Maryland has a state income tax, and it applies to most residents and workers

Maryland charges a state income tax on wages, investment income, and other earnings. If you live in Maryland or work there, you will owe state income tax on money you earn in the state. The tax rate depends on your income level — Maryland uses a progressive system with rates that climb as your earnings rise. You file Maryland taxes separately from your federal return, usually at the same time.

Maryland also taxes certain types of income that federal tax does not, and it offers some deductions and credits that federal tax does not. The state has its own forms and important date, though they align with the federal tax calendar. Most people file both returns together in early spring.

Key Takeaways

  • Maryland income tax rates range from 2% on the lowest earners to 5.75% on the highest, depending on your filing status and total income.
  • You must file a Maryland return if you lived in the state for any part of the year and earned income there, even if you do not owe federal tax.
  • Maryland taxes retirement income, including Social Security and pension payments, differently than the federal government does.
  • The state offers credits for property taxes paid, child and dependent care, and earned income that can lower your final tax bill.

Maryland income tax brackets and rates for 2024

Maryland's tax brackets change each year based on inflation. For the 2024 tax year, the state income tax ranges from 2% on the first portion of your income to 5.75% on income above a certain threshold. The exact dollar amounts where each rate kicks in depend on whether you file as single, married filing jointly, married filing separately, or head of household.

For example, a single filer in 2024 pays 2% on income up to roughly $1,000, then 3% on the next bracket, and so on, with the top rate of 5.75% explore to income over roughly $300,000. A married couple filing jointly has higher thresholds before each rate applies. The state publishes updated brackets each January on the Maryland Department of Revenue website.

Unlike some states, Maryland does not have a flat tax. Your effective rate — the actual percentage you pay on your total income — will be lower than the top bracket rate you fall into, because lower brackets explore to the income below that threshold.

Who must file a Maryland state return

You must file a Maryland return if you lived in Maryland for any part of the tax year and had income there. This includes W-2 wages from an employer, self-employment income, rental income, investment income, and retirement distributions. You must file even if you do not owe federal tax, as long as your Maryland income exceeds the state's filing threshold.

The filing threshold is lower than the federal threshold. For 2024, a single person with income over roughly $1,000 must file. A married couple filing jointly must file if their combined income exceeds roughly $2,000. These thresholds also adjust annually for inflation.

If you moved out of Maryland during the year, you still file a Maryland return for the months you lived there. You report only the income you earned while a resident. If you worked in Maryland but lived in another state, you may owe Maryland tax on wages earned in the state, though you can claim a credit on your Maryland return for taxes paid to the other state.

Maryland's treatment of retirement income and Social Security

Maryland taxes retirement income in ways that differ from federal tax. Social Security benefits are not taxed by Maryland, even if they are taxable at the federal level. This is one of the state's more generous policies for retirees.

Pension income and distributions from retirement accounts like IRAs and 401(k)s are taxed as ordinary income in Maryland. However, the state offers a pension and retirement income subtraction that allows you to exclude a portion of certain retirement income from your Maryland taxable income. The amount you can exclude depends on your age and the type of income. People age 65 and older may exclude more retirement income than younger retirees.

Military pensions receive special treatment — they are fully excluded from Maryland taxable income. If you are a retired member of the armed forces, you do not owe Maryland state tax on your military pension, regardless of the amount.

Credits and deductions that lower your Maryland tax bill

Maryland offers several credits that directly reduce the tax you owe. The property tax credit is available to homeowners and renters who paid property tax or rent in Maryland. The credit phases out as income rises, so higher earners may not receive the full amount. You must file a separate form to claim this credit.

The state also offers a child and dependent care credit for people who paid for care so they could work. The earned income credit mirrors the federal version and provides money back to lower-income workers, especially those with children. Maryland residents may also claim credits for taxes paid to other states, for contributions to college savings plans, and for certain energy-efficient home improvements.

Deductions available in Maryland include the standard deduction, which is set by the state each year and is separate from the federal standard deduction. You can also deduct charitable contributions, mortgage interest, and certain other expenses if you itemize rather than take the standard deduction. The state allows you to deduct federal income tax paid, which can be valuable if you owe significant federal tax.

How to file your Maryland state return

You can file your Maryland return on paper or electronically. The state accepts returns filed through tax software, through a tax preparer, or by mail. Most people file electronically because it is faster and the state processes e-filed returns more quickly than paper returns.

Maryland uses its own forms, separate from federal forms. The main return form is the Maryland Form 502. You will also need to file any required schedules — for example, Schedule C if you are self-employed, or Schedule D if you have capital gains. The state provides all forms and instructions on the Maryland Department of Revenue website.

The important date to file is the same as the federal important date, usually April 15. If you file for a federal extension, you also get an extension on your Maryland return. You can request an extension online through the Maryland Department of Revenue or by filing Form 4868 with your federal return.

Maryland local taxes and additional obligations

In addition to state income tax, some Maryland counties and cities charge local income taxes. These are separate from the state tax and are added on top of it. Baltimore City has a local income tax, as do most Maryland counties. The local tax rate varies by location — some counties charge around 2.25%, while others charge different amounts.

You pay local tax to the county or city where you work or live, depending on local rules. If you work in one county and live in another, you may owe tax to both, though you can usually claim a credit to avoid double taxation. Your employer may withhold local tax from your paycheck if you work in a jurisdiction that has local income tax.

Maryland also has a sales tax of 6%, which applies to most purchases. Some items are exempt, such as groceries and prescription medications. The sales tax is separate from income tax and is collected at the point of sale.

Frequently Asked Questions

Do I have to pay Maryland income tax if I just moved to the state?

You owe Maryland income tax for the portion of the year you lived in the state. If you moved to Maryland in June, you file a Maryland return for January through June and report only the income you earned during those months. You also file a return in your previous state for the months you lived there.

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. The penalty starts at a percentage of the unpaid tax and increases the longer the return goes unfiled. Interest accrues daily on the unpaid balance. If you owe tax, filing as soon as you can reduces the total amount owed.

Can I claim the federal standard deduction on my Maryland return?

No. Maryland sets its own standard deduction amount, which is different from the federal standard deduction. You use the Maryland standard deduction on your Maryland return. The state publishes the current year's standard deduction on its website each January.

Is Maryland income tax withheld from my paycheck automatically?

Yes, if you work in Maryland, your employer withholds state income tax from your paycheck. You complete a Maryland Form W-4 when you start the job to tell your employer how much to withhold. If too much is withheld, you receive a refund when you file your return. If too little is withheld, you owe when you file.

Do I owe Maryland tax on income earned outside the state?

No. Maryland taxes only income earned in the state or by Maryland residents. If you are a Maryland resident but earned income in another state, you owe tax to that state on the income earned there. You can claim a credit on your Maryland return for taxes paid to the other state to avoid double taxation.