Maryland Estate and Inheritance Tax: $5M Exemption, 10% Rate

Few states tax both the estate and the people who inherit from it. Maryland does, and the two taxes interact: inheritance tax paid is credited against the estate tax, so an estate may owe only one of them (if the inheritance tax paid equals or exceeds the credit-based estate tax, no estate tax is due).

This guide explains each tax, which heirs are exempt from the inheritance tax, how the estate tax cap works, the nine-month filing deadline and penalties, and worked examples, using the Maryland Tax-General Article as published by the General Assembly and the Comptroller's tax tip and estate tax extension form, read on 29 October 2026.

Two Separate Taxes

The inheritance tax is a separate tax collected by the Register of Wills located in the county where the decedent either lived or owned property. The estate tax is filed with the Comptroller. The inheritance tax paid to the Register of Wills is subtracted from the gross Maryland estate tax liability and the difference is the Maryland estate tax due; the Maryland estate tax is owed until the inheritance tax is actually paid.

The Estate Tax

• Exemption: $5,000,000 for a decedent dying on or after 1 January 2019, plus any deceased spousal unused exclusion amount (portability): surviving spouses may elect to claim any unused portion of their predeceased spouse's unused Maryland exemption under certain circumstances.
• Cap: 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 exemption for the year of death. The Comptroller's estate tax application form has the estimated tax be the lesser of that 16% figure and the credit-based figure, less inheritance tax already paid.
• Filing: a return is required when the gross estate (with adjusted taxable gifts) reaches $5,000,000 for deaths in 2019 and after.
• Deadline and penalty: file within nine months after the date of death, or by the approved extension date; a penalty of up to 10% is charged on any Maryland estate tax not paid by the due date. The Comptroller may extend the time to file up to six months, or up to one year if the person required to file is out of the United States.

The Inheritance Tax

The inheritance tax rate is 10% of the clear value of the property that passes from a decedent, where clear value means fair market value minus expenses. The tax does not apply to property passing to or for the use of:

• a grandparent, parent or spouse of the decedent;
• a child of the decedent or a lineal descendant of a child, and certain in-laws of those descendants;
• a brother or sister of the decedent;
• the proceeds of a life insurance policy payable to any beneficiary other than the estate of the insured;
• an organization exempt under section 501(c)(3) of the Internal Revenue Code that meets the statute's conditions.

Children include stepchildren and former stepchildren, and parents include stepparents. Nieces, nephews, cousins and friends are not on the statute's family exempt list, so property passing to them is taxed at 10 percent of its clear value, with two narrow exceptions: real property under a perpetual farming conservation easement passing to a niece or nephew, and property passing to a domestic partner (all property if the partnership is registered under Estates and Trusts section 2-214; otherwise only a jointly held primary residence, with proof of the partnership).

2026 change for nonresident decedents: Maryland Chapter 504 of 2026 (House Bill 17) provides that the situs of intangible personal property is the decedent's domicile and repeals the exemption for personal property passing from a nonresident decedent whose home state has no death tax or a reciprocal exemption. The inheritance tax part applies to decedents dying on or after 1 July 2026. The family exemptions above were not changed.

Worked Examples (our illustration)

The estate tax figure is a ceiling: the actual tax is the lesser of the 16 percent cap and the credit-based amount, reduced by any inheritance tax paid. These examples are our arithmetic on the statute and the Comptroller's form, not official calculations; consult the Comptroller or a professional for a real estate.

Official Sources

• Maryland General Assembly: Tax-General 7-204 (rate), 7-203 (exemptions) and 7-309 (estate tax)
• Comptroller of Maryland: What you need to know about Maryland's estate tax (Tax Tip 42, Rev. 10/18)
• Comptroller of Maryland: Form MET-1E (Rev. 02/26)