The Future for Federal and Maryland Estate Tax Exemptions
As of January 1, 2025, the federal estate tax exemption is $13,990,000 per person. As a married couple, you can shelter $27,980,000 together by utilizing the portability election on the filing of an estate tax return at the death of the first spouse. The federal estate tax exemption, however, is set to undergo some massive changes in the next 12 months. Specifically, many provisions of the Tax Cuts and Jobs Act (the “TCJA”) will sunset effective January 1, 2026, after which, absent changes to the law before then, the federal estate tax exemption will “sunset” back to $5,000,000 per person, adjusted for inflation, so approximately, $7,500,000 per person. The portability election will remain available, meaning married couples will be able to shelter $15,000,000 together.
The results of the 2024 Election causes some Estate and Trust professionals to question the scheduled federal estate tax sunset in 2026. It is expected that Congress will take action to extend the TCJA tax cuts and keep the federal estate tax exemption higher, instead of sunsetting. However, the timing any such legislation is an open question.
Currently, Maryland’s estate tax exemption is $5,000,000 per person, and as a married couple, you can shelter $10,000,000 together by utilizing a portability election on a timely filed Maryland Estate Tax Return. Governor Moore has proposed, however, that the Maryland Estate Tax exemption should be lowered to $2,000,000 per person. Although this has not been passed by the Maryland Legislature at this time, there are some uncertainties around the future of the Maryland Estate Tax Exemption amount.
If you have questions or concerns regarding your possible estate tax exposure, either federally or in Maryland, please contact McNamee Hosea and schedule a time to meet with Samantha Arnold.