Who is exempt from Maryland inheritance tax?

A spouse, child, stepchild, grandchild, great-grandchild or other lineal descendant, the spouse of a child or other lineal descendant, a parent, stepparent, grandparent, and a sibling. Registered domestic partners are also exempt for decedents dying on or after October 1, 2023. Section 501(c)(3) organizations and State, county and municipal entities are exempt as well. Everyone else pays 10%.

Do nieces and nephews pay Maryland inheritance tax?

Yes. Nieces, nephews, aunts, uncles, cousins, friends, and unmarried partners who are not registered domestic partners are all non-exempt beneficiaries and pay the 10% inheritance tax. This is the most common way the tax surprises a family: a Maryland resident with no spouse and no children leaves everything to a niece or a close friend, and 10% comes off the top.

What is the difference between Maryland inheritance tax and Maryland estate tax?

They are two separate taxes and Maryland is one of the few states that has both. The estate tax is paid by the estate and depends on how large the estate is — it applies above a $5 million exemption. The inheritance tax is charged on what an individual beneficiary receives and depends on who that person is, with no size threshold. A modest estate can owe inheritance tax while owing no estate tax at all.

Does the District of Columbia have an inheritance tax?

No. The District imposes an estate tax on larger estates but has no inheritance tax on beneficiaries, so a DC decedent's niece, friend, or unmarried partner does not face the 10% charge a Maryland decedent's would. This is one of the sharpest tax differences between the two jurisdictions and it matters for families who own property in both or who move across the line.

How Much Is Maryland Inheritance Tax — and Who Actually Pays It?

Q: How much is Maryland inheritance tax?

Ten percent of the value of what passes to a non-exempt beneficiary. It is a flat rate with no graduated brackets and no large exemption amount — the only dollar threshold is that property passing to any one person totaling $1,000 or less is exempt. Most heirs are exempt by relationship, so most estates pay nothing. The tax falls entirely on who inherits, not on how much the estate is worth.

Q: How can an unmarried couple avoid Maryland inheritance tax?

By registering as domestic partners. Since October 1, 2023, Maryland couples can file a notarized Declaration of Domestic Partnership with the Register of Wills in their county. A surviving registered domestic partner is fully exempt from inheritance tax and is treated much like a surviving spouse for inheritance purposes. The registration must be completed while both partners are living.

mikecelli

Aug 16

7 min read

Ten percent of whatever passes to a non-exempt beneficiary. Flat rate, no brackets, and essentially no exemption amount — the only dollar threshold is that property totaling $1,000 or less to any one person is exempt.

But most estates never pay it, because most heirs are exempt by relationship. The tax turns entirely on who inherits, not on how much the estate is worth. That is what makes it catch people.

Maryland is one of very few states that still imposes an inheritance tax, and one of an even smaller group that has both an inheritance tax and an estate tax. Most people have never heard of the inheritance tax until it takes ten cents of every dollar they meant to leave someone.

Who is exempt

If a beneficiary appears on this list, no inheritance tax is due on what they receive:

Spouse

Who it covers: A surviving husband or wife

Registered domestic partner

Who it covers: Exempt for decedents dying on or after 1 October 2023 — see below, this is the big one

Children and descendants

Who it covers: Child, stepchild, grandchild, great-grandchild, and other lineal descendants

In-laws in the direct line

Who it covers: The spouse of a child or of another lineal descendant — a son-in-law or daughter-in-law

Parents and grandparents

Who it covers: Parent, stepparent, grandparent

Siblings

Who it covers: Brothers and sisters, exempt for decedents dying on or after 1 July 2000

Charities and government

Who it covers: Section 501(c)(3) organizations; State, county and municipal entities

Small amounts

Who it covers: Property to any one person totaling $1,000 or less; grave maintenance up to $500

Who is not — and this is where families get hurt

Everyone else pays ten percent. In practice that means:

Nieces and nephews. The single most common one. Siblings are exempt; their children are not.
Aunts, uncles, and cousins.
Close friends, godchildren, caregivers, neighbors — anyone outside the statutory list.
An unmarried partner who is not a registered domestic partner. Decades together counts for nothing here without the paperwork.

Inheritance tax is not estate tax — Maryland has both

These get conflated constantly, including by people who should know better. They are different taxes with different payers, different triggers, and different math.

Who pays

Maryland inheritance tax: The beneficiary — it comes out of their share

Maryland estate tax: The estate, before anything is distributed

What triggers it

Maryland inheritance tax: Who inherits — the relationship

Maryland estate tax: How much the estate is worth

Rate

Maryland inheritance tax: Flat 10%

Maryland estate tax: Graduated, up to 16%

Threshold

Maryland inheritance tax: None to speak of — $1,000 per person

Maryland estate tax: $5 million exemption per individual

Who it hits

Maryland inheritance tax: Modest estates left to non-relatives

Maryland estate tax: Large estates, regardless of who inherits

The practical consequence: a $400,000 estate left to a nephew owes inheritance tax and no estate tax. A $6 million estate left to a daughter owes estate tax and no inheritance tax. A $6 million estate left to a nephew owes both.

Maryland's estate tax is decoupled from the federal one. The federal exemption is in the millions per person and most families never come near it — which is why "we're not rich enough for estate tax" is such a common assumption. Maryland's own exemption sits at $5 million, far below the federal figure, so a Maryland family can owe state estate tax while owing nothing federally. Verify the current figure before relying on it; these numbers move.

