Understanding Maryland’s Estate Tax for 2026
Key Takeaways: The $5 million Maryland estate tax threshold for 2026 is the amount an estate can be worth before Maryland’s state estate tax applies, with only the value above $5,000,000 taxed at a maximum rate of 16%. This fixed exclusion does not adjust for inflation and is the end point of a phased increase from $1 million before 2015 to $5 million in 2019. Because Maryland’s threshold sits far below the $15 million federal exemption for 2026, many families owe state estate tax without owing federal estate tax. Married couples may stretch the exclusion through portability of a deceased spouse’s unused exemption, though it must be properly elected. Maryland also imposes a separate inheritance tax based on who inherits. A will alone does not avoid probate, so trusts and careful administration are often key.
The $5 million Maryland estate tax threshold for 2026 is the dollar amount an estate can be worth before Maryland’s state estate tax applies. For anyone who passes away in 2026, the first $5,000,000 of a taxable estate generally escapes Maryland estate tax, and only the value above that line is taxed. Because Maryland’s threshold sits well below the federal exemption, many families who never owe federal estate tax may still face a Maryland bill.
If you are an executor, administrator, or beneficiary trying to understand what this means for a loved one’s estate, the team at Sawyer & Associates is here to help. You can call us at 240-249-7890 or reach out through our online contact page to discuss your family’s situation.
How the $5 Million Maryland Estate Tax Threshold Works
Maryland law fixes the state estate tax exclusion at a flat $5,000,000, and it does not rise with inflation. This differs from the federal exemption, which adjusts upward each year. On April 5, 2018, HB 0308 became law, capping the Maryland threshold at $5 million for 2019 and thereafter. That cap is codified in Md. Code, Tax-General § 7-309(b)(3)(i)(6), which sets the exclusion at $5,000,000 for a decedent dying on or after January 1, 2019.
The current $5 million figure is the end point of a gradual climb. Maryland’s exclusion was previously far lower, rising from $1 million before 2015, through $1.5 million in 2015, $2 million in 2016, $3 million in 2017, and $4 million in 2018, reaching $5 million in 2019. You can review the full schedule in the Maryland estate tax statute maintained by the General Assembly.
| Year of Death | Maryland Exclusion Amount |
|---|---|
| Before 2015 | $1,000,000 |
| 2015 | $1,500,000 |
| 2016 | $2,000,000 |
| 2017 | $3,000,000 |
| 2018 | $4,000,000 |
| 2019 and after (including 2026) | $5,000,000 |
💡 Pro Tip: The taxable estate includes more than bank accounts. Real estate, retirement assets, business interests, and life insurance you own all count toward the $5 million line, so estimating early helps avoid surprises.
What Rate Applies Above the Threshold
Maryland does not tax the entire estate when it crosses the line; it taxes only the excess. The Maryland estate tax is calculated as up to 16% of the amount by which the taxable estate exceeds the Maryland threshold. An estate valued just over $5 million pays tax only on that small slice, not the full amount.
How Portability Can Raise the Effective Threshold
Married couples in Maryland can stretch the exclusion beyond $5 million. Maryland allows portability of the unused predeceased spouse’s estate tax exemption to the surviving spouse, effective 2019. The statute provides for $5,000,000 plus any deceased spousal unused exclusion amount, which can increase the effective threshold for surviving spouses. Portability is not automatic; it must be elected by timely filing a Maryland estate tax return for the deceased spouse.
Maryland Estate Tax vs. Federal Estate Tax in 2026
The biggest source of confusion for Baltimore families is the gap between Maryland’s threshold and the federal exemption. They are separate taxes with very different breaking points. The federal estate tax exemption increased to $15 million for 2026 under the One Big Beautiful Bill Act, up from $13.99 million in 2025, and is indexed for inflation going forward. The federal top estate tax rate is 40%.
Because the thresholds differ dramatically, the result catches many off guard. Maryland’s $5 million threshold is far below the $15 million federal exemption, meaning many estates in Maryland owe state estate tax but not federal estate tax. A family with a $7 million estate may owe nothing federally yet still face a Maryland obligation. This is why thoughtful Baltimore estate planning examines both layers.
