The D.C. City Council has repealed the city's inheritance tax, replacing it with an estate tax that imposes a far heavier burden than similar levies in either Maryland or Virginia.

The changes adopted by the council June 2 sharply raise the cost of dying for middle-income residents and homeowners in a city already notorious for its high cost of living.

The tax shift was aimed at simplifying filing requirements and raising more money for the financially hardpressed city. City officials estimate the new tax will raise an estimated $4 million in new revenues in fiscal 1983, the first year in which its full effect will be felt.

But area lawyers involved in estate planning claim the changes may also erode the city's tax base. They said they already are urging upper middle-income clients who can choose where to live to move out of the city. For instance, a client looking for a retirement home near Chevy Chase Circle was recently encouraged to choose one north of the circle because of estate planning considerations.

Because the D.C. law will conform more closely with federal law under the changes, it will make it easier for residents to file tax forms and for the city to process them, said Steve Schneider, executive assistant for the office in the city's Department of Finance and Revenue, which administers the tax.

The higher taxes are "something you just live with if you live in the District," he said. "It's the cost of living in D.C."

The tax changes will take effect Aug. 31, assuming the legislation is not vetoed by Congress. Congress can veto City Council actions if both houses adopt a resolution of disapproval within 30 working days after legislation has been approved by the city. Mayor Marion Barry initiated the new legislation and is expected to sign the council bill shortly.

Under the new law, the tax will apply to an entire estate rather than to bits and pieces as they are inherited. In addition, federal estate taxes will no longer be allowed to be deducted from the amount taxed by the city, and insurance policies with named beneficiaries will now be taxed. Both changes mean higher taxes.

Another change will increase the taxes for estates left by divorced or unmarried persons to minor children with another living parent. The new law also includes a marriage deduction under which hald of an estate, or law also includes a marriage deduction under which hald of an estate, or $100,000, whichever is greater, left to a spouse is exempt from estate taxes.

According to a chart prepared by a committee of the D.C. Bar, someone with a taxable estate of $200,000 and no surviving spouse who leaves the entire estate to surviving children (with insurance payable to the heirs making up 10 percent of the estate) would pay $6,600 in federal estate taxes, $1,200 in Virginia estate taxes and $1,800 in Maryland inheritance and estate taxes. In contrast, the same estate would be charged $17,500 in D.C. taxes.

An estate of $200,000 might consist of a house valued at $150,000 and $50,000 in life insurance. The average price of houses sold in D.C. during the first three months of 1981 was $112,000.

Persons with taxalbe estates of less than $50,000 will pay no estate taxes, but virtually all homeowners will have estates at least that large. For District residents, the tax applies only to real estate and tangible property located in the District of Columbia, and intangible property such as stocks and bonds owned by District residents. Real estate and other tangible property in the District owned by nonresidents, such as members of Congress, are also subject to taxation.

"$50,000 is not a whole lot of money for the average middle-income person, what with inflation," said atlarge council member Betty Ann Kane, the single member to vote against the charges. "For upper-income people in particular, this could be one more factor in the decision not to be in the District." Kane said "a lot of people may end up paying more D.C. taxes then federal."

The Reagan administration has proposed a reduction in federal estate taxes as part of its tax cut program.

Virginia Riley, a D.C. probate attorney, said she and many probate lawyers "will certainly be recommending to our wealthy clients that, if they have the choice, they should move out of D.C. It's going to hit home for many people. A lot of people through their work have very substantial life insurance benefits.

"I'm not saying it's wrong, because we need the money, but if you compare it with other jurisdictions, it really brings home the difference in position" of District residents, she said.

"You won't find many states where the local inheritance tax is more of a burden than the federal tax," said Ira Siegler, a lawyer engaged in estate planning who prepared the bar committee's tables. "The federal tax has been the horror. How'd you like to pay more D.C. income tax than U.S. income tax?"

The impact of the city's rising real estate values will increase the burden of the tax, he said. "The home itself has been such an unintended estate wrecker, even when you get a friendly appraisal," he said. "It can wipe out the whole estate if you had the bad sense to buy a house 25 years ago in Chevy Chase."