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Estate Tax in Maryland: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed estate planning attorney for your specific situation.

Maryland holds a unique distinction: it is the only state in the nation that imposes both an estate tax and an inheritance tax. The estate tax has an exemption of approximately ~$5.00 million with a top rate of ~16.00%, while the inheritance tax applies at a flat ~10.00% rate to transfers to non-lineal heirs. This dual system creates complex planning requirements and potentially higher total transfer tax burdens than in most other states.

Maryland Estate Tax Rates and Exemption (2026)

Parameter	Projected 2026 Level
Estate tax exemption	~$5.00 million
Estate tax top rate	~16.00%
Inheritance tax rate (non-lineal heirs)	~10.00%

Maryland Estate Tax Rate Schedule

Maryland computes its estate tax using the maximum state death tax credit from the pre-2001 federal estate tax tables, with the ~$5.00 million exemption:

Taxable Estate	Approximate Effective Rate
Up to $5,000,000	$0
$5,000,001 — $6,000,000	~6.40% to ~8.80%
$6,000,001 — $8,000,000	~9.60% to ~12.00%
$8,000,001 — $10,000,000	~12.80% to ~14.40%
Over $10,000,000	~16.00%

Estimated Estate Tax by Estate Size

Estate Value	Estimated Maryland Estate Tax
$5,000,000	$0
$6,000,000	~$90,800
$7,000,000	~$203,200
$8,000,000	~$327,200
$10,000,000	~$635,200
$15,000,000	~$1,435,200

Maryland Inheritance Tax

The Maryland inheritance tax is entirely separate from the estate tax and applies based on the relationship between the decedent and the beneficiary:

Beneficiary Relationship	Inheritance Tax Rate
Surviving spouse	Exempt
Children, grandchildren, parents	Exempt
Siblings	Exempt
Son-in-law, daughter-in-law	Exempt
Charities	Exempt
Nieces, nephews, friends, other non-lineal	~10.00%
Business partners, unrelated individuals	~10.00%

The inheritance tax has no exemption amount — it applies from the first dollar of any transfer to a non-lineal heir. Unmarried partners, friends, nieces, nephews, and distant relatives all face the ~10.00% rate.

Interaction Between Estate Tax and Inheritance Tax

Inheritance taxes paid are deductible from the estate for estate tax purposes. This prevents pure double taxation, but the combined burden is still significant. An estate of ~$8.00 million leaving ~$1.00 million to nieces and nephews could face approximately ~$100,000 in inheritance tax plus approximately ~$300,000 in estate tax (after the inheritance tax deduction).

Portability in Maryland

Maryland offers portability of the estate tax exemption between spouses, allowing the surviving spouse to claim the deceased spouse’s unused exemption. This effectively doubles the exemption to approximately ~$10.00 million for married couples. Maryland is one of only two states (along with Hawaii) that offers state-level portability.

To claim portability, an estate tax return must be filed for the first spouse to die, even if no tax is owed.

Comparison to Neighboring States

State	Estate Tax	Inheritance Tax	Combined?
Maryland	Yes (~$5M exemption, ~16% top)	Yes (~10% non-lineal)	Both
Virginia	None	None	Neither
Delaware	None	None	Neither
Pennsylvania	None	Yes (~4.5% to ~15%)	Inheritance only
D.C.	Yes (~$4.71M exemption, ~16%)	None	Estate only
West Virginia	None	None	Neither

Maryland is the only state with both taxes. Virginia and Delaware have neither, making them attractive alternatives for Maryland residents with large estates or significant non-lineal bequests.

What Is Included in the Maryland Taxable Estate

Maryland’s taxable estate follows the federal gross estate definition:

Real property in Maryland
Financial accounts and investments
Retirement accounts (IRAs, 401(k)s)
Life insurance proceeds (if the decedent owned the policy)
Business interests

Both the estate tax and inheritance tax apply to the same property, though the inheritance tax deduction prevents full double taxation.

Tips for Minimizing Maryland Estate and Inheritance Tax

File for portability. Maryland’s portability provision doubles the estate tax exemption for married couples. This is critically important and should never be overlooked.
Plan bequests to non-lineal heirs carefully. The ~10.00% inheritance tax on transfers to nieces, nephews, friends, and others can be substantial. Consider leaving life insurance or other assets in trust to reduce exposure.
Make lifetime gifts. Maryland does not impose a state gift tax. Gifting assets to non-lineal heirs during your lifetime avoids the ~10.00% inheritance tax at death.
Use irrevocable trusts. Assets in irrevocable trusts can be structured to reduce both the estate tax and inheritance tax. A properly structured trust can shift assets out of the taxable estate.
Maximize charitable bequests. Charitable gifts are exempt from both the estate tax and the inheritance tax, providing a double benefit.
Consider domicile in Virginia or Delaware. Both neighboring states have no estate or inheritance tax. A genuine relocation eliminates both Maryland taxes on intangible property, though Maryland real estate remains subject to both taxes.

Key Takeaways

Maryland is the only state that imposes both an estate tax and an inheritance tax
The estate tax exemption is approximately ~$5.00 million with rates up to ~16.00%
The inheritance tax is ~10.00% flat on transfers to non-lineal heirs (nieces, nephews, friends, etc.) with no exemption
Maryland offers portability of the estate tax exemption, doubling it to approximately ~$10.00 million for married couples
Inheritance taxes paid are deductible from the estate, but the combined burden is still significant
Neighboring Virginia and Delaware have neither tax, creating strong relocation incentives

Next Steps

Understand the federal framework at Federal Estate Tax: Complete Guide 2026
Learn about Pennsylvania’s inheritance tax at Inheritance Tax in Pennsylvania 2026
Read the full state guide at Taxes in Maryland: State Tax Guide 2026
Explore estate basics at Estate and Inheritance Tax Guide
Get professional help: Hire a Tax Professional