Maryland Joins the Fray By Raising Tax ExemptionsTax Professionals Resource
April 3, 2014 — 1,573 views
The latest Democratic state to ease the levying of estate tax is the blue state of Maryland. The measure was passed by the Maryland Senate on March 20, 2014 after being given the nod by the House. The amount exempt from the state’s tax was raised at par with the federal estate tax exemption. The bill awaits the signature of Gov. Martin O’Malley in due time.
The state death taxes have been imposed in 19 states including Maryland and the District of Columbia. The last four years have seen the states of Indiana, Kansas, North Carolina, Ohio and Oklahoma, repeal their respective state taxes with Tennessee to follow suit in January, 2016.
A good news for many
Tax exemptions in Maryland have evoked familiar sentiments in the District of Columbia, Minnesota, Maine, New York and Georgia with a vote that will decide the future of a federal tax in these states. Palmer Schoening of the Family Business Coalition believes that it is encouraging to see a a blue state take such action. She said that their goal is to get both the death tax as well as the federal estate tax repealed in near future and that the exemptions are just the beginning.
According to the passed measure the, amount exempted from tax this year will increase to $1.5 million in 2015, $2 million in 2016, $3 million in 2017 and $4million in 2018. The projected exemption for the year 2019 is $5.9 million, which is the same as the federal exemption which at present is $5.34 million. Now the only impediment left here in Maryland is the inheritance tax, which is to be paid by a relative who by relation to the deceased is not a spouse, parent, child or a sibling. So if the assets are left to an uncle, nephew or a friend, they would owe an inheritance tax of 10 percent of the total value. New Jersey is the only other state to have an inheritance tax.
Tax exemptions catching up?
Tax exemptions have turned out to be the latest trend this season as politicians across different states have been rallying to raise state exemptions to match the federal exemption made permanent at $5million per person (with an indexed inflation rate of 40 percent). A budget proposal by the New York, Gov. Andrew Cuomo to lower the top rate from 16 percent to 10 percent by fiscal year 2017 while the state estate tax exemption is increased from $1 million to match the federal exemption is on anvil.
The State of Georgia saw its legislators taking the initiative to vote out the dormant estate tax law from the books. Even if the federal system changed back to allowing a credit instead of the current deduction for the state estate taxes, Georgia won’t relapse as it has already voted the law off the books.