💡 Pro Tip: Spousal transfers receive favorable treatment. Transfers between spouses are exempted from federal estate tax, and any unused exemption can be inherited by a surviving spouse.
Don’t Forget Maryland’s Inheritance Tax
Maryland is the only state that imposes two separate death-related taxes. Maryland imposes both a pick-up (estate) tax and an inheritance tax. The Maryland inheritance tax is based on who inherits, not just estate size, and close relatives such as spouses, children, parents, and siblings are generally exempt, while more distant heirs may owe the tax. The official Maryland Comptroller guidance explains how both taxes are administered.
Why a Will Alone Does Not Avoid Probate in Maryland
One of the most common misunderstandings is that having a will keeps an estate out of probate. In reality, a will guides the probate process; it does not bypass it. Assets that pass under a will typically go through estate administration in Maryland, which means court oversight, notice to creditors, and statutory filing steps. A will controls who receives what, but does not avoid the Baltimore probate process.
A revocable living trust is the tool more often used to pass assets outside of probate. When assets are properly titled in a trust, they can generally transfer to beneficiaries without court administration. This does not eliminate estate tax exposure, but it can streamline administration and add privacy. The right structure depends on your specific assets and goals.
💡 Pro Tip: A trust only helps with assets actually transferred into it. Many plans fall short because accounts or property were never retitled, so funding the trust is just as important as creating it.
Working With a probate lawyer Baltimore MD Families Trust
Navigating estate administration while honoring a fiduciary duty is rarely simple, especially when tax thresholds are involved. Executors and administrators may be required to value assets, file returns, satisfy creditor claims, and meet court deadlines, all while grieving. A knowledgeable probate lawyer Baltimore MD residents rely on can help you understand whether Maryland estate tax applies, how portability might be claimed, and what steps keep administration on track.
Our firm approaches these matters as a multi-state guide, not just a local service. We help families across Maryland, North Carolina, South Carolina, Tennessee, and Alabama with both probate and longer-term concerns like Medicaid crisis planning. If you are weighing your options, our trust and estates Baltimore MD team can walk you through what applies to your circumstances.
Common challenges executors face include:
- Determining whether the taxable estate crosses the $5 million Maryland line
- Coordinating the separate Maryland estate tax and Maryland inheritance tax
- Properly electing spousal portability when available
- Identifying which assets must pass through probate versus a trust
For more reading on probate, estate administration, and planning topics across the states we serve, browse our estate planning blog for accessible guidance.
Frequently Asked Questions
1. Does the Maryland estate tax threshold change in 2026?
No, it remains the same. Maryland’s 2026 estate tax threshold is confirmed at $5,000,000, because the cap is fixed by statute and does not adjust for inflation.
2. Will my estate owe federal estate tax too?
It depends on estate size. Many Maryland estates owe state tax but not federal tax, since the federal exemption is $15 million for 2026 while Maryland’s is only $5 million.
3. How much is the Maryland estate tax if my estate exceeds the threshold?
Only the excess is taxed. The Maryland estate tax is generally calculated as up to 16% of the amount by which the taxable estate exceeds the Maryland threshold.
4. Can a surviving spouse use a deceased spouse’s unused exemption?
Often, yes, but it is not automatic. Maryland allows portability of the unused predeceased spouse’s exemption to the surviving spouse beginning in 2019, and the election must be made by timely filing a Maryland estate tax return for the deceased spouse.
5. Does a will keep my estate out of probate?
Generally, no. A will guides distribution but typically still requires probate. A properly funded revocable living trust is usually the tool used to pass assets outside court administration.
Planning Ahead With Confidence
Understanding the $5 million Maryland estate tax threshold is the first step toward protecting your family’s home and lifetime savings. Because Maryland taxes estates that the federal government does not, and also imposes an inheritance tax, even moderate estates deserve careful review. Portability, trusts, and proper administration can all play a role, but the right approach depends on your specific facts. When in doubt, consult an attorney who can review your situation in detail.
You do not have to sort through these rules alone. The compassionate team at Sawyer & Associates is ready to help you understand your options and move forward with peace of mind. Call us today at 240-249-7890 or schedule a consultation to get clear, practical guidance for your family.
