Determining your income tax rate in Maryland is a two-step calculation, as the state employs a unique system that combines both a state income tax and a mandatory local county income tax. This means your total effective rate depends on both your income level and your county of residence.
The state of Maryland levies a progressive income tax, which means the tax rate increases as your taxable income rises. For the 2025 tax year, the state tax rates range from a low of 2.00% up to a new high of 6.50%.
The brackets start at 2.00% for the lowest levels of taxable income. The rates climb steadily until they reach the top marginal brackets, which were recently updated to impact high-income earners:
It is crucial to remember that this progressive system applies the marginal rate only to the portion of income that falls within that specific bracket, not to your entire income.
Maryland is one of the few states where local governments impose their own income tax, often called a "piggyback tax" because it's calculated on the same taxable income as the state tax.
To find your true Maryland tax rate, you must add the applicable state marginal rate and your county's flat local rate.
For instance, a resident in a county with a 3.20% local rate and a state income tax bracket of 5.50% would have a combined marginal tax rate of 8.70% (5.50% + 3.20%) on income falling into that bracket. The highest combined marginal rate, including the new 6.50% state bracket and the 3.30% local maximum, can reach 9.80% for the state's highest earners.
Because of this two-part structure, the exact Maryland income tax rate you pay is highly specific to your financial situation and your address within the state.
If Maryland’s mix of state brackets and county “piggyback” taxes feels confusing, Watter CPA can calculate your true effective rate, & explain what it means for your paycheck — and build a tax plan to keep more of your income in your pocket. Reach out to us today for 360-degree support.
