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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0704*
SENATE BILL 704
Q7 6lr3152
By: Senator Mautz
Introduced and read first time: February 6, 2026
Assigned to: Budget and Taxation
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 3, 2026
CHAPTER ______
AN ACT concerning 1
Maryland Estate Tax – Qualified Agricultural Property – Transfer to Limited 2
Liability Company 3
FOR the purpose of authorizing, for purposes of determining the Maryland estate tax, a 4
qualified recipient to transfer qualified agricultural property to a limited liability 5
company; providing that qualified agricultural property transferred in accordance 6
with this Act is not subject to estate tax recapture under certain circumstances; and 7
generally relating to the Maryland estate tax. 8
BY repealing and reenacting, with amendments, 9
Article – Tax – General 10
Section 7–309(c) 11
Annotated Code of Maryland 12
(2022 Replacement Volume and 2025 Supplement) 13
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14
That the Laws of Maryland read as follows: 15
Article – Tax – General 16
7–309. 17
(c) (1) (i) In this subsection the following words have the meanings 18
indicated. 19
2 SENATE BILL 704
(ii) “Farming purposes” has the meaning stated in § 2032A(e)(5) of 1
the Internal Revenue Code. 2
(iii) “Qualified agricultural property” means real or personal 3
property that is used primarily for farming purposes. 4
(iv) “Qualified recipient” means an individual who enters into an 5
agreement to use qualified agricultural property for farming purposes after the decedent’s 6
death. 7
(2) The Maryland estate tax shall be determined by excluding from the 8
value of the gross estate up to $5,000,000 of the value of qualified a gricultural property 9
that passes from the decedent to or for the use of a qualified recipient. 10
(3) If the value of qualified agricultural property that passes from the 11
decedent to or for the use of a qualified recipient exceeds $5,000,000, the Maryland estate 12
tax imposed on the Maryland estate of the decedent may not exceed the sum of: 13
(i) 16% of the amount by which the decedent’s taxable estate, 14
excluding the value of all qualified agricultural property that passes from the decedent to 15
or for the us e of a qualified recipient, exceeds the applicable exclusion amount specified 16
under subsection (b) of this section; and 17
(ii) 5% of the amount by which the value of qualified agricultural 18
property that passes from the decedent to or for the use of a qua lified recipient exceeds 19
$5,000,000. 20
(4) (i) The Maryland estate tax shall be recaptured as provided in this 21
paragraph if, within 10 years after the decedent’s death, the qualified agricultural property 22
ceases to be used for farming purposes. 23
(ii) The amount of the estate tax imposed under this paragraph shall 24
be the additional Maryland estate tax that would have been payable at the time of the 25
decedent’s death but for the provisions under paragraphs (2) and (3) of this subsection. 26
(5) (I) A QUALIFIED RECIPIENT MAY T RANSFER LEGAL 27
OWNERSHIP OF QUALIFI ED AGRICULTURAL PROP ERTY TO A LIMITED LI ABILITY 28
COMPANY. 29
(II) A TRANSFER OF QUALIFIE D AGRICULTURAL PROPE RTY IN 30
ACCORDANCE WITH SUBP ARAGRAPH (I) OF THIS PARAGRAPH IS NOT SUBJECT TO 31
RECAPTURE UNDER PARAGRAPH (4) OF THIS SUBSECTION IF: 32
1. THE OWNERSHIP OF THE LIMITED LIABILITY 33
COMPANY CONSISTS ONLY OF QUALIFIED RECIPIENTS; AND 34
SENATE BILL 704 3
2. THE QUALIFIED AGRICU LTURAL PROPERTY IS U SED 1
FOR FARMING PURPOSES FOR AT LEAST 10 YEARS AFTER THE DECEDENT’S DEATH. 2
(6) The Comptroller shall adopt regulations to implement this subsection. 3
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 4
1, 2026, and shall be applicable to decedents dying after June 30, 2026 July 1, 2027. 5
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.