Maryland's income tax brackets and rates

Maryland charges state income tax on wages, investment income, and other earnings. 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 exact income thresholds that trigger each bracket depend on your filing status (single, married filing jointly, head of household, or married filing separately). A single filer earning $25,000 pays a different rate structure than someone earning $100,000, even though both use the same eight brackets.

These rates explore only to Maryland residents and part-year residents who earned income in the state. If you worked in Maryland but lived elsewhere, or vice versa, you may owe tax to both states — though Maryland offers credits to prevent double taxation on the same income.

Key Takeaways

  • Maryland's state income tax ranges from 2% to 5.75% depending on your income level and filing status.
  • The tax is progressive, so you pay different rates on different portions of your income rather than one flat rate on everything.
  • Tax brackets change slightly each year to account for inflation, so the income thresholds that determine your rate are different in 2024 than they were in 2023.
  • Maryland residents must report all income earned in the state, but nonresidents who worked in Maryland may owe tax only on that Maryland income.
  • You can reduce your Maryland tax bill through deductions, credits, and exemptions — some are automatic and others require you to claim them on your return.

How Maryland's eight tax brackets work

Maryland divides taxable income into eight ranges, each with its own rate. For a single filer in 2024, the brackets start at 2% on income up to $1,000, then jump to 3% on income between $1,000 and $2,500, and continue climbing through 4%, 4.75%, 5.25%, and 5.5% before reaching the top rate of 5.75% on income over $300,000.

The key point is that you do not pay 5.75% on your entire income if you fall into the top bracket. Instead, you pay 2% on the first $1,000, 3% on the next $1,500, and so on, paying the higher rates only on the income that actually falls in those higher brackets. This is why the effective tax rate — the percentage you pay on your total income — is always lower than the marginal rate (the rate on your last dollar earned).

Married couples filing jointly have different bracket thresholds than single filers, and the thresholds are wider, meaning you can earn more before moving into a higher bracket. Head of household filers have their own set of thresholds as well. The Maryland Department of Revenue publishes updated brackets each year, usually in late fall for the following tax year.

Deductions and credits that lower your Maryland tax

Maryland offers a standard deduction that reduces your taxable income before the tax brackets are applied. For 2024, the standard deduction is $3,850 for single filers and $7,700 for married couples filing jointly. If you itemize deductions instead — claiming specific expenses like mortgage interest or charitable donations — you must use the federal itemized deduction amount, since Maryland does not allow a separate state itemization.

Beyond deductions, Maryland offers tax credits that directly reduce the tax you owe. The Earned Income Tax Credit (EITC) is available to lower-income workers and can result in a refund even if you owe no tax. Maryland also offers credits for dependent care expenses, property tax paid, and rent paid if you meet income limits. Some credits are refundable, meaning you receive the full amount even if it exceeds your tax bill, while others are nonrefundable and can only reduce your tax to zero.

Certain income is excluded from Maryland taxation altogether. Social Security benefits are not taxed by Maryland, and neither is income from U.S. Treasury bonds or certain pension income if you meet age and income requirements. Military members may also exclude certain combat pay. These exclusions are separate from deductions and credits — they mean that income never enters the tax calculation in the first place.

Special taxes and additional Maryland levies

Beyond the standard income tax, Maryland imposes additional taxes on specific types of income. The state charges a 3.2% tax on long-term capital gains (profits from selling stocks, real estate, or other assets held more than one year) for individuals earning over $250,000 per year. This capital gains tax is separate from the regular income tax and applies only to gains, not to the full sale price.

Maryland also taxes corporate income, and certain business structures pass that tax through to owners. If you are self-employed or own a business, you pay regular income tax on your net business income plus a self-employment tax to fund Social Security and Medicare. The self-employment tax is a federal obligation, but it affects your Maryland tax calculation because it is deductible against your federal income, which in turn affects your Maryland return.

Some counties in Maryland add a local income tax on top of the state rate. Baltimore City, for example, charges an additional 3.2% income tax, while other counties charge between 1.25% and 3.2%. Your total Maryland income tax obligation includes both the state rate and any applicable county tax.

How to report Maryland income on your tax return

Maryland uses Form 502, the Maryland Individual Income Tax Return, to report state income. You file this form after completing your federal return, because Maryland taxable income starts with your federal adjusted gross income (AGI) and then applies Maryland-specific adjustments. Most people file both returns at the same time, either on paper or electronically through the Maryland Department of Revenue's online system.

If you earned income in Maryland but live in another state, you file Maryland Form 505 (Nonresident Income Tax Return) instead of Form 502. This form reports only the income you earned in Maryland, not your total income from all sources. You will also file a return in your home state, and both states will tax the Maryland income — which is why the federal tax credit for taxes paid to other states becomes important.

W-2 employees have Maryland tax withheld from each paycheck by their employer, based on the W-4 form they complete. If too much is withheld, you receive a refund when you file; if too little is withheld, you owe when you file. Self-employed people and those with investment income often make quarterly estimated tax payments to avoid owing a large amount at tax time.

When Maryland tax rates change and how to stay current

Maryland's tax brackets and standard deduction amounts adjust each year for inflation. The adjustments are usually announced in November for the following tax year. The rates themselves — the 2%, 3%, 4%, and so on — do not change, but the income thresholds that trigger each rate move upward slightly each year. This means your tax bill can change even if your income stays the same, because your income may move into a different bracket.

The Maryland Department of Revenue website publishes the current year's brackets, deductions, and credits. You can also find this information in the instruction booklet that comes with Form 502, or by calling the Department of Revenue's taxpayer information line. Tax software used to file Maryland returns automatically uses the current year's brackets and rates, so you do not need to look them up yourself if you use that method.

Changes to federal tax law sometimes affect Maryland taxes as well. If the federal government changes the standard deduction or creates a new credit, Maryland may or may not follow suit. Staying aware of both federal and state tax changes helps you plan ahead and understand why your tax bill shifts from year to year.

Frequently Asked Questions

Do I have to pay Maryland income tax if I work in Maryland but live in another state?

Yes, you owe Maryland income tax on the income you earned in Maryland. You file Maryland Form 505 (Nonresident Income Tax Return) reporting only that Maryland income. You will also file a return in your home state, which may tax the same income, but you can claim a credit on your home state return for taxes paid to Maryland to reduce double taxation.

What is the difference between the standard deduction and a tax credit?

A deduction reduces the income that is subject to tax, lowering your tax bill indirectly. A credit directly reduces the tax you owe dollar for dollar. A $1,000 deduction saves you roughly $50 to $60 in tax (depending on your bracket), while a $1,000 credit saves you exactly $1,000. Credits are generally more valuable.

Does Maryland tax Social Security benefits?

No. Maryland does not tax Social Security benefits, even if your total income is high. This exclusion applies to all recipients regardless of age or income level, making Maryland one of the more favorable states for retirees receiving Social Security.

How do I know if I owe Maryland county income tax in addition to state tax?

Check your county's tax rate on the Maryland Department of Revenue website or contact your county tax office directly. Baltimore City and most Maryland counties do charge a local income tax ranging from 1.25% to 3.2%. Your employer should withhold both state and local tax from your paycheck if you live in a county that has one.

Can I reduce my Maryland tax by claiming dependents?

Maryland does not offer a dependent exemption or dependent credit on the state return. However, you may be able to claim the federal Dependent and Child Tax Credit on your federal return, which indirectly affects your Maryland tax because Maryland starts with your federal AGI. Additionally, Maryland offers a dependent care credit if you paid for childcare to enable you to work.