse typically owes no Maryland estate tax regardless of size.

What counts. Maryland's taxable estate is broad. It generally includes non-probate assets such as retirement accounts, jointly held property, and life insurance the decedent owned, not just what passes through probate. A nonresident who owns Maryland real estate or tangible property can also owe Maryland estate tax on that in-state property. If your combined assets are near $5,000,000, do not assume the probate estate alone sets the number; the taxable estate can be larger.1

Filing. The Maryland estate tax is administered by the Comptroller of Maryland and reported on Form MET-1, due nine months after the date of death, with a six-month filing extension available.1 The Comptroller's estate and inheritance tax page carries the current forms, the exemption, and the rules for both taxes.

The Maryland Inheritance Tax

This is the second tax, and it is where Maryland stands alone. The inheritance tax is paid by the heir, not the estate, and it applies regardless of the estate's size.

The Maryland inheritance tax is a flat 10 percent on the value passing to a non-exempt heir.1 But Maryland exempts close relatives entirely. A spouse, child, grandchild, great-grandchild, stepchild, parent, grandparent, sibling, child's spouse, and registered domestic partner all pay no inheritance tax.1

In practice, that means the 10 percent mainly falls on more distant relatives and unrelated heirs, such as nieces, nephews, cousins, and friends.1 A daughter inheriting the whole estate owes no inheritance tax; a nephew inheriting the same amount owes 10 percent on his share. Because the inheritance tax does not depend on the estate's size, a small estate with no estate tax at all can still trigger inheritance tax if it passes to a non-exempt heir.

Estate Tax vs. Inheritance Tax

Maryland is the place this distinction matters most, because both taxes can apply to one family. The estate tax turns on how big the estate is; the inheritance tax turns on who receives it. Those are independent questions, so you have to run both.

• An estate tax is paid by the estate. It comes off the top, on estates above $5,000,000, before heirs receive anything.
• An inheritance tax is paid by each heir on what they personally receive, at 10 percent, and only non-exempt heirs owe it.1

A large estate left to a niece could owe both: the estate tax on value above $5,000,000, and the niece's 10 percent inheritance tax on her share.1 A modest estate left to a child owes neither. A modest estate left to a nephew owes only the inheritance tax. Knowing which tax applies to which person is the whole game in Maryland, and a large or complicated estate is a clear case for an estate attorney.

The Federal Estate Tax Is Separate

Maryland's taxes sit alongside a separate federal estate tax. The federal tax is filed and calculated independently.

For 2026, the federal basic exclusion is $15,000,000 per person and the top federal rate is 40 percent, filed on IRS Form 706.2 Because that federal exemption is so high, the large majority of estates owe no federal estate tax even when they owe a state estate tax in a state with a much lower exemption.2

Maryland's $5,000,000 exemption is well below the federal figure, so an estate between $5,000,000 and $15,000,000 can owe Maryland estate tax while owing the IRS nothing.1,2 The federal tax also has no inheritance component, so the 10 percent inheritance tax is purely a Maryland matter.

This Is Not Medicaid Estate Recovery

Families often confuse these taxes with Medicaid estate recovery. They are separate processes.

Estate recovery is how a state seeks repayment from the estate of someone who received long-term-care Medicaid, usually by claiming against the home after death. It has nothing to do with the estate's size, the estate tax exemption, or who the heirs are. A modest estate that owes zero Maryland estate tax can still face a recovery claim, and a large taxable estate that never used Medicaid faces none. Our explainer on Medicaid estate recovery covers how that works.

Next Steps

Maryland takes two checks: one against the estate's size, one against who inherits. Settling an estate with two taxes in play is a lot to carry while grieving, so run both early.

• Add up the whole estate, including non-probate assets like retirement accounts, life insurance, and jointly held property, and compare it to the $5,000,000 estate tax exemption.1
• Map your heirs, because anyone outside the exempt close-relative list owes 10 percent inheritance tax on their share, regardless of the estate's size.1
• File on time. Form MET-1 goes to the Comptroller of Maryland, due nine months after the date of death, with a six-month extension available.
• Find an attorney. The Maryland Courts' legal-help resources at mdcourts.gov and the Maryland State Bar Association's Lawyer Referral Service can point you to an estate or elder-law attorney. For broader help orienting around care and costs, the federal Eldercare Locator at eldercare.acl.gov or 1-800-677-1116 can point you to local resources.

For the bigger financial picture, our guide to building a senior care funding plan ties taxes, benefits, and care costs together, and if a home is part of the estate, selling or renting a home for care covers that trade-off.

Learn More

Find personalized help understanding the Maryland estate tax and your family's plan at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.