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

The Maryland estate tax applies to estates over $5 million and is capped at 16 percent of the value above that exemption. Maryland also charges a separate inheritance tax on top of it.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, how each is figured, the rates, and how Maryland's taxes relate to the federal estate tax and to 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. In Maryland, both taxes in this table can apply to the same family.

Two things stand out. The estate tax exemption is a flat $5,000,000 for anyone dying on or after January 1, 2019, and Maryland pairs that estate tax with a separate inheritance tax collected by the Register of Wills.1 The two taxes are separate: one is measured against the whole estate, the other against what each heir receives.

How the Maryland Estate Tax Works

The estate tax is figured on the deceased person's taxable estate as a whole, not on what each heir receives. It applies only to larger estates.1

The exemption. The first $5,000,000 of a Maryland estate passes estate tax free.1 That is a flat statutory amount for every decedent dying on or after January 1, 2019, and it works as a ceiling on the unified credit: the credit used to determine the Maryland estate tax may not exceed the applicable credit amount corresponding to a $5,000,000 exclusion.1

The 16 percent cap. The credit that sets the Maryland estate tax cannot exceed 16 percent of the amount by which the taxable estate exceeds the $5,000,000 exemption.1 So an estate $1,000,000 over the line owes no more than $160,000 in Maryland estate tax.

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 It is not automatic. For a spouse who died on or after January 1, 2019, the unused amount counts only if a Maryland estate tax return was timely filed for that spouse, calculating it and making an irrevocable election.1 The federal version works the same way: no election, no carryover.2

What counts. The exemption and the 16 percent cap are both measured against the taxable estate, which is a legal calculation, not a glance at the bank statements.1 If your combined assets are anywhere near $5,000,000, have an estate attorney work out the taxable estate before you assume no tax is due.

Filing. Filing on time matters beyond the tax itself, because a timely Maryland estate tax return is what preserves a surviving spouse's portability election.1 The Comptroller of Maryland's estate and inheritance tax page carries the current return, its deadline, and the instructions for both taxes.

The Maryland Inheritance Tax

This is the second tax. The inheritance tax is figured on what passes to each heir, not on the estate as a whole, and it applies regardless of the estate's size.1

The Maryland inheritance tax is a flat 10 percent of the clear value of property passing to a non-exempt heir.1 But Maryland exempts close relatives entirely. A spouse, child, stepchild, grandchild or other descendant of a child, child's spouse, parent or stepparent, grandparent, sibling, and registered domestic partner all pay no inheritance tax.1 Nor does anyone whose total inheritance from the estate is worth $1,000 or less.1

In practice, that means the 10 percent falls on heirs outside that list, 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 more than $1,000 of it passes to a non-exempt heir.1

Estate Tax vs. Inheritance Tax

In Maryland this distinction matters, because both taxes can apply to one family.1 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.

• The estate tax looks at the whole estate. It is figured on the taxable estate's value above $5,000,000.1
• The inheritance tax looks at each heir. It is 10 percent of what that heir receives, and only heirs outside the exempt close-family list 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, which is figured and filed on its own federal return.2

For deaths in 2026, the federal basic exclusion is $15,000,000 per decedent, the top bracket of the federal rate table is taxed at 40 percent, and the return is IRS Form 706.2 Lifetime taxable gifts count against that exclusion too. And being under it does not mean no death tax is owed: a state estate or inheritance tax can fall on an estate that owes nothing federally.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, as long as lifetime gifts have not used up the federal exclusion.1,2 The 10 percent inheritance tax is Maryland's own, collected by the Register of Wills.1

This Is Not Medicaid Estate Recovery

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

In Maryland, estate recovery is how the Maryland Department of Health seeks repayment of Medicaid benefits from the estate of someone who was 55 or older when they received them. It waits until after a surviving spouse has died, and it cannot proceed while there is a surviving child who is under 21, blind, or disabled.3 Because recovery reaches the estate of any recipient who was 55 or older, a modest estate that owes zero Maryland estate tax can still face a recovery claim.3 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 and compare it to the $5,000,000 estate tax exemption, then have an attorney work out the taxable estate the exemption is measured against.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, unless that share is worth $1,000 or less.1
• File on time. The Comptroller of Maryland's estate and inheritance tax page lists the current return and deadline, and a timely Maryland return is what preserves a surviving spouse's portability election.1
• Find an attorney. An estate or elder-law attorney can run both checks; the Maryland Judiciary's site at mdcourts.gov is one place to start looking for legal help. For broader help orienting around care and costs, the federal Eldercare Locator at eldercare.acl.gov or 1-800-677-1116 connects families to services in their community.4

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.