Yes, Maryland has a state income tax

Maryland charges state income tax on wages, investment income, and other earnings. The tax rate depends on your income level — Maryland uses a progressive system with rates that climb as you earn more. For the 2024 tax year, rates range from 2% on the lowest bracket to 5.75% on the highest, though you may also owe local income tax depending on which county you live in.

Unlike some states that tax only certain types of income, Maryland taxes most kinds of earnings the same way: wages from a job, self-employment income, interest, dividends, and capital gains all count. The state also taxes retirement income in some cases, though there are exemptions for certain types of pensions and Social Security.

Key Takeaways

  • Maryland state income tax rates range from 2% to 5.75% depending on your income bracket, and you may owe additional local income tax on top of that.
  • Most types of income are taxed the same way: wages, self-employment earnings, investment income, and retirement income all count toward your tax liability.
  • Some retirement income is exempt from Maryland tax, including Social Security and certain military pensions, but you need to claim the exemption when you file.
  • You file Maryland state taxes using Form 502 (the individual income tax return) along with your federal return, usually by April 15.
  • If you work in Maryland but live in another state, or live in Maryland but work elsewhere, you may owe tax to both states and need to file a nonresident return.

How Maryland's tax brackets work

Maryland's income tax is progressive, meaning the rate increases as your income goes up. You do not pay the top rate on all your income — you pay the lower rate on the first portion, then the next rate on the next portion, and so on. For example, if you are single and earn $50,000, you do not pay 5.75% on the whole amount; you pay 2% on the first chunk, then 3% on the next, and so on up to your actual income level.

The exact brackets change slightly each year because they are adjusted for inflation. For 2024, a single filer in Maryland moves through brackets at roughly $1,000, $2,000, $3,000, $100,000, $125,000, $150,000, and $175,000 in taxable income. Married couples filing jointly have higher thresholds. The Maryland Department of Revenue publishes the current year's brackets on their website each January, so check there for the year you are filing.

Your taxable income is not the same as your gross income. You subtract the standard deduction (which varies by filing status and age) before calculating tax. For 2024, the standard deduction for a single filer under 65 is $3,900; for married filing jointly it is $7,800. If you are 65 or older, you get an additional deduction.

Local income tax on top of state tax

Maryland allows counties and Baltimore City to charge their own local income tax, and most do. This is a separate tax added to your state bill. Local rates range from about 1.25% to 3.2% depending on where you live, so your total Maryland income tax can be significantly higher than the state rate alone.

For example, if you live in Baltimore City, you owe both the state tax (up to 5.75%) and the city tax (3.2%), for a combined top rate of 8.95%. If you live in a county with a lower local rate, your total will be less. Check your county or city government website or ask your employer's payroll department what local rate applies to your address.

What income is taxed and what is exempt

Wages from employment are always taxed. Self-employment income, rental income, interest, and dividends are also taxed. Capital gains (profit from selling stocks, real estate, or other assets) are taxed as ordinary income in Maryland, not at a special rate.

Some types of income are exempt from Maryland tax. Social Security benefits are not taxed by the state. Military pensions and certain other government pensions have exemptions, though the rules are specific — you must meet income limits and file the correct form to claim them. Certain types of retirement distributions from may have access to plans may also be exempt if you meet the age and income requirements. If you receive any of these types of income, check the Maryland Department of Revenue website or ask a tax preparer whether you may have access to for an exemption.

Unemployment benefits are taxed by Maryland, and so are most types of retirement account withdrawals (401(k), IRA, and similar accounts). If you withdraw money early from a retirement account, you owe Maryland tax on the withdrawal, though you may also owe a federal penalty.

Filing your Maryland return

You file Maryland state taxes using Form 502 (Maryland Individual Income Tax Return) or Form 502H if you are a part-year resident. You submit this form along with your federal return, usually by April 15. If you file your federal return late, your Maryland return is also due on the same extended date.

You can file by mail, online through the Maryland Department of Revenue website, or through a tax preparation service. If you use tax software (like TurboTax or H&R Block), it will guide you through the Maryland questions and generate the form for you. If you file by mail, include all required schedules and documentation — the Department of Revenue's website lists what you need based on your situation.

If you are due a refund, Maryland processes returns and issues refunds within four to six weeks of receiving your complete return. If you owe tax, you can pay online, by mail, or through an installment plan if you cannot pay in full.

Nonresident and part-year resident situations

If you worked in Maryland but lived in another state for part or all of the year, you may owe Maryland tax on the income you earned here. You file Form 502NR (Nonresident Income Tax Return) instead of Form 502. You will also file a return in your home state for income earned there. Some states have reciprocal agreements with Maryland to avoid double taxation, but not all do — check with both states' tax departments if you are unsure.

If you moved to Maryland during the year or left Maryland during the year, you are a part-year resident. You file Form 502H and report only the income you earned while you were a Maryland resident. You may also owe tax to your previous state for the months you lived there. Keep records of when you moved and where you worked each month to support your return.

Tax credits and deductions you may use

Maryland offers several tax credits that reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to lower-income workers and is often worth hundreds of dollars. Maryland also offers credits for child and dependent care expenses, education expenses, and property tax paid. Some credits are refundable, meaning you can receive money back even if you owe no tax; others reduce your tax bill to zero but do not result in a refund.

In addition to the standard deduction, you may be able to deduct certain expenses if you are self-employed, such as home office costs, supplies, and vehicle mileage. If you itemize deductions instead of taking the standard deduction, you can deduct state and local taxes paid (up to $10,000 combined for federal purposes, though Maryland does not have this limit). Charitable donations and mortgage interest may also be deductible if you itemize.

Frequently Asked Questions

Do I have to file a Maryland return if I only lived there part of the year?

Yes, if you earned income while living in Maryland, you must file a part-year resident return (Form 502H) reporting only the income earned during the months you lived there. You will also file a return in any other state where you lived and earned income during the year.

Is Social Security taxed in Maryland?

No, Social Security benefits are not taxed by Maryland. However, if you have other income above certain thresholds, some of your Social Security may be taxed at the federal level. You do not need to report Social Security on your Maryland return unless you are claiming a retirement income exemption that requires you to list all income.

What happens if I do not file a Maryland return when I owe tax?

The Maryland Department of Revenue can assess penalties and interest on unpaid tax. If you owe a significant amount, the state may place a lien on your property or garnish your wages. If you cannot pay in full, contact the Department of Revenue about setting up a payment plan before the important date.

Can I deduct federal income tax paid from my Maryland state tax?

No, federal income tax is not deductible on your Maryland return. However, you can deduct state and local taxes (including Maryland income tax and local taxes) on your federal return, up to $10,000 combined.

Do I owe Maryland tax if I work remotely for a company in another state?

If you live in Maryland and work remotely for an out-of-state employer, you owe Maryland tax on your wages. Your employer may not withhold Maryland tax automatically, so you may need to make estimated tax payments or adjust your withholding. Contact your employer's payroll department to confirm what they are withholding.