Planning your finances or just curious about your tax liability in Maryland? Understanding the state's tax system is the first step. The Maryland Income Tax Calculator is an indispensable tool that can help residents and non-residents estimate their financial obligation, taking into account the unique structure of Maryland's state and local income taxes.
Here is a comprehensive look at how the Maryland income tax system works and what goes into calculating your estimated tax bill.
Understanding Maryland's Two-Part Tax System
Unlike many other states, Maryland's personal income tax is a two-tiered system: you pay a state income tax and a local county income tax (also known as a piggyback tax).
1. State Income Tax (Graduated Rates)
Maryland uses a progressive tax structure, meaning the tax rate increases as your taxable income rises. For the 2025 tax year, Maryland has introduced new brackets for higher earners, increasing the top rate.
The state tax rates range from 2.00% to 6.50%.
| Filing Status |
Taxable Income |
Tax Rate |
| Single, MFS, Dependent |
Up to $1,000 |
2.00% |
|
Up to $250,000 |
Up to 5.50% |
|
$250,001 to $500,000 |
5.75% |
|
$500,001 to $1,000,000 |
6.25% |
|
Over $1,000,000 |
6.50% |
| Married Filing Jointly, HOH, Surviving Spouse |
Up to $3,000 |
Up to 4.00% |
|
Up to $300,000 |
Up to 5.50% |
|
$300,001 to $600,000 |
5.75% |
|
$600,001 to $1,200,000 |
6.25% |
|
Over $1,200,000 |
6.50% |
Note: The new 6.25% and 6.50% brackets are effective for tax year 2025 and primarily impact high-income taxpayers.
2. Local County Income Tax (Flat Rate)
All Maryland counties and the city of Baltimore levy a local income tax, which is calculated as a flat percentage of your taxable income.
- Rate Range: Local tax rates generally range from 2.25% to 3.30% (the maximum rate increased from 3.20% to 3.30% for 2025).
- Where you live matters: Your local tax rate is based on the county where you reside on December 31st of the tax year, not the county where you work.
- Nonresidents: If you work in Maryland but live in another state, you pay a flat nonresident local rate, typically 2.25%.
How the Maryland Income Tax Calculator Works
A Maryland income tax calculator estimates your total tax burden by following steps similar to those you would use on an official tax form.
Key Inputs Needed for the Calculator:
- Filing Status: Single, Married Filing Jointly (MFJ), Married Filing Separately (MFS), Head of Household (HOH), or Qualifying Widow(er).
- Federal Adjusted Gross Income (AGI): This is your starting point, which Maryland uses from your federal return.
- County of Residence: This determines your specific local tax rate.
- Deduction Method:
- Standard Deduction: For 2025, the Maryland standard deduction has been increased for all filers. For example, it is $3,350 for Single/MFS and $6,700 for MFJ/HOH.
- Itemized Deductions: You can itemize if your total deductible expenses (including state and local taxes, mortgage interest, etc.) exceed the standard deduction. Keep in mind that high-income earners may face a phase-out of their itemized deductions.
- Subtractions, Additions, and Credits: These are Maryland-specific adjustments to your Federal AGI.
- Subtractions: Common subtractions include pension exclusion for seniors and Social Security benefits.
- Credits: Tax credits directly reduce your tax liability (dollar for dollar). Common credits include the Earned Income Tax Credit (EITC) and tax paid to another state.
- New for 2025: High-income earners may also be subject to a 2% Capital Gains Surtax if their federal AGI exceeds $350,000.
The Calculation Steps:
- Calculate Maryland AGI: Start with your Federal AGI and apply any Maryland additions or subtractions.
- Determine Taxable Income: Subtract your standard or itemized deduction from your Maryland AGI.
- Calculate State Tax: Apply your taxable income to the progressive Maryland state tax brackets.
- Calculate Local Tax: Apply your specific county's flat local tax rate to your taxable income.
- Total Tax Liability: Add the State Tax and the Local Tax, and then subtract any applicable tax credits.
Why Use a Maryland Income Tax Calculator?
A tax calculator is more than just an estimate; it's a powerful financial planning tool:
- Year-Round Planning: It allows you to estimate your tax withholding needs. If you withhold too little, you'll owe tax at the end of the year; too much, and you're giving the government an interest-free loan.
- Budgeting: Get a clearer picture of your take-home pay by estimating the total combined state and local tax percentage.
- Major Life Changes: Moving to a new county, changing jobs, or getting married can all impact your tax liability. A calculator helps you quickly see the financial consequences of these changes.
- Check Withholding: Ensure your employer is withholding the correct amount for both state and local tax based on your current county of residence.
If you want more than just an online estimate, Watter CPA can review your Maryland state and county tax situation & fine-tune your withholding — and build a customized tax plan so your surprises at filing time are minimized. Contact our dedicated team today for decades of expertise.
FAQs
Maryland uses a progressive state income tax from 2.00% up to 6.50%, plus a mandatory local county income tax of about 2.25% to 3.30%, so your actual rate is the combination of your state bracket and your county’s flat rate.
For 2025, a $120,000 income in Maryland is generally taxed at a marginal state rate of about 5.00% if you file single or 4.75% if you file jointly, plus a local rate of roughly 2.25% to 3.30%, giving a combined Maryland marginal rate of around 7% to 8.3% before deductions and credits.
A Maryland paycheck typically withholds federal income tax, 7.65% FICA (Social Security and Medicare), Maryland state income tax between 2.00% and 6.50%, and a local county income tax of about 2.25% to 3.30%, with the exact amount depending on your income, forms, and county of residence.
