Law & Legal & Attorney Wills & trusts

Will the Maryland Estate Tax Exemption Increase in 2014?

Another state has joined the state estate tax reform bandwagon. In mid-December the New York State Tax Relief Commission released a report that proposed increasing the measly $1 million New York estate tax exemption to match the federal estate tax exemption, which currently sits at $5.34 million and will increase in future years based on inflation. And now Maryland, which also has a measly $1 million state estate tax exemption, has jumped into the fray, with two bills introduced in the Senate that would do the exact same thing as proposed in New York, although one bill calls for an immediate increase in the Maryland exemption to match the federal exemption that would go into effect on July 1, while the other would gradually increase the Maryland exemption to match the federal exemption by 2017.

While bills have been introduced in the past to increase Maryland's estate tax exemption to no avail, this year things appear to be different. For one, both the Senate President, Thomas V. Mike Miller Jr. (D-Calvert), and House Speaker Michael Busch (D-Anne Arundel), have come out in favor of it, and Governor Martin O'Malley said that he is willing to work with state legislators on state estate tax reform, stating "I'm for what works and for what's fiscally responsible."

Why is there a new push for estate tax reform in Maryland? Most likely because the rich do move to lower their tax bills, and Maryland has seen an exodus of residents over the past few years to neighboring states like Delaware, which collects a state estate tax but matches the federal exemption, and Virginia, which doesn't collect a state estate tax at all; and then there's Florida, which doesn't collect a state income tax or a state estate tax. Yes, money walks as taxes pile up.

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