Maryland charges a state income tax on wages, investments, and other earnings
Maryland's state income tax is a tax on money you earn — from your job, self-employment, investments, or retirement accounts. Unlike some states, Maryland taxes all these income types. The tax rate depends on how much you earn: the more you make, the higher percentage you pay. Maryland uses a progressive tax system, meaning rates climb in steps as your income rises.
You file Maryland state taxes separate from federal taxes, usually at the same time. If you work in Maryland or live there, you owe Maryland income tax on your earnings. If you live in Maryland but work in another state, the rules depend on where you earned the money and what agreements exist between the states.
Maryland also taxes capital gains (profit from selling investments), retirement account withdrawals, and certain types of interest income. The state does not tax Social Security benefits, but it does tax most other retirement income.
Key Takeaways
- Maryland's income tax rates range from 2% on the lowest earners to 5.75% on the highest, with six tax brackets in between.
- You file a separate Maryland state return even if you file federal taxes, and the important date is usually April 15.
- Maryland taxes wages, self-employment income, investment gains, and retirement withdrawals, but not Social Security.
- If you work in another state, you may owe tax to that state instead of Maryland, depending on residency and reciprocal agreements.
- Property tax, sales tax, and corporate tax are separate from income tax and work differently.
Maryland's income tax brackets and rates for 2024
Maryland divides income into seven brackets. Each bracket has its own rate, and you only pay that rate on income within that bracket — not on all your income. For example, if you earn $50,000, you do not pay 4.75% on the whole amount; you pay 2% on the first portion, then 3% on the next portion, and so on.
The brackets change slightly each year because they are adjusted for inflation. For 2024, the brackets for single filers are roughly: 2% up to $1,000; 3% from $1,000 to $2,500; 4% from $2,500 to $3,200; 4.75% from $3,200 to $5,100; 5.25% from $5,100 to $10,300; and 5.75% on income above $10,300. Married couples filing jointly have higher bracket thresholds. The exact numbers shift annually, so check the Maryland Department of Revenue website for the current year.
These rates explore only to state income tax. You also owe federal income tax, which has its own separate brackets and rates. Some Maryland counties add a local income tax on top of the state tax, ranging from 1.25% to 3.2% depending on where you live.
What income counts and what does not
Maryland taxes earned income — wages from a job, salary, tips, and self-employment profit. It also taxes unearned income like interest from savings accounts, dividends from stocks, capital gains from selling investments, and distributions from retirement accounts like IRAs and 401(k)s.
Maryland does not tax Social Security benefits, even if you have other income. It also does not tax certain retirement income under specific conditions: if you are over 65 and receive a pension, you may exclude up to $31,200 of pension income from taxation (the threshold changes yearly). Military pensions have different rules and may be fully or partially exempt.
Gifts and inheritances are not taxed as income in Maryland. Reimbursements for business expenses are not taxed if they are legitimate reimbursements, not extra pay. Certain scholarships and educational grants are not taxed if they pay for tuition and required fees, though room and board are taxable.
How to file Maryland state taxes
You file Maryland taxes using Form 502 (the main return) or Form 505 (a shorter form for straightforward situations). Both are available on the Maryland Department of Revenue website. You can file by mail, online through the state's free filing system, or through a tax preparation service like TurboTax or H&R Block.
The important date is usually April 15, the same as federal taxes. If you file your federal return early, you can file Maryland at the same time. If you need more time, you can request an extension, which gives you until October 15 to file — though taxes are still due by April 15 if you owe money.
You will need your Social Security number, W-2 forms from employers, 1099 forms for other income, records of deductions or credits you claim, and information about any taxes already withheld from your paychecks. If you are self-employed, you also need records of business income and expenses.
Tax withholding and refunds
When you work for an employer in Maryland, your employer withholds state income tax from each paycheck based on a form you fill out called a W-4. The amount withheld depends on how much you earn, how many dependents you claim, and other adjustments you make. If too much is withheld, you get a refund when you file. If too little is withheld, you owe money.
