Maryland Estate Tax Reduction Awaits Governor’s Signature

Maryland Estate Tax Reduction Awaits Governor’s Signature

Maryland has joined the long list of states that have recently rolled back their estate tax. The Maryland legislature doled out this small reprieve to Marylanders who have seen several tax increases over the past several years. Although Governor O’Malley has not yet signed the bill, he is expected to do so. The governor has until May 27th to sign this and other bills into law.

When O’Malley signs the bill, the measure will gradually increase the estate tax exemption in Maryland from $1,000,000 to nearly $6,000,000 in 2019 (See Chart Below). This will bring the Maryland estate tax exemption in line with the Federal exemption and follows changes in many other states. Politicians and others had become concerned (and rightly so) that wealthy residents have been moving to states who do not have an estate tax; for residents of Montgomery County this often required only a short move across the border to Northern Virginia.

This change will remove one piece of the estate administration process and allow middle class families to pass on their estate to their heirs’ estate tax free. Keep in mind however that Maryland is still one of only two states to have an inheritance tax on assets of an estate left to someone other than your immediate family; even nieces and nephews. It is estimated that once the law is fully implemented, less than 20% of estates which would have been taxable under the $1,000,000 threshold will be taxable under the increased threshold.

Maryland Estate Tax Exemption

Year

Exemption

2014

$1,000,000

2015

$1,500,000

2016

$2,000,000

2017

$3,000,000

2018

$4,000,000

2019

$5,900,000*

*Projected Federal Exemption

Tim Stolz

Article provided by Tim Stolz, CPA MKS&H Senior Tax Accountant


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