What is the estate tax in Maryland?
Maryland is one of a few states with an inheritance tax. The tax focuses on the privilege of receiving property from a decedent. The Maryland inheritance tax rate is 10% of the value of the gift. It is currently only imposed on collateral heirs like a niece, nephew or friend.
Who pays estate tax in Maryland?
Maryland collects both an inheritance tax and an estate tax, but close relatives of a deceased person are exempt from paying the inheritance tax. By Mary Randolph, J.D. Maryland is the only state in the country that collects two types of “death taxes”—an inheritance tax as well as a state estate tax.
What happens to the estate tax exemption in 2026?
Under the current tax law, the higher estate and gift tax exemption will “Sunset” on December 31, 2025. Starting January 1, 2026, the exemption will return to $5.49 million adjusted for inflation. With inflation, this may land somewhere around $6 million.
What is Maryland estate tax exemption for 2021?
In Maryland, estate tax exemption is $5 million and is not currently scheduled to change. It is not indexed for inflation. However, Maryland does permit “portability”—surviving spouses can elect to claim the unused portion of their predeceased spouse’s Maryland estate tax exemption (under certain circumstances).
Is there inheritance tax on real estate?
While estate tax is assessed to the estate of the person giving a gift or leaving assets to heirs, an inheritance tax is assessed on the person who inherits the assets. There is no estate tax on the federal level, but a few states have an inheritance tax that you may have to pay.
How do I avoid inheritance tax in Maryland?
There are exemptions. Essentially blood (or adopted) relatives and their spouses are exempt from the inheritance tax. So leaving money to your spouse, parents, siblings, children, grandkids, and all of their spouses will not trigger the inheritance tax.
What will the estate tax be in 2026?
The adjusted exemption accounting for inflation in 2026 is projected to be between $6 and $7 million. Additionally, the current maximum gift and estate tax rate of 40% will increase to 45% in 2026, which is imposed on the fair market value of all assets valued at death.
How is the estate tax calculated in Maryland?
The Maryland estate tax is based on the maximum credit for state death taxes allowable under § 2011 of the Internal Revenue Code. The credit used to determine the Maryland estate tax cannot exceed 16% of the amount by which the decedent’s taxable estate exceeds the Maryland estate tax exemption amount for the year of the decedent’s death.
Is there an estate tax exclusion in Maryland?
The new provision also provides that the Maryland estate tax may not exceed 5% of the value of specified agricultural property exceeding $5,000,000. Maryland qualified agricultural exclusion forms may be obtained by calling the Estate Tax Unit at (410) 260-7850.
When do you have to pay inheritance tax in Maryland?
However, the Maryland estate tax is owed and due until the inheritance tax is actually paid. If the amount of inheritance tax paid to the Register of Wills on or before the due date of the Maryland estate tax return is less than the gross Maryland estate tax liability, interest and/or penalty will be assessed on the outstanding liability.
How to obtain an agricultural exclusion form in Maryland?
Maryland qualified agricultural exclusion forms may be obtained by calling the Estate Tax Unit at (410) 260-7850.