On July 4, 2025 the Federal ‘One Big Beautiful Bill’ (“OBBB”) became law. The legislation affects four critical financial areas: Estate Planning, Asset Strategy, Entity Structure and Compensation Strategy. The OBBB effective dates range from retroactive changes in 2025 to future rollouts into 2029. This article addresses OBBB’s Estate plan and tax provisions for Maryland families.
What the One Big Beautiful Bill Changed
Beginning January 1, 2026, OBBB permanently increased the Federal Estate Tax Exemption. The exemption is now $15 million per individual and $30 million per married couple. The exemption will continue to adjust for inflation. However, the $5 million per individual ($10 million per married couple) Maryland estate tax threshold has not changed.
The IRS has confirmed that taxpayers can make larger lifetime gifts under the higher Federal Estate and Gift Tax limits. Future reductions in the exemptions will not trigger future “claw back” into their estates, even if future laws reduce the current Federal tax exemptions.
Maryland Estate Tax Still Applies
The lower Maryland estate tax threshold hasn’t changed; it still applies to gross estates over $5 million per person, without adjustment for inflation. (Maryland doesn’t impose gift tax) Despite the higher federal exemption, Maryland residents may still owe Maryland estate tax. This applies when a gross estate exceeds Maryland’s $5 million exemption amount. That said, a surviving spouse may claim the unused portion of the $5 million state estate tax exemption from the first spouse to die, by making the related state estate tax election following the death of the first spouse.
What Maryland Families Should Do Now
So, what should YOU do now? Review your estate plan with your attorney to determine whether your estate could be subject to Maryland Estate Tax. Strategic tax planning can help reduce or eliminate Maryland Estate Tax. One option is making annual exclusion gifts. In 2026, individuals can give $19,000 per recipient, while married couples can give $38,000 per recipient. You may make gifts to multiple recipients under the annual exclusion rules. These gifts do not reduce your lifetime exemption and generally do not require a gift tax return.
Families can reduce or eliminate Maryland Estate Tax by fully funding trusts, retitling assets, and implementing other planning and tax strategies. Your CPA can help identify and properly document lifetime gifts that align with your overall estate plan.
Don’t Wait to Review Your Estate Plan
While the new Federal law offers new business and estate planning opportunities, it doesn’t provide additional time to complete estate planning. You will need time to identify and consider your planning options, to obtain real or personal property appraisals, and to make decisions in alignment with your goals instead of racing against a deadline.
In sum, while ‘One Big Beautiful Bill’ increased higher Federal Estate and Gift tax exemptions, Maryland’s lower Estate Tax exemption hasn’t changed. Careful estate and tax planning is essential to maximizing the value of assets distributed to your family or other loved ones after you die. Now is the time to make sure your documents are complete, and that they maximize Federal and State tax exemption strategies, especially in light of new planning opportunities presented by OBBB.
If you are interested in learning more about estate and tax planning options to protect you and your loved ones, please call us to schedule an appointment. (410) 988-3973. www.TheCoxLawGroup.com We look forward to working with you!
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This blog is for informational purposes only and does not constitute legal advice. For guidance on your specific situation, please consult an attorney licensed in your jurisdiction.