You can adjust your withholding at any time by giving your employer a new W-4. If you are self-employed or have income with no withholding, you may need to make estimated tax payments four times a year to avoid owing a large amount at tax time.
Refunds typically arrive within four to six weeks of filing if you file electronically and request direct deposit. Paper checks take longer. You can check the status of your refund on the Maryland Department of Revenue website using your Social Security number and the amount you expect to receive.
Credits and deductions that lower your Maryland tax
Maryland offers several credits that 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. The Child and Dependent Care Credit helps if you pay for childcare while you work. The Education Credit applies if you or a dependent attended college.
You can also deduct certain expenses. If you itemize deductions (rather than taking the standard deduction), you can deduct state and local taxes paid, mortgage interest, charitable donations, and medical expenses above a threshold. Most people take the standard deduction, which is simpler and often larger.
Maryland also offers credits for property tax if you are a homeowner with low income, and credits for renters in similar situations. These are separate from income tax but filed on your state return. Check the Maryland Department of Revenue website or a tax professional to see which credits explore to your situation.
How Maryland income tax differs from federal and local taxes
Federal income tax is collected by the IRS and goes to the U.S. government. Maryland state income tax goes to the state government. Some Maryland counties and cities also charge local income tax, which is a third layer. You file separate returns for each: federal, state, and (if applicable) local.
The rates, brackets, deductions, and credits are different for each. A deduction you can take on your federal return may not be allowed on Maryland's return, or vice versa. For example, Maryland allows a deduction for military pensions that federal tax does not.
Maryland also has sales tax (6% statewide, plus local additions in some counties) and property tax (paid by homeowners to their county). These are separate from income tax and work on different rules. Sales tax is paid when you buy goods; property tax is paid annually based on your home's assessed value.
If you work in another state or moved to Maryland
If you live in Maryland but work in another state, you may owe income tax to that state instead of Maryland, depending on where you earned the money. Some states have reciprocal agreements with Maryland, meaning you pay tax only to your home state. Pennsylvania and Virginia have such agreements with Maryland. If you work in a state without a reciprocal agreement, you typically owe tax to that state.
If you moved to Maryland partway through the year, you file as a part-year resident. You owe Maryland tax only on income earned after you moved to the state. You may also owe tax to your previous state on income earned there. Both states will want to see proof of when you moved.
If you are not a Maryland resident but earned income in Maryland, you may owe Maryland tax on that income even though you live elsewhere. This applies to people who work in Maryland but live in another state. You file a nonresident return in Maryland and a resident return in your home state.
Frequently Asked Questions
Do I have to file Maryland taxes if I live there but earned very little money?
You must file if your income exceeds the filing threshold for your age and status. For 2024, a single person under 65 must file if they earned more than about $12,950. If you earned less, you do not have to file, though you may want to if taxes were withheld from your paychecks — you could get a refund.
What happens if I do not pay Maryland income tax?
The Maryland Department of Revenue can assess penalties and interest on unpaid taxes. If you owe a significant amount, the state can place a lien on your property, garnish your wages, or intercept your tax refund. If you cannot pay in full, you can contact the Department of Revenue about a payment plan.
Can I deduct federal income tax paid from my Maryland state taxes?
No. Maryland does not allow a deduction for federal income tax. You can deduct state and local taxes (SALT) on your federal return, but not the other way around.
Is Maryland income tax withheld automatically from my paycheck?
Yes, if you work for an employer in Maryland. Your employer withholds state income tax based on the W-4 form you complete. If you are self-employed or have income without withholding, you must arrange to pay estimated taxes yourself.
What is the difference between Maryland's standard deduction and itemized deductions?
The standard deduction is a fixed amount you can subtract from your income with no documentation required. For 2024, it is about $4,850 for single filers. Itemized deductions let you add up specific expenses like mortgage interest and charitable gifts. You choose whichever is larger for your situation.