Maryland residents might face a complicated and usually unexpected issue when a loved one passes and leaves assets behind: the inheritance tax. Maryland is one of the few states that still imposes an inheritance tax. This tax is applied in accordance with the relationship between the beneficiary and the deceased, as well as the value of the assets received.
Unlike the federal system, which currently does not impose an inheritance tax and instead focuses on estate taxes above the federal inheritance tax threshold, Maryland’s approach can catch many families off guard. In addition to a separate estate tax, beneficiaries might also face a taxation liability in line with their status and the amount inherited.
Therefore, working with a Maryland inheritance tax accountant becomes fundamental. Whether you are a family member inheriting property, an executor managing the estate, or simply trying to avoid inheritance tax in Maryland with advance planning, professional assistance can establish full compliance and further reduce the taxation burden.
Not all inheritances in Maryland result in a tax obligation. In accordance with the Maryland inheritance tax laws, exemptions are granted in line with the relationship to the decedent. The following individuals are fully exempt from Maryland inheritance tax:
If individuals are not in one of these categories—like niece, nephew, cousin, or family friend—they are usually considered a non-exempt beneficiary. In such cases, inheritance tax for beneficiaries is typically 10% of the total value received. And there is no dollar-based exemption to shield smaller inheritances from this tax. Even modest gifts may result in a tax burden.
It is true that you can’t change the law. Yet, you can plan ahead to minimize or avoid inheritance tax in Maryland with legal and smart methods. A Maryland inheritance tax accountant may present assistance in structuring your estate to lower the taxation liabilities of your heirs.
In this context, the typical strategies are listed below:
These approaches can be especially valuable for estates that include real estate, business interests, or retirement accounts. Early and smart planning actions would be the optimum way to protect what you’ve built and leave more behind for the people you care about.
Under Maryland inheritance tax laws, beneficiaries who do not qualify for an exemption are usually subject to a 10% tax on the fair market value of the assets they receive. This applies whether the inherited asset is cash, real estate, investments, or personal property.
The examples regarding how the inheritance tax for beneficiaries is commonly applied are below:
There is no minimum threshold for taxation, meaning even smaller inheritances may be taxed if the beneficiary is not exempt.
It’s also important to acknowledge the distinction between inheritance tax and estate tax. Inheritance tax is the responsibility of the beneficiary. And estate tax—in line with the total value of the estate—is paid by the estate itself before distributions are made. Depending on the estate’s size, both taxes may apply. The federal inheritance tax threshold may also step in for larger estates.
In Maryland, inheritance matters are governed by specific legal definitions as well as succession rules outlined under Maryland inheritance tax laws. Within this scope, a legal heir is someone who is entitled to inherit under state law, either through a valid will or through intestate succession—the default process when no will exists.
When a Maryland resident dies without a will, their estate follows this order of distribution:
In order to make sure that the assets are distributed according to your wishes—and to potentially avoid inheritance tax in Maryland where possible—estate planning is fundamental. Common tools are presented below:
Maryland inheritance tax laws impose a separate tax on certain beneficiaries. Yet, the federal government does not tax individuals on inherited assets directly. Instead, it enforces an estate tax, which only applies in the case the total value of the estate exceeds the federal inheritance tax threshold—currently $13.61 million in 2024 and $13.99 million in 2025..
Because most estates fall below this amount, the federal estate tax is not a concern for the majority of families. However, for high-net-worth individuals, planning is very important to lower exposure. Several strategies might be applied as below:
It should be acknowledged that a Maryland inheritance tax accountant or a Maryland estate tax accountant can present assistance in implementing such smart strategies and make sure of alignment with both state-level rules and federal thresholds.
Handling estate and inheritance matters requires more than just paperwork—it demands insight into both Maryland inheritance tax laws and federal tax regulations. Indeed, a qualified Maryland inheritance tax accountant may present the expertise as well as the structure needed to proceed with confidence.
Assisting with the complicated state and federal necessities, including the federal inheritance tax threshold, in order to establish full compliance.
Locating legal opportunities to avoid inheritance tax in Maryland or lower the overall liability—particularly critical for high-value estates or inheritance tax for beneficiaries who do not qualify for exemptions.
Structuring the will and trusts as well as beneficiary designations in order to minimize taxation exposure and preserve wealth for future generations.
From inheritance tax filings to IRS disclosures, professionals make sure of accuracy and timeliness—aiding executors and heirs to stay in line with the legislation and penalty-free.
It should be noted that the Maryland inheritance tax laws are vital for protecting the legacy. Whether individuals are exempt or fall under the 10% rate for inheritance tax for beneficiaries, smart planning actions have big potential to make a big difference.
Although most estates fall below the federal inheritance tax threshold, Maryland's rules are more stringent. A professional Maryland inheritance tax accountant can aid individuals in staying fully compliant and uncover strategies to avoid inheritance tax in Maryland.
Ready to plan with confidence? Schedule your consultation with Watter CPA today.
Spouses, children, parents, and siblings are exempt under Maryland inheritance tax laws. Other heirs may owe tax on the full amount received.
Options cover lifetime gifting and using trusts alongside naming exempt beneficiaries. A Maryland inheritance tax accountant can assist in applying such strategies.
Most non-exempt individuals—like nieces, nephews, or friends—pay a 10% tax on what they inherit.
Inheritance follows the will. Without one, intestate succession determines who inherits based on family relationships.
Estates under the federal inheritance tax threshold of $13.61 million (2024) are not subject to federal estate tax.
