Maryland Estate & Inheritance Tax Guide
Maryland Estate Tax Guide
Maryland Estate Tax & Probate — Complete Guide
Maryland is unique: it imposes a state estate tax and a separate inheritance tax. This guide covers who is taxed, what’s taxed, the fixed $5,000,000 Maryland exclusion (with portability for spouses), rate mechanics (up to 16%), how the inheritance tax offsets the estate tax, nonresident situs/apportionment, forms, deadlines, and planning (step-up, QTIP, gifts).
Maryland Inheritance & Probate Basics
Intestacy & probate courts
Probate is handled by the county Register of Wills and Orphans’ Court. The personal representative gathers assets, files inventories, pays debts/taxes (estate + inheritance), then distributes the remainder.
How the Maryland estate & inheritance taxes interact
Maryland computes a state estate tax using the pre-2005 federal state death tax credit schedule (top 16%) after a state exclusion of $5,000,000. Any inheritance tax paid to the Register of Wills is credited against the Maryland estate tax; if inheritance tax equals/exceeds the estate tax, no Maryland estate tax is ultimately due (timing of payment still matters).
Maryland Death Taxes — At a Glance (2025)
Estate tax exclusion: $5,000,000 (fixed since 2019), with Maryland portability (DSUE) available on a timely filed return.
Rates/mechanics (estate tax): Graduated credit table up to 16% on amounts over the exclusion (see table below). State-only QTIP election is allowed.
Inheritance tax: Generally 10% on transfers to non-exempt beneficiaries (e.g., nieces/nephews/friends). Spouses, lineal heirs (children, grandchildren, parents, grandparents) and siblings are exempt.
Nonresidents/situs: Maryland taxes MD-situs real property and tangible personal property. Estates apportion using Schedule A to isolate the Maryland portion.
Due date & extensions: File/pay within 9 months of death. Filing extensions available (Form MET-1E); interest may accrue. Alternative payment schedules may be requested.
Official Pages, Forms & Where to File
- Comptroller of Maryland — Estate Tax: Form MET-1 (estate tax return) & instructions; Schedule A (apportionment); MET-1E (extension).
- Register of Wills — Inheritance Tax: who pays the 10% tax; exemptions (incl. siblings); payment and certification procedures.
- Maryland Code (Tax-General §7-309): state-only QTIP & treatment of MD elective property; portability framework (DSUE). Title 7, Subtitle 4: Maryland GST provisions.
Generation-Skipping Transfer (GST) — Maryland Context
Maryland’s GST chapter ties to the federal GST framework. In practice, a separate Maryland GST is generally not collected today because it was historically pegged to a federal state-GST credit. Coordinate your federal GST planning; Maryland filings may be required if a federal GST return is filed.
Maryland Situs vs. Non-Situs Property (for Nonresidents)
| Asset type | Maryland estate tax treatment | Notes |
|---|---|---|
| Real property in Maryland | MD-situs; taxable for nonresidents | Included in MD Schedule A apportionment numerator |
| Tangible personal property in Maryland | MD-situs; taxable for nonresidents | Vehicles, equipment, artwork customarily in MD |
| Intangibles (stock, bonds, cash) | Generally by domicile; typically not MD-situs for nonresidents | Residents: intangibles included in the Maryland base |
Filing Mechanics & Deadlines
- When to file: Within 9 months of death (extensions to file via MET-1E; interest may apply on unpaid tax).
- Where/how: File MET-1 with the Comptroller; include federal Form 706 (even if not filed federally) and required MD schedules. The Register of Wills certifies inheritance-tax payment.
- Nonresident apportionment: Use Schedule A to apportion the MD credit/tax to MD-situs property.
Planning Ideas to Reduce Maryland Estate Tax
- Portability (DSUE): File timely to preserve unused Maryland exclusion for the survivor (aim for combined $10M MD shield).
- Maryland-only QTIP: Elect state QTIP to secure marital deduction locally even if federal QTIP differs; remaining QTIP becomes includible at survivor’s death.
- Inheritance-tax aware bequests: Leave assets to exempt classes (spouse, lineal heirs, siblings) to avoid the 10% inheritance tax that otherwise erodes the estate; remember inheritance tax offsets the MD estate tax.
- Step-up vs. gifting: Hold high-gain assets for IRC §1014 step-up; consider gifting low/no-gain assets (no MD gift tax). Model the one-estate/two-tax interaction.
- Liquidity & options: Installment/alternative payment schedules, life insurance, and (for farms) special rules for agricultural land.
FAQs
Does Maryland have inheritance tax?
Yes. 10% on transfers to non-exempt beneficiaries; spouses, children, grandchildren, parents, grandparents, and siblings are exempt.
