Democratic leaders in Maryland’s General Assembly are seriously considering that which Maryland Republicans have long championed — a reduction in the Maryland estate tax. While the federal government estate tax exemption amount is currently at $5.34 million, Maryland’s exemption amount has stubbornly remained at $1 million for years.
Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch have joined forces to support legislation that would raise the amount of money exempt from estate tax. One proposed bill would gradually raise the Maryland estate tax exemption to $5 million — in line with the federal exemption but without the automatic inflation adjustments. Another proposed bill would raise the exemption amount to $3 million effective January 1, 2014.
Current thinking is that raising the state exemption would reduce the incentive for wealthy Maryland residents to move to a state with either a higher exemption amount or no estate tax, such as Florida, Virginia or Delaware. Many feel that the number of residents who have actually left Maryland to avoid the estate tax is over estimated. Regardless of whether the loss of taxpaying residents to other states has significant impact on state tax revenue, an increase in the Maryland exemption amount will certainly allow for greater wealth to be passed on from generation to generation for Maryland families.