Estate tax
Estate and Inheritance Tax in Maryland 2026
Maryland has both a state estate tax and an inheritance tax. Learn the $5 million estate tax threshold, 10% inheritance tax, exemptions, deadlines, and filing basics.
Maryland has both a state estate tax and an inheritance tax. They are different taxes with different filing paths, and either one can matter after a death.
The estate tax is paid by the estate and generally becomes a concern when the Maryland taxable estate reaches the Maryland threshold. The inheritance tax is tied to who receives property. A smaller estate can still create Maryland inheritance tax if property passes to a non-exempt recipient, such as a niece, nephew, cousin, friend, or non-charitable organization.
This guide is educational only. It is not legal, tax, or financial advice. Maryland estate and inheritance tax questions are fact-specific, and deadlines can be unforgiving. If an estate is near the $5 million Maryland estate tax threshold, includes non-exempt beneficiaries, owns real estate, has trust property, or has a Medicaid claim, speak with a Maryland probate attorney and a tax professional before distributing assets.
Maryland Has Two Different Death Taxes
The terms sound similar, but the mechanics are different.
| Tax | Who pays it | What triggers it | Who handles it |
|---|---|---|---|
| Maryland estate tax | The estate | Estate value and Maryland filing rules | Personal representative or person responsible for the estate tax return |
| Maryland inheritance tax | Recipient or estate, depending on the transfer and will terms | Property passing to a non-exempt recipient | Register of Wills assesses and collects |
The practical mistake is assuming that "no probate" means "no Maryland death tax." A joint account, payable-on-death account, transfer-on-death account, trust interest, or other non-probate transfer may skip the probate process but still be reportable for Maryland inheritance tax, and it may still be included in the estate tax calculation.
Maryland Estate Tax Threshold
For deaths on or after January 1, 2019, the Maryland estate tax uses a $5,000,000 applicable exclusion amount, plus any valid Maryland deceased spousal unused exclusion amount, often called Maryland DSUE, if it was properly elected.
That threshold is lower than the federal estate tax threshold in 2026. A Maryland estate can owe no federal estate tax but still need to file and pay Maryland estate tax.
The filing requirement generally looks to the federal gross estate, adjusted taxable gifts, and certain Maryland QTIP property. The calculation can include assets that do not pass through probate, including real estate, bank accounts, brokerage accounts, retirement accounts, life insurance payable to the estate, business interests, trust interests, and other taxable property.
Maryland estate tax can reach 16%. This guide does not reproduce a rate table because the calculation should be checked against the current Maryland estate tax return and instructions for the year of death.
Form MET-1 and the Nine-Month Deadline
The Maryland estate tax return is Form MET-1. Under Maryland Tax-General Section 7-305, the return is generally due 9 months after the date of death.
Maryland allows a filing extension request using Form MET-1E, but the extension is for filing the return. It does not extend the time to pay the tax. Estimated Maryland estate tax should be paid by the original 9-month deadline unless another payment arrangement applies.
| Item | Maryland rule |
|---|---|
| Estate tax return | Form MET-1 |
| Due date | 9 months after death |
| Filing extension | Form MET-1E, generally up to 6 months |
| Payment | Due by the 9-month deadline |
| Maryland threshold | $5,000,000 for deaths on or after January 1, 2019, plus valid Maryland DSUE |
If the estate is illiquid, for example where most value is in a house or business, start the estate tax review early. A filing extension does not solve the liquidity problem if tax is due at 9 months.
Maryland DSUE and Portability
Maryland has a state-level deceased spousal unused exclusion rule for deaths on or after January 1, 2019. In plain English, if a spouse dies without using all of the Maryland estate tax exclusion, the unused amount may be available to the surviving spouse later, but only if the election is properly made.
Maryland Tax-General Section 7-309 ties the Maryland DSUE election to a timely Maryland estate tax return for the predeceased spouse in many cases. Do not assume the federal portability election automatically preserves Maryland portability for every estate. If the first spouse has died and the family wants to preserve Maryland DSUE, ask a Maryland estate tax professional about whether a MET-1 should be filed even when no Maryland estate tax is due.
Maryland Inheritance Tax
Maryland inheritance tax is imposed on the privilege of receiving property from a decedent with a Maryland taxable situs. The general inheritance tax rate is 10% of the clear value of the property unless an exemption applies.
