Maryland uses a progressive state income tax with rates from 2% to 5.75%, plus mandatory local income taxes ranging from 2.25% to 3.2%. This combination gives Maryland one of the highest overall income tax burdens on the East Coast.
Maryland State Tax Brackets
| Taxable Income | Tax Rate |
|---|---|
| $0 - $1,000 | 2% |
| $1,001 - $2,000 | 3% |
| $2,001 - $3,000 | 4% |
| $3,001 - $100,000 | 4.75% |
| $100,001 - $125,000 | 5% |
| $125,001 - $150,000 | 5.25% |
| $150,001 - $250,000 | 5.5% |
| Over $250,000 | 5.75% |
These are state rates only. You must add local county/city tax on top. Figures based on Comptroller of Maryland guidelines.
Local Income Tax Rates
Maryland is unique in requiring local income taxes in all jurisdictions. These rates vary by county:
| County | Local Rate | Combined Top Rate |
|---|---|---|
| Montgomery County | 3.2% | 8.95% |
| Prince George's County | 3.2% | 8.95% |
| Howard County | 3.2% | 8.95% |
| Baltimore County | 3.2% | 8.95% |
| Baltimore City | 3.2% | 8.95% |
| Anne Arundel County | 2.81% | 8.56% |
| Frederick County | 2.96% | 8.71% |
| Worcester County | 2.25% | 8.00% |
Local tax is based on where you live, not where you work. If you move between counties, your local rate changes.
What You'll See on Your Paystub
A Maryland worker's paystub includes federal income tax withholding plus multiple state and local deductions:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit |
| MD State Income Tax | 2% - 5.75% | Progressive based on income |
| MD Local Income Tax | 2.25% - 3.2% | Based on county of residence |
You'll see both state and local tax as separate line items on your paystub. Together, they can exceed 8% of your income.
Maryland Standard Deduction
Maryland's standard deduction is a percentage of your federal adjusted gross income, with limits:
| Filing Status | Standard Deduction (2026) |
|---|---|
| Single | 15% of AGI, min $1,800, max $2,550 |
| Married Filing Jointly | 15% of AGI, min $3,600, max $5,100 |
Maryland's standard deduction is much lower than the federal amount. Many Maryland residents benefit from itemizing deductions.
Reciprocity with D.C., Virginia, and Others
Maryland has reciprocity agreements with neighboring jurisdictions:
- Live in MD, work in DC: Pay MD taxes only
- Live in MD, work in VA: Pay MD taxes only
- Live in DC, work in MD: Pay DC taxes only (file MD exemption)
- Live in VA, work in MD: Pay VA taxes only (file MD exemption)
- Live in PA, work in MD: Pay PA taxes only (file MD exemption)
- Live in WV, work in MD: Pay WV taxes only (file MD exemption)
Maryland's reciprocity agreements benefit commuters. You only pay taxes to your state of residence, though you'll need to file an exemption form with your employer.
DC Metro Commuters
Many Maryland residents work in Washington D.C. or Northern Virginia:
- Montgomery and Prince George's counties are major DC bedroom communities
- MARC and Metro provide commuter rail and transit
- Remote work has become more common since 2020
- Federal government is a major employer for MD residents
Baltimore Metro Workers
The Baltimore area has diverse employment:
- Johns Hopkins (university and hospital system)
- Under Armour headquarters
- Port of Baltimore logistics
- Federal agencies (NSA, Social Security Administration)
- No additional city income tax beyond the county rate
Federal Employees
Many Maryland residents are federal employees:
- NSA, FDA, NIH, and other agencies are headquartered in MD
- Fort Meade and Aberdeen Proving Ground
- Federal workers living in MD pay MD taxes regardless of where they work
- FERS pension and TSP withdrawals are taxable
Retirement Income
Maryland offers some retirement income exclusions:
- Social Security benefits are fully exempt
- Pension exclusion up to $36,200 (age 65+) or $31,100 (disabled)
- 401(k) and IRA distributions qualify for pension exclusion
- Military retirement pay: partial exclusion available
Maryland's pension exclusion helps offset the high tax rates for retirees, but the exclusion has income limits. High-income retirees may not qualify.
Maryland vs. Neighboring States
| State | Tax Structure | Top Rate |
|---|---|---|
| Maryland (state + local) | Progressive + Local | 8.95% |
| Washington D.C. | Progressive | 10.75% |
| Virginia | Progressive | 5.75% |
| Pennsylvania | Flat | 3.07% |
| Delaware | Progressive | 6.6% |
| West Virginia | Progressive | 5.12% |
Comparing Take-Home Pay
Here's how a $100,000 annual salary compares in the DC-Baltimore corridor:
| Location | Effective Rate | Annual State/Local Tax |
|---|---|---|
| Maryland (Montgomery Co.) | ~7.5% | ~$7,500 |
| Washington D.C. | ~7.2% | ~$7,200 |
| Virginia | ~5.3% | ~$5,300 |
| Pennsylvania | ~3.07% | ~$3,070 |
Maryland's combined state and local rates make it one of the highest-tax states in the region. Virginia offers significantly lower taxes for similar access to DC metro jobs.
Key Takeaways
- Maryland has both state (up to 5.75%) and local (2.25-3.2%) income taxes
- Combined rates can reach 8.95% in most populated counties
- Local tax is based on where you live, not where you work
- Reciprocity with DC, VA, PA, and WV simplifies multi-state situations
- Standard deduction is much lower than federal—consider itemizing