Updated 2026-07-08
Maryland's estate tax exemption is $5 million per person in 2026, and it has sat at that number since 2019 because the state, unlike the federal government, does not index it for inflation. Estates above the exemption pay graduated rates that top out at 16 percent, per the Comptroller of Maryland. The federal exemption, by contrast, rose to $15 million per person on January 1, 2026 (per the University of Maryland's agricultural risk management program, citing the IRS figures). That gap matters: a Marylander can die owing the state a six-figure estate tax bill while owing the federal government nothing.
Maryland is also one of the few states that layers a second, separate tax on top: a 10 percent inheritance tax on what certain beneficiaries receive. The calculator above handles both.
Two different taxes, and people mix them up
The estate tax is paid by the estate itself before anything is distributed, based on the total value of what the deceased owned. The inheritance tax is charged on what a particular person receives, and whether it applies depends entirely on who that person is. One estate can trigger both, either, or neither. The estate tax vs. inheritance tax guide covers the national picture; here is how the two work in Maryland:
| Estate tax | Inheritance tax | |
|---|---|---|
| Who pays | The estate, before distribution | The beneficiary (usually withheld by the estate) |
| Triggered by | Estate value over $5 million | Any transfer to a non-exempt person |
| Rate | Graduated, up to 16% | Flat 10% |
| Exemption | First $5 million of the estate | Close family is fully exempt |
| Collected by | Comptroller of Maryland | County Register of Wills |
One relief valve: inheritance tax paid by an estate is credited against its Maryland estate tax bill, so the state does not take the full amount of both taxes on the same dollars, as Nolo's Maryland estate tax guide notes.
How the estate tax is calculated, with real numbers
Take a $7 million estate: a paid-off house in Bethesda, retirement accounts, a brokerage account, and a life insurance payout (yes, life insurance owned by the deceased counts toward the total).
The first $5 million passes free of Maryland estate tax. That leaves $2 million exposed. Maryland caps the tax at 16 percent of the amount above the exemption, and for estates in this range the cap is effectively the bill, per Nolo. So:
Federal estate tax on the same $7 million estate: zero. The estate is $8 million under the 2026 federal exemption. This is the planning gap in one example. Estates between $5 million and $15 million owe Maryland something and the IRS nothing, which surprises families who assumed "under the federal exemption" meant "no estate tax at all." Run your Maryland and federal numbers side by side in the full estate tax calculator.
Anything passing to a surviving spouse is deducted before the tax is figured, so a married couple's exposure usually arrives at the second death.
The inheritance tax: 10 percent, but most families never pay it
Maryland's inheritance tax exempts close relatives entirely. Per the Register of Wills rules summarized by the Comptroller of Maryland, no inheritance tax is owed on property passing to a surviving spouse, children and other lineal descendants, spouses of children, parents, grandparents, siblings, stepchildren, or stepparents.
Everyone else pays 10 percent of what they receive. The list of "everyone else" is longer than people expect: nieces and nephews, aunts and uncles, cousins, friends, and unmarried partners all pay. Leave $200,000 to a beloved nephew and $20,000 of it goes to the Register of Wills. Leave the same amount to your daughter and the tax is zero. For unmarried couples this is one of the sharper edges in Maryland law, and it applies from the first dollar, with no $5 million cushion.
Portability: a married couple can shelter $10 million
Maryland allows a surviving spouse to claim the deceased spouse's unused exemption, a feature most states with estate taxes lack. Elected properly, a couple can shield $10 million from Maryland tax, per the Scheuerman Law summary of the 2026 rules. Federal portability works the same way for the $15 million federal exemption, giving a couple up to $30 million there.
The catch, and it catches people: portability is not automatic. The executor of the first spouse to die must file the required returns and make the election even when no tax is owed. On the federal side that means IRS Form 706 within nine months of death, with a six-month extension available. Skip the filing because "the estate was under the limit anyway" and the unused exemption is gone.
Planning notes
None of this is legal or tax advice; it is a map of the rules. A Maryland estate attorney or CPA should run your actual numbers. That said, the levers people commonly discuss with their advisors:
- Lifetime gifts. Maryland has no gift tax, and as Nolo notes, lifetime gifts generally are not pulled back into the Maryland taxable estate the way they are for federal purposes. Moving assets out during life shrinks the state number. The gift tax calculator shows the federal side of that move, and the step-up in basis calculator shows what gifting early costs your heirs in basis.
- The portability filing. Cheap insurance at the first spouse's death, even for estates nowhere near $5 million today. Assets grow; the exemption does not.
- Beneficiary choice. Because the inheritance tax turns entirely on who receives the property, the same bequest can be taxed at 10 percent or 0 percent depending on routing.
- Watching Annapolis. Bills to change the exemption and the inheritance tax surface in the General Assembly regularly, including Senate Bill 277 and House Bill 17 in the 2026 session. The $5 million figure is current law, not a law of nature.
Estate values, family structure, and pending legislation all move these numbers. Treat the calculator's output as a starting point for a conversation with a professional, not a filing position.