"Clear value" generally means fair market value minus expenses. The exact valuation and payment process depends on whether the property is probate or non-probate property.
The inheritance tax is not limited to property passing under a will. The Register of Wills explains that probate and non-probate property can be subject to inheritance tax, including property passing by operation of law or contract.
Who Is Exempt From Maryland Inheritance Tax
Maryland has broad family exemptions, but not every relative is exempt.
Common exempt recipients include:
- Spouse
- Registered domestic partner
- Parents and grandparents
- Children, grandchildren, and other lineal descendants
- Stepchildren and stepparents
- Siblings
- Spouse of a child or lineal descendant
- Certain surviving spouses of deceased children or lineal descendants
- Qualifying organizations exempt under Section 501(c)(3) of the Internal Revenue Code
- State, county, and municipal corporations
- Certain family-controlled corporations that meet the statutory relationship rules
Common exempt property categories include:
- Life insurance payable to a named beneficiary other than the estate
- Property administered in a Maryland small estate proceeding
- Property passing to any one person if the total does not exceed $1,000
- Certain income, gains, and losses accrued on probate assets after death, though estate income may have separate reporting requirements
- Certain conservation easement property described in Maryland law
Non-exempt recipients commonly include nieces, nephews, aunts, uncles, cousins, friends, unmarried partners who are not within a current statutory exemption, and non-charitable organizations. The exact answer depends on the relationship and the property.
Non-Probate Transfers Can Still Matter
Maryland inheritance tax can reach more than probate assets. The Register of Wills lists taxable categories that may include:
- Joint interests in real or personal property, including bank and credit union accounts
- POD accounts
- Trust interests where the decedent retained certain powers or beneficial interests
- Annuities or employee benefits that are taxable for federal estate tax purposes
- Transfers made in contemplation of death
- Property passing by operation of law or contract
This creates a two-track analysis:
| Question | Why it matters |
|---|---|
| Does the asset avoid probate? | This controls who can access or transfer the asset without court appointment. |
| Is the asset taxable or reportable? | This controls Maryland inheritance tax and estate tax treatment. |
An account can avoid probate and still be relevant for Maryland tax. For example, a POD bank account payable to a non-exempt friend may be released by the bank directly to the friend, but it may still need to be reported for Maryland inheritance tax. A POD account payable to a child may avoid probate and also be exempt from inheritance tax, but it may still be part of the estate tax base if the estate is large enough.
Credit Between Inheritance Tax and Estate Tax
Maryland gives credit against Maryland estate tax for inheritance tax paid. That prevents the same Maryland transfer from being fully taxed twice in many cases.
Timing still matters. Maryland estate tax payment is due 9 months after death. Inheritance tax on non-probate property may be assessed by the Register of Wills through a separate process, and probate inheritance tax may be paid when an administration account shows distribution. If the estate is close to the Maryland estate tax threshold or includes non-exempt beneficiaries, coordinate the timing with a tax professional before assuming one payment will neatly offset the other.
Federal Estate and Income Tax Still Apply Separately
Maryland tax does not replace federal tax.
Federal estate tax: Large estates may need IRS Form 706. The federal threshold is separate from Maryland's $5,000,000 threshold.
Final federal income tax: A final federal Form 1040 is filed if the decedent had a federal filing requirement for the year of death.
Final Maryland income tax: Maryland Form 502 is filed if the decedent had a Maryland filing requirement. Do not assume a final Form 502 is always required for every decedent.
Estate income tax: If the estate or trust has post-death income, federal Form 1041 may be required. Maryland Form 504 is the Maryland fiduciary income tax return when a Maryland fiduciary filing is required.
These are income tax filings. They are separate from Maryland estate tax and Maryland inheritance tax.
Medicaid Estate Recovery
Maryland Medicaid estate recovery is separate from estate and inheritance tax. Maryland Health-General Section 15-121 authorizes the Department to make a claim against the estate of a deceased Medical Assistance recipient in accordance with federal law.
For planning and administration, treat Medicaid recovery as a case-specific creditor issue. Maryland materials frame recovery through the estate, and state Medicaid materials also discuss liens and hardship situations. Do not assume that a POD account, joint account, trust, or other non-probate transfer always shields assets from every Medicaid or creditor issue. The title history, timing, beneficiary, lien status, and probate facts can matter.
