For residents of the Old Line State, navigating the complexities of Maryland State Income Tax is as essential as knowing how to pick a blue crab, yet it often feels significantly more complicated due to the unique structure of the local “piggyback” tax that accompanies the standard state levy. Unlike many other jurisdictions where you simply file a return and pay a flat percentage, Maryland operates a graduated tax bracket system that ranges from 2% to 5.75% for most filers, ensuring that higher earners contribute a larger share while those with modest incomes are taxed at a lower rate. However, the real curveball for newcomers and seasoned residents alike is the additional local income tax, which is imposed by each of the 23 counties and Baltimore City, effectively tacking on another 2.25% to 3.20% to your bill depending on where you sleep at night. Understanding this dual-layer system—comprised of both the state-level assessment and the county-level surcharge—is critical for accurate financial planning, estimating your withholdings correctly, and ultimately avoiding a surprise bill from the Comptroller of Maryland when April 15th rolls around. Whether you are a single filer in Montgomery County or a married couple in rural Garrett County, getting a handle on your taxable net income, standard deductions, and personal exemptions is the first step toward fiscal peace of mind.
The Bracket Breakdown
Maryland’s tax system is progressive, meaning the more you earn, the higher your rate. For single filers, the first $1,000 of taxable net income is taxed at a gentle 2%, but this quickly ramps up. By the time you reach $3,000 in taxable income, you are at 4.75%, and income over $250,000 (for singles) hits the top marginal rate of 5.75%. It is important to remember that these rates apply only to your state taxable income, which is your federal adjusted gross income (AGI) after specific Maryland modifications.
The “Piggyback” Local Tax
This is where Maryland is unique. In addition to the state rates mentioned above, you must pay a local income tax based on your county of residence. This is often called a “piggyback” tax because it rides on top of the state tax form. The rates vary significantly; for example, Worcester County might have a rate as low as 2.25%, while Baltimore City and high-cost areas like Prince George’s County max out at 3.20%. This local portion is calculated on the same taxable income line as your state tax, so deductions that lower your state burden also lower your local one.
Deductions and Exemptions
To lower your bill, you can take advantage of the standard deduction or choose to itemize. For the 2025 tax year (filed in 2026), the standard deduction amounts are adjusted for cost-of-living increases. Single taxpayers can claim a standard deduction of 15% of their Maryland AGI, subject to a minimum of roughly $1,700 and a maximum cap. Personal exemptions are another key way to save; typically, you can subtract $3,200 for yourself and each dependent, provided your income doesn’t exceed certain thresholds ($100,000 for single filers).
Maryland State Income Tax Brackets 2026
| Rate | Single Filers (Taxable Income) | Joint Filers / Head of Household (Taxable Income) |
|---|---|---|
| 2.00% | $0 – $1,000 | $0 – $1,000 |
| 3.00% | $1,001 – $2,000 | $1,001 – $2,000 |
| 4.00% | $2,001 – $3,000 | $2,001 – $3,000 |
| 4.75% | $3,001 – $100,000 | $3,001 – $150,000 |
| 5.00% | $100,001 – $125,000 | $150,001 – $175,000 |
| 5.25% | $125,001 – $150,000 | $175,001 – $225,000 |
| 5.50% | $150,001 – $250,000 | $225,001 – $300,000 |
| 5.75% | $250,001 – $500,000 | $300,001 – $600,000 |
| 6.25% | $500,001 – $1,000,000 | $600,001 – $1,200,000 |
| 6.50% | Over $1,000,000 | Over $1,200,000 |
Filing for Non-Residents
If you work in Maryland but live in a neighboring state like Pennsylvania, Virginia, West Virginia, or Washington, D.C., you might be in luck. Maryland has a reciprocal agreement with these jurisdictions. This means that if your only source of income is wages or salary, you do not have to file a Maryland non-resident return; you simply pay tax to your home state. However, you must file a specific exemption form (Form MW507) with your Maryland employer to prevent them from withholding Maryland tax from your paycheck erroneously.
Frequently Asked Questions
Q: Do I have to pay both state and county tax?
A: Yes, Maryland residents must pay the state income tax plus the local tax for the county where they reside.
Q: What is the highest tax rate in Maryland?
A: The top state marginal rate is 5.75%, plus a potential local tax of up to 3.20%, totaling nearly 9%.
Q: Does Maryland tax Social Security benefits?
A: No, Social Security benefits are generally exempt from Maryland state income tax.