Is the MD estate tax threshold portable?
Yes. Maryland recognizes portability (DSUE) with a timely state filing (and federal 706 with valid portability election).
How do nonresidents get taxed?
Maryland taxes only MD-situs real/tangible property; use Schedule A apportionment on the return.
Do inheritance taxes reduce the MD estate tax?
Yes. Inheritance tax paid to the Register of Wills is credited against the MD estate tax (timing matters for interest).
Need help filing or planning?
We model Maryland estate + inheritance tax together (including DSUE, state-only QTIP, apportionment) and cross-border coordination with federal credits.
Maryland estate-tax credit schedule (used to compute MD estate tax)
| Adjusted Taxable Estate (ATE) | …not over | Base credit | % on excess | Excess over |
|---|---|---|---|---|
| $0 | $40,000 | $0 | 0.0% | — |
| $40,000 | $90,000 | $0 | 0.8% | $40,000 |
| $90,000 | $140,000 | $400 | 1.6% | $90,000 |
| $140,000 | $240,000 | $1,200 | 2.4% | $140,000 |
| $240,000 | $440,000 | $3,600 | 3.2% | $240,000 |
| $440,000 | $640,000 | $10,000 | 4.0% | $440,000 |
| $640,000 | $840,000 | $18,000 | 4.8% | $640,000 |
| $840,000 | $1,040,000 | $27,600 | 5.6% | $840,000 |
| $1,040,000 | $1,540,000 | $38,800 | 6.4% | $1,040,000 |
| $1,540,000 | $2,040,000 | $70,800 | 7.2% | $1,540,000 |
| $2,040,000 | $2,540,000 | $106,800 | 8.0% | $2,040,000 |
| $2,540,000 | $3,040,000 | $146,800 | 8.8% | $2,540,000 |
| $3,040,000 | $3,540,000 | $190,800 | 9.6% | $3,040,000 |
| $3,540,000 | $4,040,000 | $238,800 | 10.4% | $3,540,000 |
| $4,040,000 | $5,040,000 | $290,800 | 11.2% | $4,040,000 |
| $5,040,000 | $6,040,000 | $402,800 | 12.0% | $5,040,000 |
| $6,040,000 | $7,040,000 | $522,800 | 12.8% | $6,040,000 |
| $7,040,000 | $8,040,000 | $650,800 | 13.6% | $7,040,000 |
| $8,040,000 | $9,040,000 | $786,800 | 14.4% | $8,040,000 |
| $9,040,000 | $10,040,000 | $930,800 | 15.2% | $9,040,000 |
| $10,040,000 | and above | $1,082,800 | 16.0% | $10,040,000 |
Adjusted Taxable Estate (ATE) = taxable estate − $60,000. Maryland exclusion: $5,000,000 (portable with timely election).
Maryland Estate Tax Calculator
Instant estimate using the MD credit table, inheritance-tax offset, and Schedule-A style apportionment for nonresidents. Educational only — actual returns include interrelated computations and certifications.
Advanced Maryland inputs (optional)
Results (educational estimate)
Practical Maryland Planning — Portability, MD-only QTIP & Inheritance-Tax Offset
Client snapshot: Maryland resident; home and two stock positions.
Home: FMV $3.0M, basis $2.0M. Stock #1: FMV $10.0M, basis $10.0M (no built-in gain). Stock #2: FMV $2.0M, basis $1.0M (+$1.0M gain).
Strategy A (optimized): Elect MD-only QTIP (if married) + gift the “no-gain” asset
- Gift Stock #1 ($10M) to an irrevocable trust (no MD gift tax; federal 709 as applicable). Keep an eye on overall line-5/ATE math.
- MD-only QTIP: Take the Maryland marital deduction while tailoring federal QTIP separately; the trust becomes includible as MD elective property at survivor’s death.
- Step-up focus: Retain the home and Stock #2 for §1014 step-up; post-mortem gains shrink.
- Inheritance-tax aware bequests: Direct transfers to spouse/lineals/siblings (exempt) to avoid the 10% inheritance tax; if any 10% applies, it credits against MD estate tax.
Strategy B (do nothing now)
Everyone gets step-up at death, but Maryland estate tax applies above $5M (unless mitigated by DSUE/charity/QTIP). If assets pass to non-exempt relatives/friends, the 10% inheritance tax applies (offsetting the MD estate tax but still affecting liquidity).
This page simplifies complex rules (MD/QTIP elections, portability timing, adjusted taxable gifts, apportionment via Schedule A, inheritance-tax credit, circular computations). It is not tax or legal advice.
Our U.S. CPAs and our German Wirtschaftsprüfer can advise you on your specific situation.