If the decedent received Medicaid benefits after age 55 or had a Medicaid lien issue, consult a Maryland elder law or probate attorney before distributing assets.
Planning Notes for Maryland Families
Maryland planning often requires looking at both taxes at once.
Married couples: Review Maryland DSUE, federal portability, QTIP planning, and beneficiary designations. The Maryland portability election is easy to miss.
Homes and retirement accounts: A Maryland home plus retirement savings can move an estate closer to the Maryland estate tax threshold even if the family is nowhere near federal estate tax.
Non-exempt beneficiaries: Leaving money to nieces, nephews, cousins, friends, or non-charitable organizations can create inheritance tax even when the estate is far below $5 million.
POD and TOD designations: Beneficiary designations can avoid probate, but they do not automatically avoid Maryland inheritance tax or estate tax inclusion.
Trusts: Revocable trusts can help with administration and privacy, but assets in a revocable trust are usually still relevant for estate tax. Irrevocable trust planning requires Maryland-specific legal advice.
Real property TOD deeds: Maryland real property transfer-on-death deeds are unresolved for practical planning purposes. Do not rely on a Maryland TOD deed for real estate without advice from a Maryland real estate or estate planning attorney.
Frequently Asked Questions
Does Maryland have both estate tax and inheritance tax?
Yes. Maryland has a state estate tax and a separate inheritance tax. The estate tax is tied to the estate tax calculation and filing threshold. The inheritance tax is tied to the recipient and the property received.
What is the Maryland estate tax threshold in 2026?
For deaths on or after January 1, 2019, the Maryland applicable exclusion amount is $5,000,000, plus any valid Maryland DSUE if properly elected.
What is the Maryland inheritance tax rate?
The general rate is 10% of the clear value of property that passes from a decedent, unless the recipient or property is exempt.
Are children exempt from Maryland inheritance tax?
Generally yes. Maryland exempts property passing to children, grandchildren, and other lineal descendants. The exemption also covers several other close family categories, including spouses, registered domestic partners, parents, grandparents, stepchildren, stepparents, siblings, and spouses of children or lineal descendants.
Are nieces and nephews exempt from Maryland inheritance tax?
Generally no, unless another specific exemption applies. This is one of the common Maryland surprises because siblings are exempt, but nieces and nephews are usually treated as collateral beneficiaries.
Does a POD bank account avoid Maryland inheritance tax?
Not necessarily. A POD account can avoid probate access, but Maryland inheritance tax can apply to non-probate property depending on the beneficiary and the property. A POD account payable to an exempt child is different from a POD account payable to a non-exempt friend.
Does Maryland inheritance tax paid reduce Maryland estate tax?
Maryland inheritance tax paid is credited against Maryland estate tax, but timing and documentation matter. The estate tax payment deadline is 9 months after death.
What to Do Next
- List all assets at date-of-death value, including probate and non-probate assets.
- Identify each recipient and whether they are exempt from Maryland inheritance tax.
- If the total estate is near $5,000,000, contact a Maryland estate tax professional early.
- Calendar the 9-month MET-1 deadline.
- Do not distribute property to non-exempt beneficiaries until inheritance tax reporting and payment are understood.
For account-level logistics, see how to close bank accounts after death in Maryland.
Kaira turns state-specific deadlines, forms, and next actions into a shared plan your family can work from. See how it works.
Disclaimer: This article provides general educational information about Maryland estate tax, inheritance tax, and related administration issues as of May 2026. It is not legal, tax, financial, or accounting advice. Tax rules, filing thresholds, and agency procedures can change. Consult a Maryland-licensed attorney, CPA, or qualified tax professional for advice about a specific estate.
Sources: Maryland Tax-General Sections 7-202, 7-203, 7-204, 7-305, 7-306, and 7-309; Maryland Comptroller Administrative Release No. 30; Maryland Form MET-1 and MET-1E materials; Maryland Register of Wills inheritance tax guidance; Maryland Register of Wills administration guidance; Maryland Health-General Section 15-121; Maryland Department of Health Medicaid estate recovery materials; IRS Publication 559.