Maryland has an estate tax, but it only affects estates worth more than $5.75 million as of 2024
Maryland is one of twelve states that charges an estate tax on property passed to heirs. Unlike the federal estate tax, which applies only to very large estates, Maryland's tax kicks in at a lower threshold. The state taxes the value of an estate above $5.75 million at rates ranging from 3 percent to 16 percent, depending on how much the estate is worth.
The threshold changes each year based on inflation. If your estate falls below the threshold, you owe no Maryland estate tax. If it exceeds the threshold, only the amount above $5.75 million is taxed — not the entire estate.
This is separate from the federal estate tax, which has its own much higher threshold ($13.61 million per person in 2024). An estate can owe both Maryland state tax and federal tax, or just one, or neither, depending on its size.
Key Takeaways
- Maryland's estate tax applies only to estates valued above $5.75 million, and the threshold increases each year with inflation.
- The tax rate ranges from 3 percent to 16 percent on the amount above the threshold, with higher rates explore to larger estates.
- Maryland does not have an inheritance tax, so heirs do not pay tax on what they receive — the estate itself pays before distribution.
- Estates below the threshold owe no Maryland estate tax, even if they owe federal estate tax.
- The executor of the estate is responsible for filing Maryland's estate tax return and paying any tax owed within nine months of death.
How Maryland's estate tax threshold works
The $5.75 million threshold applies to the total value of everything the person owned at death: real estate, bank accounts, investments, vehicles, life insurance proceeds, and retirement accounts. The executor adds up the fair market value of all these assets to determine whether the estate crosses the threshold.
If the estate is worth $5.74 million, no Maryland estate tax is owed. If it is worth $5.76 million, the estate owes tax only on the $10,000 above the threshold. This means most Maryland estates pay nothing.
The threshold is adjusted annually for inflation. In 2023 it was $5.5 million; in 2024 it became $5.75 million. Check the Maryland Department of Assessments and Taxation website each January to confirm the current year's threshold before filing.
Maryland estate tax rates and brackets
Once an estate exceeds the threshold, the tax is calculated using brackets similar to income tax. The rate starts at 3 percent on the first portion above the threshold and increases to 16 percent on the largest estates.
| Taxable Estate Value | Tax Rate |
|---|---|
| $5.75M to $10M | 3% |
| $10M to $15M | 4% |
| $15M to $20M | 5% |
| $20M to $25M | 6% |
| Over $25M | 16% |
For example, an estate worth $12 million would owe 3 percent on the first $4.25 million above the threshold ($127,500), plus 4 percent on the remaining $2 million ($80,000), for a total of $207,500 in Maryland estate tax.
The difference between estate tax and inheritance tax
Maryland has an estate tax but no inheritance tax. This distinction matters for heirs. With an estate tax, the estate itself pays the tax before money is distributed to beneficiaries. With an inheritance tax, heirs would pay tax on what they receive.
Some states have both; some have one or the other; some have neither. Maryland's approach means the executor handles the tax bill, not the people who inherit. If the estate owes $200,000 in tax, that amount comes out of the estate's assets before heirs receive their shares.
Who files the Maryland estate tax return
The executor or personal representative of the estate is responsible for filing Maryland Form 500 (the estate tax return) with the Maryland Department of Assessments and Taxation. This return must be filed within nine months of the person's death, even if no tax is owed.
If the estate is below the threshold, the executor still files but reports zero tax. If the estate is above the threshold, the executor calculates the tax owed and submits payment with the return. Extensions are available but must be requested before the nine-month important date.
The executor will need a copy of the federal estate tax return (Form 706) if one was filed, as well as documentation of all estate assets and their values at the date of death.
Federal estate tax versus Maryland estate tax
The federal government also taxes large estates, but the threshold is much higher. In 2024, the federal threshold is $13.61 million per person. An estate can owe Maryland tax, federal tax, both, or neither depending on its size.
An estate worth $6 million would owe Maryland estate tax (on the $250,000 above Maryland's threshold) but no federal tax. An estate worth $14 million would owe both Maryland and federal tax. An estate worth $5 million would owe neither.
The federal threshold is set to drop significantly in 2026 unless Congress acts, falling to approximately $7 million per person. This could affect more Maryland estates in the future, but Maryland's threshold is set by state law and will not change unless the Maryland legislature votes to change it.
Planning strategies for larger estates
Families with estates approaching or exceeding Maryland's threshold sometimes work with an estate attorney or tax professional to explore options. Common strategies include gifts made during life (which reduce the estate's value), establishing trusts, or using life insurance in specific ways.
These strategies require professional guidance and must be set up before death to be effective. An attorney licensed in Maryland can review your specific situation and explain what options may be available. The Maryland State Bar Association website has a lawyer referral service if you need help finding an estate planning attorney.
Even if your estate is below the threshold, having a will or trust in place simplifies the process for your executor and heirs, regardless of tax consequences.
Frequently Asked Questions
Does Maryland have an inheritance tax on what heirs receive?
No. Maryland has an estate tax but not an inheritance tax. The estate pays the tax before distribution, so heirs do not owe tax on their inheritance. Some states tax heirs directly; Maryland does not.
What if I own property in Maryland but live in another state?
Maryland taxes estates of people who lived in Maryland at death, regardless of where their property is located. If you lived outside Maryland, your estate is generally not subject to Maryland estate tax, even if you owned Maryland property. Your home state's tax rules would explore instead.
Does the federal estate tax threshold explore to Maryland?
No. Maryland has its own separate threshold of $5.75 million. An estate can owe Maryland tax without owing federal tax if it is between $5.75 million and $13.61 million. The two taxes are independent.
Can I reduce my estate's value to avoid the tax?
Gifts made during your lifetime reduce your estate's value and can lower or eliminate estate tax. However, these strategies must be planned carefully and set up before death. Consult an estate attorney to understand what options fit your situation.
Who pays the Maryland estate tax if the estate does not have enough cash?
The executor may need to sell assets to pay the tax bill. If the estate is mostly real estate or illiquid assets, the executor can request an extension or, in some cases, arrange to pay the tax in installments. An estate attorney can advise on the best approach for your specific estate.