What Is the Estate Tax Limit in Maryland?

The latest update in the relevant law back in 2024 set the Maryland estate tax limit to $5 million. There is no doubt that federal threshold limitations are adjusted in parallel to inflation. Yet, it is not the case for the Maryland estate tax limit, as it would remain the same until new regulatory updates. The surrounding taxation implications might appear suddenly—particularly for estates holding appreciated property as well as business assets.

As is widely known, both estate tax and inheritance tax are imposed by Maryland. This fact brings us to the necessity of treating these liabilities separately. The Maryland estate tax limit is critical information, since it establishes whether an estate must file and pay the surrounding taxation liabilities.

Keystones of the Maryland Estate Tax Limit

• The $5 million limit is applied to the estate’s total fair market value on the decedent’s date of death.
• This tax is imposed on the estate itself. Not the individual recipients.
• Both Maryland residents and non-residents who own real property in Maryland might have estate tax obligations.
• The estate tax threshold has no relation to Maryland inheritance tax.

For estates valued above this exemption amount, the excess might have to deal with graduated tax rates. It changes in parallel to the complete size as well as asset mix. Life insurance, real estate, portfolios with investment intention, and privately held businesses are all naturally covered in the taxable estate if they are not specifically excluded in accordance with smart structures.

Is It Possible to Avoid or Minimize?

There is no doubt that the Maryland estate tax cannot be entirely dismissed for estates above the limit. On the other side, there are smart planning possibilities:

• Gifting assets during lifetime has a lowering impact on the size of the taxable estate.
• Trust arrangements might lower the estate’s valuation too. Or they may bypass probate-related concerns.
• Documentation techniques and professional valuation methods could support reductions in fair market appraisals.

As it was mentioned, Maryland inheritance tax is a separate liability and depends on who receives the inheritance. In the same scope, beneficiaries might be fully exempted. For instance, children or parents, as well as siblings, do not pay the 10% Maryland inheritance tax—distant relatives and friends generally do. If you are not sure about your Maryland estate tax obligations, contact Watter CPA today.