Inheriting wealth is rarely simple. Between federal and state-level rules, it is natural that beneficiaries wonder what their tax liability might be. The good news is that federal law does not impose an inheritance tax on individuals. Instead, it focuses on the value of the estate itself. That distinction matters.
As of 2025, the federal inheritance tax threshold stands at $13.99 million. This means if the total estate value is below this amount, there is simply no federal estate tax due—regardless of who inherits what. The tax is applied to the estate before any assets are distributed and only if the value exceeds the limit. However, this is only the half of the story for families in Maryland.
If the estate value remains under $13.99 million:
If the estate value exceeds $13.99 million:
The threshold includes:
Note: Lifetime gifts made above the annual gift exclusion may count toward this threshold as well. This is why taxation planning is usually connected with gifting strategies.
Even if the federal estate tax is avoided, Maryland inheritance tax laws remain in effect. Instead of the federal government, Maryland taxes specific beneficiaries directly at 10% of the value received. That rule applies to anyone not classified as an exempt heir.
The following actions are usually taken in order to avoid inheritance tax in Maryland:
The federal inheritance tax threshold is generous, shielding most estates from federal taxation. But state laws in Maryland change the picture. Beneficiaries may not owe anything federally, yet still face a 10% bill locally. Watter CPA presents expert advisory services in inheritance taxation in Maryland.
