Maryland's income tax brackets and rates
Maryland charges state income tax on wages, self-employment income, and investment gains. The state uses a progressive tax system, meaning the rate increases as your income rises. You do not pay the highest rate on all your income — only on the portion that falls within each bracket.
As of 2024, Maryland has eight tax brackets ranging from 2% on the lowest incomes to 5.75% on the highest. The brackets change slightly each year to account for inflation. A single filer earning $30,000 pays tax at the 4.75% rate on income above $26,100 but below $31,100, not 4.75% on the entire $30,000.
Maryland also taxes capital gains — profits from selling stocks, real estate, or other investments — at the same rates as ordinary income. Long-term capital gains (assets held over one year) receive no special lower rate in Maryland, unlike the federal system.
Key Takeaways
- Maryland's top income tax rate is 5.75%, applied only to income above a certain threshold that changes yearly.
- The state uses eight tax brackets, so you pay different rates on different portions of your income.
- Both wages and investment income are taxed at the same rates; Maryland does not offer preferential rates for capital gains.
- You must file a Maryland return if you earned income in the state, even if you also filed a federal return.
- Certain income sources, such as federal bonds and some retirement distributions, may be partially or fully exempt from Maryland tax.
Who has to file a Maryland income tax return
You must file a Maryland return if you lived in the state for any part of the tax year and earned income above the filing threshold. The threshold depends on your filing status and age. For 2024, a single person under 65 must file if they earned more than $13,100; a married couple filing jointly must file if combined income exceeded $26,200.
If you worked in Maryland but lived elsewhere, you still owe Maryland tax on the income you earned in the state. You file a part-year resident return or a non-resident return, depending on how long you lived there. Maryland will credit any taxes you paid to another state to avoid double taxation.
Even if your income falls below the filing threshold, you may want to file anyway if taxes were withheld from your paychecks — filing gets you a refund of the overpayment.
Deductions and exemptions available in Maryland
Maryland allows you to claim either the standard deduction or itemized deductions, just as you do on your federal return. For 2024, the Maryland standard deduction is $3,650 for single filers and $7,300 for married couples filing jointly. These amounts are lower than the federal standard deduction, so many people who itemize federally will also itemize in Maryland.
Maryland offers a personal exemption of $3,200 per person, plus an additional $1,000 exemption if you are over 65 or blind. These exemptions reduce your taxable income further. You cannot claim both the standard deduction and personal exemptions — you use one or the other.
Certain income is exempt from Maryland tax. Federal bond interest is not taxed by the state. Distributions from federal retirement plans, including military pensions, are exempt. Some retirement income, such as distributions from IRAs and 401(k)s, may be partially exempt if you meet age and income requirements.
How Maryland taxes retirement income
Maryland offers a partial exemption for retirement income if you are 65 or older. Distributions from IRAs, 401(k)s, and similar plans are exempt up to $31,100 per person per year, provided your federal adjusted gross income does not exceed $100,000 (or $150,000 if married filing jointly). Above those income thresholds, the exemption phases out.
Social Security benefits are not taxed by Maryland, regardless of your age or income. Military pensions are fully exempt. Teacher pensions and other government employee pensions are also exempt, as long as the pension is from a government employer.
If you receive a pension from a private employer, it is taxed as ordinary income unless it qualifies under the retirement income exemption described above. The rules are complex, and your pension administrator or a tax preparer can tell you whether your specific pension qualifies.
Tax credits that reduce what you owe
Maryland offers several tax credits that directly reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers. Maryland's credit is in addition to the federal EITC and can be worth several hundred dollars depending on your income and family size.
The Child and Dependent Care Credit helps offset the cost of childcare or adult care needed so you can work. You claim it on your Maryland return if you paid for care and have a dependent. The credit is worth up to 20% of your expenses, capped at $1,200 in expenses per dependent.
Maryland also offers credits for property tax paid, rent paid (if you are a renter), and contributions to certain savings accounts. These credits are smaller but can add up if you may have access to for more than one.
Filing your Maryland return and where to send it
You file your Maryland return with the Comptroller of Maryland, the state agency that collects income tax. You can file online using the Comptroller's website, by mail, or through a tax preparation service. The important date is the same as the federal important date, typically April 15.
If you file electronically, you receive a refund faster — usually within two to four weeks. If you mail a paper return, allow six to eight weeks. You can check the status of your refund on the Comptroller's website using your Social Security number and the amount of your refund.
If you cannot file by April 15, you can request an extension. An extension gives you until October 15 to file, but taxes owed are still due by April 15 — the extension only delays filing, not payment. If you owe and do not pay by the important date, you will owe interest and penalties.
How Maryland taxes differ from federal income tax
Maryland's top rate of 5.75% is lower than the federal top rate of 37%, but you pay both. Your federal return and Maryland return are separate; you cannot use one to satisfy the other. Some deductions and credits available federally are not available in Maryland, and vice versa.
Maryland does not offer a preferential rate for long-term capital gains, while the federal government taxes them at 15% or 20% depending on income. This means investment income is taxed more heavily in Maryland than at the federal level. Maryland also does not allow a deduction for federal income taxes paid, though you can deduct state and local taxes (SALT) up to $10,000 on your federal return.
If you live in Maryland but work in another state, or vice versa, you may owe tax to both states. Maryland credits taxes paid to other states to prevent this double taxation, but you need to file returns in both places to claim the credit.
Frequently Asked Questions
Do I have to pay Maryland income tax if I work remotely for an out-of-state company?
Yes. If you live in Maryland and work remotely, 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 federal withholding to cover the state liability.
What is the difference between Maryland's standard deduction and the federal standard deduction?
Maryland's standard deduction is lower than the federal amount. For 2024, Maryland's is $3,650 for single filers versus the federal $14,600. You file both returns separately, so you may itemize on one and take the standard deduction on the other.
Can I deduct my federal income taxes from my Maryland return?
No. Maryland does not allow a deduction for federal income taxes paid. You can deduct state and local taxes (SALT) on your federal return, but the deduction is capped at $10,000 per year.
Does Maryland tax Social Security benefits?
No. Maryland does not tax Social Security benefits at any income level. Even if your total income is very high, your Social Security is not subject to Maryland income tax.
What happens if I move out of Maryland mid-year?
You file a part-year resident return showing the months you lived in Maryland and the months you lived elsewhere. You owe Maryland tax only on income earned while you were a resident. You may also owe tax to the state you moved to, depending on when you arrived and that state's rules.