Maryland vs Federal Estate Tax: Why You Might Still Owe

Quick answer: yes — an estate can owe zero federal estate tax and still owe real money to Maryland, because the exemptions sit a third apart. Run your own numbers in the Maryland estate tax calculator.

Two exemptions, a third apart

The federal estate tax exemption sits at roughly $15,000,000 per individual for 2026. Maryland's own exemption is fixed at $5,000,000 — about a third of the federal line. Any estate between those two numbers owes nothing federally but can face a genuine Maryland tax bill of up to 16% on the excess.

The two calculations don't interact

A federal deduction still matters at the estate level

While it doesn't change how Maryland's own tax is computed, Maryland estate tax actually paid is generally deductible on the federal Form 706 as a state death tax under separate federal rules — relevant once an estate is large enough to owe both taxes at once.

See the full threshold and rate breakdown for exactly how the 16% figure gets computed on Form MET-1.

State vs federal — frequently asked questions