Maryland Estate
Tax Calculator

Maryland is one of only two jurisdictions (along with New Jersey historically) that imposes both an estate tax and an inheritance tax. The estate tax exemption is **$5 million**, with graduated rates up to 16% on taxable amounts.

The inheritance tax is a flat 10% on assets passing to non-exempt beneficiaries — spouses, parents, children, grandchildren, and siblings are exempt from the inheritance tax.

This dual-tax structure means Maryland estates can face two separate state-level transfer taxes on the same assets, though a credit mechanism partially offsets the overlap. The interplay between the estate tax and inheritance tax requires careful modeling to determine the combined state tax burden.

Maryland's **$5 million** exemption is well below the federal $15 million threshold, creating a wide band of estates that owe state but not federal estate tax. Maryland does allow portability of the state estate tax exemption between spouses — an important distinction from most other estate-tax states.

The surviving spouse can claim the deceased spouse's unused Maryland exemption by filing a timely Maryland estate tax return.

Maryland's inheritance tax operates entirely separately from both the federal estate tax and the Maryland estate tax. It is based on the relationship between the decedent and each beneficiary, not the total estate size.

Bequests to a niece, nephew, friend, or unmarried partner trigger the 10% inheritance tax regardless of estate size.

Maryland's portability provision for the estate tax exemption simplifies planning for married couples compared to states without portability. However, the inheritance tax adds complexity.

Those with non-exempt beneficiaries (such as unmarried partners, nieces, or nephews) should consider life insurance trusts or other vehicles to fund the inheritance tax obligation without depleting the bequest.

Maryland's proximity to DC and Virginia creates domicile-shopping opportunities. DC imposes a higher estate tax rate (up to 16%) with a lower exemption, while Virginia imposes no state estate or inheritance tax.

Those in the DMV region routinely analyze the net tax impact of domicile changes for high-net-worth families.

Maryland's dual-tax system requires careful calculation. Use this estimator to model both the estate tax and the inheritance tax impact for different beneficiary classes.

Free for all jurisdictions.

Maryland residents with taxable estates face a two-layer system: the federal estate tax (exemption of $15 million in 2025, top rate of 40%) and the Maryland estate tax (exemption of $5 million). The gap between these exemptions creates a range where only the state tax applies.

An estate valued at $8 million, for example, may owe Maryland estate tax while owing nothing at the federal level.

The federal return (Form 706) allows a deduction for state estate taxes paid, which partially offsets the double-taxation effect but does not eliminate it. The state tax is deductible on the federal return as an estate administration expense or under the state death tax credit rules, depending on the estate's circumstances.

The net result is that combined effective rates in Maryland can exceed 45% on estates large enough to trigger both layers.

Planning for this interaction requires modeling both taxes simultaneously. Strategies that reduce the Maryland taxable estate — such as lifetime gifts, charitable bequests, and irrevocable trusts — may also reduce federal exposure, but the relative benefit depends on where the estate falls within each jurisdiction's rate brackets.

Use our Maryland estate tax calculator to model both layers side by side, and check the Maryland probate cost calculator to estimate administration expenses.

Federal law permits a surviving spouse to use the deceased spouse's unused exclusion (DSUE) — commonly called portability — by timely filing Form 706 for the first-to-die spouse. This allows married couples to shelter up to $30 million federally without trust-based planning.

However, most estate-tax states, including Maryland, do not offer portability of the state exemption.

This asymmetry makes bypass trusts (also called credit shelter trusts or B trusts) essential in Maryland. At the first spouse's death, funding a bypass trust up to the Maryland exemption amount preserves that exemption for state tax purposes.

Without the trust, the unlimited marital deduction passes everything to the surviving spouse tax-free at the first death — but the surviving spouse's estate then has only one Maryland exemption, effectively wasting the first spouse's.

The bypass trust should be sized carefully. Overfunding it beyond the Maryland exemption wastes the marital deduction benefit; underfunding it fails to capture the full state exemption.

For married couples with estates above $5 million but below $15 million, the bypass trust is the single most impactful planning tool available. Review your plan with the Maryland estate tax estimator, and use the executor fee calculator to account for administration costs in your projections.

The $5 million Maryland exemption establishes a lower threshold than the federal exemption, making proactive estate reduction strategies more urgent. Irrevocable trusts are the primary vehicle: irrevocable life insurance trusts (ILITs) remove life insurance proceeds from the taxable estate, spousal lifetime access trusts (SLATs) allow married couples to remove assets while retaining indirect access, and qualified personal residence trusts (QPRTs) transfer a home at a discounted gift tax value.

Annual exclusion gifting — currently $19,000 per recipient (2025) — reduces the taxable estate dollar-for-dollar without consuming the lifetime gift exemption. For Maryland residents near the $5 million threshold, a sustained gifting program over several years can bring the estate below the state exemption entirely.

Charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) offer additional reduction while generating income tax deductions.

GRATs (grantor retained annuity trusts) are particularly effective in low-interest-rate environments, transferring asset appreciation to beneficiaries with minimal or zero gift tax cost. For Maryland business owners, entity-level planning — family limited partnerships, LLCs with valuation discounts, and buy-sell agreements — can reduce the reportable value of closely held interests for both state and federal purposes.

Compare strategies using the Maryland estate tax calculator or find a Maryland estate planning attorney.