If you are an unmarried couple, read this part twice

This is the most consequential change in Maryland death taxes in years, and it is badly under-publicized.

Since 1 October 2023, Maryland couples can register as domestic partners by filing a notarized Declaration of Domestic Partnership with the Register of Wills in their county. A surviving registered domestic partner is fully exempt from Maryland inheritance tax and is treated much like a surviving spouse for inheritance purposes — including intestate inheritance rights and priority to serve as personal representative.

Before that change, an unmarried partner had only a narrow exemption, and only for a primary residence the two of them held as joint tenants. Everything else — the accounts, the investments, a second property — was taxed at ten percent.

The arithmetic is stark. A partner inheriting a $500,000 estate goes from roughly $50,000 of inheritance tax to zero, on the strength of a notarized form filed with a county office.

The registration has to happen while you are both alive. There is no retroactive fix, no affidavit your executor can sign afterward, no argument about how long you were together. This is one of the few places in estate planning where a single inexpensive step, taken in time, changes the outcome by tens of thousands of dollars.

What registration does not do

It is not marriage, and it is worth being clear about the gaps:

No elective share. A surviving spouse who is written out of a will can claim a statutory share of the estate anyway. A registered domestic partner cannot. If you want your partner protected against your own documents, registration alone will not do it.
It is Maryland law. It does not travel. If you own property in another state, or move, that jurisdiction's rules govern what happens there.
It does not replace a plan. Registration fixes a tax problem and supplies default inheritance rights. It does not say who raises your children, who makes your medical decisions, or who winds up your affairs.

If registration is not available to you

Registration solves the problem for partners. For a niece, a nephew, a cousin, or a friend, the ten percent is a real cost to plan around rather than eliminate. Approaches worth discussing:

Lifetime giving. The inheritance tax reaches transfers at death. Giving during life is a different exercise, with its own federal gift tax rules to respect, but it can move value outside the tax's reach.
Charitable structures. Section 501(c)(3) organizations are exempt, which matters if part of your plan is philanthropic anyway.
Weighting the exempt beneficiaries. Where a plan names both exempt and non-exempt people, which assets go to whom is not a neutral choice.
Life insurance. Proceeds paid to a named beneficiary can be structured so the recipient nets what you intended rather than what is left after tax.
Naming it in the documents. Whether the tax comes out of a specific bequest or off the residue determines who actually bears it. Silence produces an outcome nobody chose.

None of these is a universal answer, and some create costs elsewhere. The point is that the tax is predictable, so it can be planned around — but only before the fact.

How and when it gets paid

The inheritance tax is collected through the Register of Wills in the county where the estate is administered, and it is generally settled as part of the estate administration rather than billed to the beneficiary separately. Non-probate assets passing to a non-exempt person can still be within reach, which surprises people who assumed a beneficiary designation put an asset outside the process. A personal representative should not distribute to non-exempt beneficiaries without confirming what is owed.

The District of Columbia does it differently

Families here often own property on both sides of the line, or move across it and never revisit their documents. The two jurisdictions are not close on this.

Inheritance tax

Maryland: Yes — flat 10% on non-exempt beneficiaries

District of Columbia: None

Estate tax

Maryland: Yes — $5 million exemption

District of Columbia: Yes — roughly $4.99 million for 2026, indexed annually

Estate tax rate

Maryland: Graduated, up to 16%

District of Columbia: Graduated, about 11.2% to 16%

Unmarried partner inheriting

Maryland: 10%, unless registered as a domestic partner

District of Columbia: No inheritance tax applies

Niece or nephew inheriting

Maryland: 10%

District of Columbia: No inheritance tax applies

For a family whose plan leaves assets to non-lineal heirs, which side of the line the decedent is domiciled on can be the single largest tax variable in the estate. That is not a reason to move. It is a reason to know which rules apply to you and to plan against those rules rather than the ones you assumed.

Also planning for children? → How to name a guardian for your children in a Maryland will

The short version

Maryland inheritance tax is a flat 10% on what passes to a non-exempt beneficiary. There is no meaningful dollar threshold.
Spouses, children and descendants, parents, grandparents, siblings, sons- and daughters-in-law, and registered domestic partners are exempt.
Nieces, nephews, cousins, friends, and unregistered partners are not. They pay 10%.
Inheritance tax and estate tax are different taxes. A small estate can owe the first and not the second.
If you are an unmarried couple in Maryland, registering as domestic partners with the Register of Wills is likely the highest-value hour you will spend on your estate plan — and it only works if you do it while you are both living.
The District has no inheritance tax at all, which makes domicile a live planning question for families with a foot in both.

Find out where you actually stand

Most people learn about the inheritance tax from a bill after someone dies. It is much cheaper to look at it now. Consultations are by phone or video, on your schedule.

Schedule a consultation

This page is general information about Maryland and District of Columbia law. It is not legal or tax advice, and reading it does not create an attorney–client relationship. Tax rates, exemption amounts and thresholds change, and the right answer depends on facts not described here. Confirm current figures before relying on them. The Celli Law Firm is licensed to practice in Maryland and the District of Columbia only.

Authorities referenced: Md. Code, Tax-General Article, Title 7, Subtitle 2 (inheritance tax), including § 7-203 (exemptions); Maryland Register of Wills inheritance tax guidance; Maryland Senate Bill 792 (2023) (domestic partnership registration, effective 1 October 2023); Md. Code, Tax-General Article, Title 7, Subtitle 3 (Maryland estate tax); D.C. Code § 47-3701 et seq. (District estate tax).