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Inheritance Tax in Maryland: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Maryland holds the unique distinction of being the only state that imposes both an inheritance tax and an estate tax. While most states levy one or the other (or neither), Maryland residents and their beneficiaries may face both taxes on the same estate. The inheritance tax is a flat approximately ~10% on property passing to non-exempt beneficiaries, while the estate tax applies to the total estate value above approximately ~$5,000,000. Understanding how these two taxes interact is essential for effective estate planning in Maryland.

Maryland Inheritance Tax Rates (2026)

Beneficiary Category	Tax Rate
Surviving spouse	~0% (exempt)
Children, grandchildren, parents, grandparents (lineal)	~0% (exempt)
Siblings	~0% (exempt)
Spouse of a child (son/daughter-in-law)	~0% (exempt)
Charities and government entities	~0% (exempt)
All other beneficiaries (nieces, nephews, friends, cousins, etc.)	~10%

Maryland’s inheritance tax is notably simpler than states like New Jersey and Pennsylvania because it uses a single flat rate of approximately ~10% for all non-exempt beneficiaries, with no graduated brackets.

How Maryland Inheritance Tax Works

Exempt Beneficiaries

Maryland provides broad exemptions for close family members. The following individuals are completely exempt from inheritance tax:

Surviving spouse
Children, stepchildren, grandchildren, and other lineal descendants
Parents, grandparents, and other lineal ancestors
Siblings (brothers and sisters)
Spouses of children (sons-in-law and daughters-in-law)

This exemption structure is more generous than many other inheritance tax states. Unlike Pennsylvania, which taxes transfers to children at ~4.5%, or New Jersey, which taxes transfers to siblings at up to ~16%, Maryland exempts both children and siblings entirely.

Non-Exempt Beneficiaries

All other beneficiaries — including nieces, nephews, cousins, friends, unmarried partners, and any other individual not in an exempt category — pay inheritance tax at a flat rate of approximately ~10% on the full value of their inheritance. There is no exemption amount or graduated rate structure; the ~10% rate applies from the first dollar.

Property Subject to Tax

The inheritance tax applies to all property passing from a Maryland resident at death, including real estate, financial accounts, investments, business interests, personal property, and certain jointly held assets. For non-resident decedents, only real and tangible personal property located in Maryland is subject to the tax.

Life insurance proceeds paid to a named beneficiary (other than the estate) are generally exempt. Retirement account distributions may be subject to inheritance tax depending on the beneficiary designation and account structure.

Interaction with Maryland Estate Tax

Maryland’s estate tax is separate from the inheritance tax and applies to estates with a total value exceeding approximately ~$5,000,000 (the Maryland estate tax exemption). The estate tax rates range from approximately ~0.8% to ~16% on the taxable estate. Critically, inheritance tax paid is credited against estate tax owed, preventing true double taxation. However, the two taxes can interact in complex ways, particularly for large estates with both exempt and non-exempt beneficiaries.

Filing and Payment

The inheritance tax is administered by the Register of Wills in the county where the decedent resided. There is no separate state inheritance tax return; instead, the tax is assessed as part of the probate process. Payment is typically due before estate assets are distributed to beneficiaries. The Register of Wills issues inheritance tax clearances necessary for asset transfers.

Comparison to Other Inheritance Tax States

State	Lineal Exempt?	Sibling Exempt?	Non-Family Rate	Also Has Estate Tax?
Maryland	Yes	Yes	~10%	Yes (~$5M exemption)
Pennsylvania	No (~4.5%)	No (~12%)	~15%	No
New Jersey	Yes	No (~11%—~16%)	~15%—~16%	No (repealed 2018)
Kentucky	Yes	No (~4%—~16%)	~6%—~16%	No
Iowa	Yes	Phasing out	Phasing out	No

Maryland’s inheritance tax is the broadest in terms of family exemptions but stands out for being paired with a separate state estate tax.

Tips for Minimizing Maryland Inheritance Tax

Direct bequests to exempt beneficiaries when possible. Transfers to a spouse, children, grandchildren, siblings, and in-laws are fully exempt, offering the most tax-efficient inheritance path.
Use trusts for non-family beneficiaries. Irrevocable trusts established well before death can potentially remove assets from the taxable estate, though they must be structured carefully to avoid inclusion.
Leverage life insurance. Proceeds paid to named beneficiaries are generally exempt from inheritance tax, making life insurance an effective planning tool for non-exempt beneficiaries.
Consider the estate tax credit. Inheritance tax paid is credited against Maryland estate tax, so for large estates, the inheritance tax effectively reduces the estate tax bill.
Gift assets during lifetime. Maryland does not impose a state gift tax, so lifetime gifts can reduce the inheritance tax base (though federal gift tax rules still apply above approximately ~$19,000 per recipient per year).
Review beneficiary designations regularly. Ensuring accounts are payable to exempt beneficiaries can avoid triggering the ~10% tax.
Coordinate with estate tax planning. Since Maryland imposes both taxes, estate plans should consider the interplay between the approximately ~$5,000,000 estate tax exemption and the inheritance tax on non-exempt beneficiaries.

Key Takeaways

Maryland is the only state that imposes both an inheritance tax and an estate tax
The inheritance tax is a flat approximately ~10% on property passing to non-exempt beneficiaries (nieces, nephews, friends, cousins, and others)
Spouses, children, grandchildren, parents, siblings, and in-laws are fully exempt from inheritance tax
Inheritance tax paid is credited against Maryland estate tax owed, preventing full double taxation
The Maryland estate tax exemption is approximately ~$5,000,000, separate from the inheritance tax
Life insurance proceeds paid to named beneficiaries are generally exempt from inheritance tax

Next Steps

See the full Maryland tax picture at Taxes in Maryland: State Tax Guide 2026
Learn about federal estate tax in the Federal Income Tax Guide 2026
Compare state tax burdens at State Income Tax Rates Comparison 2026
Calculate your federal bracket with the Tax Bracket Calculator 2026
Get local help: Find a CPA Near You