My father recently passed away. What death taxes will I be responsible for?
There are five sets of death taxes that are relevant for Maryland residents:
First, there is Final Personal Income Tax (Federal and Maryland), which refers to the income taxes that the deceased person would have had to pay in the year they died. This is something that most people are already familiar with, as they file their own income tax returns on an annual basis.
The second type of death tax is Estate Tax (Federal and Maryland). These are assessed regardless of whether the estate has been opened or not. If the decedent had assets worth $5 million, then they will be subject to Maryland estate tax.
Under the newly enacted One Big Beautiful Bill Act, the federal estate transfer tax exemption was raised to $15 million per person. Estate Tax returns are similar to Personal Income Tax returns – you need to file at the state and federal level, even if there are no federal taxes to report. Maryland’s estate tax exemption is $5 million per person, which would exclude most families.
Another type of death tax is a Fiduciary Income Tax (Federal and Maryland). This refers to reporting income that has been earned from the date of death until all accounts have been transferred to the beneficiaries. Generally, this type of tax applies to individuals with sizable investment accounts, however please consult with your CPA to be sure.
Maryland is one of the few states that still imposes an Inheritance Tax. Direct family members are exempt from the Inheritance Tax. However, there is a 10 to 11% tax for nieces, nephews, cousins, friends, unregistered domestic partners, and former spouses, among others.
Finally, there is a Gift Tax. The Personal Representative of the Estate and the Trustee of the Trust are responsible for filing the Gift Tax return if the decedent had given any gifts in excess of the annual limit during their lifetime. In 2025, that limit is currently $19,000.00.
Navigating these various taxes can be very challenging, even if someone’s situation looks simple at the surface level. That is why we strongly recommend consulting with a Probate attorney, someone like us. If you need help handling Maryland Probate or Trust administration as an Executor, please call us at 301-696-0567 or self-schedule at www.lenaclarklegal.com.
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