While the Internal Revenue Service imposes a gift tax on any gift valued at $14,000 or more as of 2015, Maryland does not have a separate state gift tax law. However, Maryland does impose taxes on gifts that are given in contemplation of death and at death. Additionally, people who receive a motor vehicle as a gift may have to pay a separate tax to the state for this gift.
Maryland imposes an inheritance tax on property that passes by will or through the probate court for a person who died without a will. The person who receives the property is responsible for paying the tax, though the executor of the estate can pay the tax if the recipient did not pay it. As of publication the tax rate is 10 percent of the value of the asset, based on the fair market value of the property minus the expense to liquidate it.
There are many exceptions to the imposition of inheritance tax. For example, inheritance tax is not imposed if the recipient is the decedent's close family member, such as a spouse, child or parent. Inheritance tax is also not imposed if the inheritance is $1,000 or less or if the inheritance is from compensation for being a Holocaust victim.
Inheritance tax is different than estate tax. As of publication, estate tax is charged to estates in Maryland that are valued at $1.5 million or more, and is paid by the estate.
Gifts in Contemplation of Death
If a person gives a gift on his deathbed to someone else in the belief that he is soon going to die -- otherwise known as giving a gift in contemplation of death -- the inheritance tax is imposed. This law applies if the giver dies within two years of providing the recipient with the gift.
Maryland typically charges a 6 percent excise tax for vehicle transfers or purchases. However, this tax might not be collected if the giver and receiver share a certain family relationship, including parent, grandparent, child or sibling. The recipient must fill out a form acknowledging that the vehicle was a gift and confirming the qualifying family relationship. When an aunt or uncle gives a motor vehicle to a niece or nephew, an additional form must be completed and the aunt or uncle must be at least 65 years old to avoid paying this tax.