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New bill makes it less taxing to die in Maryland
Author: Scarinci Hollenbeck, LLC
Date: April 14, 2014
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Maryland became the latest state to reduce its tax burden on high net-worth citizens in the form of a higher exemption for its estate tax, according to Forbes. The Maryland Senate passed a measure March 20 that will gradually raise the state exemption from $1 million to the projected $5.9 million federal exemption by 2019. The current inflation-indexed federal estate tax exemption is $5.34 million.
This move is notable in that Maryland is a staunchly Democratic state, indicating that easing the so-called “pain of death” tax isn’t only a Republican issue, according to the news source. Maryland is one of the 19 remaining states, including the District of Columbia, that still imposes an estate tax. In the past four years, Indiana, Kansas, North Carolina, Ohio and Oklahoma have repealed their estate taxes, and Tennessee is slated to repeal its estate tax by 2016.
The increase in the Maryland estate tax exemption will reduce the tax liability on a large number of its citizens, but high net-worth individuals should be aware that a separate inheritance tax may be assessed, depending upon to whom they leave their money, Forbes reported. While immediate family members are exempt from the inheritance tax, a nephew, aunt or friend, for example, would not be.
Opponents of the bill contended that wealthy individuals do not commonly leave the state for tax issues, according to Southern Maryland Today.
“A lot of people when they get to an older age want warmer weather,” Prince George’s County Democrat Sen. Paul Pinsky said in the debate, according to the news source. “Many people move south not because of estate tax, but because of warmer weather. No one has shown me, or shown any of us, that people leave because of our estate tax exemption.”
Pinsky also pointed to the fact that Maryland has the highest number of millionaires per capita, Southern Maryland Today reported. Baltimore City Democrat Sen. Catherine Pugh, however, called attention to the 2013 and 2014 Forbes articles, titled “Where Not To Die,” which both named Maryland.
“We don’t want articles written like that,” Pugh said.
- Practices: Tax and Trusts & Estates
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