Estate and inheritance tax in Maryland

Key takeaway

Maryland estate and inheritance tax rules address estate property, estate tax returns, payment, and transfers to beneficiaries. Maryland's rules address property passing through probate and through other means and the relationship of a beneficiary to the decedent. The information concerns owners of businesses, real estate and private investments, their spouses and adult children.

Maryland estate tax gross estate

Maryland's estate tax gross estate includes probate property and non-probate property. Property outside Maryland is included in the Maryland estate tax gross estate when the decedent had an interest in that property.

Maryland estate tax return conditions and exemptions

Maryland's estate tax return requirement depends on the federal gross estate and adjusted taxable gifts. Prior Maryland qualified terminable interest property (QTIP) election property is another factor in determining the Maryland estate tax return requirement.

Maryland's estate tax return requirement also depends on the exemption applicable to the decedent's death. Maryland residence or property with a Maryland taxable situs forms another part of the determination of whether an estate tax return is required.

Maryland estate tax payment and valuation

Maryland estate tax payment is due nine months after the decedent's date of death.

Maryland charges a penalty for a substantial estate tax valuation understatement when the underpayment and valuation meet the conditions for that penalty.

Maryland inheritance tax transfers and exemptions

Maryland inheritance tax applies to property passing under wills or through intestacy. Maryland inheritance tax also applies to property passing through trusts, deeds, joint ownership or other means.

Maryland inheritance tax applies to receipt of probate and non-probate property. Assets with a named beneficiary fall within Maryland's inheritance tax coverage.

Maryland exempts direct or lineal heirs from inheritance tax, including a spouse, child, grandchild, stepchild, parent or grandparent. Maryland's inheritance tax exemptions also include certain qualifying corporations. Maryland taxes transfers to other individuals at 10%.

Thresholds and rates change. Check the state's own current figures.

Common questions

Who collects Maryland inheritance tax?

Maryland inheritance tax is collected by the Register of Wills. The county where the decedent lived or owned property is the county in which the Register of Wills collects the inheritance tax.

When is Maryland inheritance tax on probate property payable?

Maryland inheritance tax on probate property is due when the personal representative submits an Administration Account showing distribution of the property to a taxable recipient. Maryland inheritance tax payment accompanies that Administration Account.