Maryland is the only state that charges both an estate tax and an inheritance tax.
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, 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.
| Feature | Maryland |
|---|---|
| State estate tax? | Yes |
| State inheritance tax? | Yes (the only state with both) |
| Estate tax exemption | $5 million per person (fixed, not indexed) |
| Top estate tax rate | 16% (graduated) |
| Portability of unused exemption | Yes (Maryland allows it between spouses) |
Two things stand out. The estate tax exemption is a fixed $5 million that does not adjust for inflation, and Maryland is the only state that pairs an estate tax with an inheritance tax. 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 million of a Maryland estate passes estate tax free. 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.
The rates. Above the exemption, Maryland's estate tax is graduated up to a top rate of 16 percent. 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 million exemption with proper filing. As with the federal version, portability is only preserved if the first estate files to elect it.
Filing. The Maryland estate tax is administered by the Comptroller of Maryland. The Comptroller's estate and inheritance tax page carries the 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. 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.
In practice, that means the 10 percent mainly falls on more distant relatives and unrelated heirs, such as nieces, nephews, cousins, and friends. 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.
- An estate tax is paid by the estate. It comes off the top, on estates above $5 million, 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.
A large estate left to a niece could owe both: the estate tax on value above $5 million, and the niece's 10 percent inheritance tax on her share. A modest estate left to a child owes neither. 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 completely separate federal estate tax. The federal tax is filed and calculated independently.
For 2025, the federal basic exclusion is $13,990,000 per person and the top federal rate is 40 percent, filed on IRS Form 706. 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.
Maryland's $5 million exemption is well below the federal figure, so an estate between $5 million and $13.99 million can owe Maryland estate tax while owing the IRS nothing. 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.
Not sure which Maryland tax, if any, touches your family? Talk to Brevy's care navigator to sort out the pieces.
Frequently Asked Questions
Yes. Maryland levies a state estate tax on the value of an estate above a $5 million exemption, with graduated rates up to 16 percent. Maryland is also the only state that charges a separate inheritance tax on top of the estate tax.
A fixed $5 million per person, implemented through a unified credit. Unlike many states, it is not indexed for inflation, so it does not rise each year. Maryland allows portability of a deceased spouse's unused exemption.
Graduated up to a top rate of 16 percent on the value of the estate above the $5 million exemption. Larger estates pay a higher effective rate as more value falls into the upper brackets.
Yes. Maryland is the only state with both. The inheritance tax is a flat 10 percent on bequests to non-exempt heirs, but close relatives, including a spouse, children, grandchildren, parents, and siblings, are exempt. The 10 percent mainly affects more distant relatives and unrelated heirs.
Yes. A large estate left to a non-exempt heir like a niece or nephew can owe both: the estate tax on value above $5 million, and the heir's 10 percent inheritance tax on the share they receive. A modest estate left to a child owes neither.
Next Steps
Maryland takes two checks: one against the estate's size, one against who inherits. Run both.
- Add up the whole estate and compare it to the $5 million estate tax exemption.
- 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.
- See an estate attorney if the estate is large or the heirs are non-exempt. With two taxes in play and a fixed exemption, planning matters more here than almost anywhere.
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
- How to Pay for Senior Care in Maryland
- Maryland Senior Property Tax Relief
- Maryland Retirement Income Tax
- Which States Have an Estate or Inheritance Tax
- Building a Senior Care Funding Plan
- Selling or Renting a Home for Care
- Medicaid Estate Recovery
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.