For years, families with significant assets heard the same warning: the federal estate tax exemption is going to be cut in half. That deadline created real anxiety and pushed many people into rushed decisions about trusts, gifts, and wealth transfers. On July 4, 2025, Congress eliminated that deadline entirely by signing the One Big Beautiful Bill Act into law.
The new law permanently raises the federal estate tax exemption to $15 million per person, effective January 1, 2026. That is welcome news at the federal level. But for Maryland families, the full picture is more complicated.
1. What Changed at the Federal Level
Under previous law, the federal estate tax exemption was scheduled to drop from roughly $14 million per person to about $7 million at the start of 2026. The One Big Beautiful Bill Act stopped that from happening. Instead of falling, the exemption increased to $15 million per individual and $30 million for married couples.
This increase is permanent, meaning there is no expiration date attached. Beginning in 2027, the amount will also adjust for inflation each year.
2. Why Maryland Families Still Have Reason to Plan Carefully
Here is where the good news gets complicated. Maryland has its own estate tax, and the state exemption is still just $5 million per person. That number has not changed since 2019, and it does not adjust for inflation.
Maryland is also the only state that charges both an estate tax (up to 16 percent) and a separate inheritance tax (10 percent on transfers to non-immediate family members). A Maryland resident with a $10 million estate would owe nothing federally but could face roughly $800,000 in state taxes. That gap catches many families off guard.
3. Your Current Estate Plan May Need an Update
Many estate plans were written with the assumption that the federal exemption was about to shrink. Attorneys built trusts and gifting strategies specifically designed to use as much of the exemption as possible before the reduction hit. Now that the reduction is not happening, those same documents may direct money in ways the family never intended.
For example, a trust that says "transfer assets up to the federal estate tax exemption" would now move $15 million instead of the $7 million the family originally expected. If it has been more than a year or two since your estate plan was reviewed, 2026 is the time to revisit it.
4. Annual Gifts Are Still One of the Simplest Tools Available
Separate from the lifetime exemption, the annual gift tax exclusion stays at $19,000 per recipient in 2026. Married couples can give up to $38,000 per recipient without filing a gift tax return. These gifts do not count against the lifetime exemption and can steadily reduce a taxable estate over time.
This matters especially in Maryland because the state does not impose a gift tax. Families can use lifetime gifts to bring their estate below the $5 million state threshold without triggering any additional state-level consequences.
5. "Permanent" Does Not Mean "Forever"
In tax law, permanent simply means there is no built-in expiration date. A future Congress could still change the exemption amount, raise tax rates, or restructure the system entirely. Families who assume today's rules will last indefinitely may find themselves unprepared if the landscape shifts again.
The stability the new law provides is a real advantage. It gives families the time to plan thoughtfully instead of reacting to deadlines. But that time should be used, not wasted.
The Bottom Line
The One Big Beautiful Bill Act is a meaningful change for estate planning at the federal level. The higher exemption protects more families than ever before. But in Maryland, the state's frozen $5 million exemption and unique dual-tax structure mean that careful, state-specific planning remains essential. Whether your estate plan was written recently or years ago, it is worth confirming that it reflects the law as it stands today.
