The answer would change in line with the relationship to the person who passed away. In accordance with Maryland inheritance tax laws, not every beneficiary is subject to taxation. In fact, specific family members are fully exempted—regardless of the value inherited. Others might owe a 10% tax on the entire amount received, even if the sum is modest.
In the case of a direct family member passing away, the state provides relief. The following individuals presented below are able to inherit without paying Maryland inheritance tax:
No paperwork or percentage as well as threshold applies in these cases. If individuals fall within this category, the inheritance is entirely tax-free in Maryland—regardless of its size.
For everyone else, Maryland imposes a flat 10% tax on the total fair market value of the assets inherited. It should be recognized that there is no threshold below which the tax does not apply. If the inherited amount is $500 or $500,000—it is still taxed at the same rate for non-exempt beneficiaries.
Several examples of individuals usually subject to such taxation are outlined below:
This tax is assessed before assets are fully transferred. If you are the executor or a beneficiary from one of these categories, it is fundamental to assess this figure with precision with a Maryland inheritance tax accountant.
It should be acknowledged that there is no inheritance tax at the federal level. Instead, estates are subject to a separate estate tax only if the value exceeds the federal inheritance tax threshold. This threshold is $13.61 million in 2024 and $13.99 million in 2025.
So, the federal aspect is not a concern for most Maryland residents. Yet, the Maryland estate tax might still apply at the state level in accordance with the total estate value.
There is no way to waive the tax once it applies—but there are legal methods to lower or eliminate it through smart planning actions. If the target is to leave assets behind without burdening someone with a tax bill, the following strategies can be considered ahead of time:
If early action is taken, the right structure may enable families to avoid inheritance tax in Maryland entirely. For further assistance, Watter CPA presents professional services for Maryland inheritance tax.
