State taxes: Maryland

Overview of Maryland Taxes

The Maryland state personal income tax currently begins at a minimum of 2% and increases up to a maximum of 5.75%. Maryland nonresidents are subject to a special tax rate of 1.75% in addition to the state income tax rate. More on Maryland taxes can be found in the tabbed pages below.

Personal income tax

Maryland collects income taxes from its residents utilizing 8 tax brackets. For single, married filing separately, or dependent taxpayers or fiduciaries, the rates are:

• 2% on the first $1,000 of taxable income.
• 3% on taxable income between $1,001 and $2,000.
• 4% on taxable income between $2,001 and $3,000.
• 4.75% on taxable income between $3,001 and $100,000. (for married joint, qualifying widowers and head-of-household filers, the 4.75% rate applies to $3,001 to $150,000)
• 5% on taxable income between $100,001 and $125,000. (for married joint, qualifying widowers and head-of-household filers, the 5% rate applies to $150,001 to $175,000)
• 5.25% on taxable income between $125,001 and $150,000. (for married joint, qualifying widowers and head-of-household filers, the 5.25% rate applies to $175,001 to $225,000)
• 5.50% on taxable income between $150,001 and $250,000. (for married joint, qualifying widowers and head-of-household filers, the 5.50% rate applies to $225,001 to $300,000)
• 5.75% on taxable income of $250,001 and more. (for married joint, qualifying widowers and head-of-household filers, the 5.75% rate applies to $300,001 and more)

Nonresidents are subject to a special nonresident tax rate of 1.25%, in addition to the state income tax rate.

Residents of Maryland must file state tax forms by April 15 or the next business day if that date falls on a weekend or holiday.

Baltimore and Maryland’s 23 counties levy local “piggyback” income taxes at rates between 1.25% and 3.20% of Maryland taxable income. Local officials set the rates, and the revenue is returned to the local governments quarterly.

Local income taxes are withheld and collected on the same forms as state income taxes.

Maryland offers a variety of personal income tax credits and deductions to eligible filers.

Sales taxes

Maryland’s state sales tax is 6%.

There are no general local sales taxes in Maryland.

Maryland also has a 6% use tax applied to tax-free purchases made out of state and which must be reported and paid by filing the state’s use tax return.

Personal and real property taxes

All real property in Maryland is subject to the property tax.

Generally, properties that are owned and used by religious, charitable or educational organizations or property owned by the federal, state or local governments are exempt.

Property tax bills are issued in July or August of each year by the 23 counties, Baltimore and the 155 incorporated municipalities in Maryland. Tax bills are rendered for the upcoming fiscal year and are effective as of July 1.

Real property is reassessed on a 3-year cycle by the real property valuation division. Every year, 1/3 of all property in Maryland is reviewed, including an exterior physical inspection of the property.

The amount of the tax bill is determined by 2 factors: the assessment and the property tax rate. Assessments are based on the fair market value of the property and are issued by the Department of Assessments and Taxation, an agency of state government. Property tax rates are set by each unit of government: the state, counties and cities.

Property tax rates vary widely. No restrictions or limitations on property taxes are imposed by the state, meaning cities and counties can set tax rates at the level they deem necessary to fund governmental services. These rates can increase, decrease or remain the same from year to year. If the proposed tax rate increases the total property tax revenues, the governing body must advertise that fact and hold a public hearing on the new tax rate. This is called the constant yield tax rate process.

Maryland offers a variety of property tax credit programs.

The homestead property tax credit, commonly referred to as the assessment cap, limits the taxation of large annual assessment increases on owner-occupied residential property. For state tax purposes, any annual assessment increase for a home that is greater than 10% is not taxed.

Maryland also offers property tax credits for renters who meet certain requirements. The renters’ tax credit program was modeled after and designed to be similar in principle to the homeowners’ tax credit program, which is also known as the Circuit Breaker Program. The concept is that renters indirectly pay property taxes as part of their rent and thus should have some protection, as do homeowners.

To find your local property tax official, check the State Department of Assessments and Taxation Web page, or call (410) 767-4433 from the Baltimore area.

Inheritance and estate taxes

A Maryland estate tax return is due for residents who died after Dec. 31, 2001, if the decedent’s federal gross estate plus adjusted taxable gifts equaled or exceeded a specific limit at the time of death and the decedent was either a resident of Maryland at the time of death or owned real or tangible personal property in the state.

For decedents in 2015, estates of $1.5 million or more are taxed. For 2016, the estate tax threshold is $2 million.

Maryland imposes an inheritance tax on the value of property passed from a decedent to some beneficiaries.

Common questions and answers about Maryland’s estate and inheritance taxes can be found on the comptroller of Maryland’s Web page.

Other Maryland tax facts

With i-File Maryland, the state’s taxpayers can e-file personal income tax returns, along with the most commonly associated schedules and forms.

Under Maryland law, all people offering individual tax preparation services must be licensed with the State Board of Individual Tax Preparers. More information is available at the Department of Labor, Licensing and Regulation website.

For more information, contact the comptroller of Maryland. If you have additional tax questions, send an email to the state’s Tax Help service.

To download tax forms on this site, you will need to install a free copy of Adobe Acrobat Reader. Click here for instructions.