Yes, Maryland does have a personal income tax. This tax applies to residents and part-year residents along with individuals generating income in the state. It is entirely separate from the Maryland personal property tax, which only applies to businesses and is based on tangible assets like equipment and inventory.
Instead of business personal property tax Maryland filings—which are handled by the Department of Assessments and Taxation—personal income tax is managed by the Comptroller of Maryland. If you live or work in Maryland, will likely need to file a state income tax return annually.
Key Points About Maryland Personal Income Tax
- It is parallel to taxable income and applies to both residents and nonresidents who generate income in the state.
- The state obtains a progressive tax system, with rates increasing alongside income brackets.
- In addition to the state income tax, Maryland counties and Baltimore City impose local income taxes. They are calculated as a percentage of the state taxable income.
How It Differs from Maryland Personal Property Tax
- Personal income tax varies in line with the earnings and filed individually with the Comptroller’s Office.
- Maryland personal property tax applies to businesses and is based on physical assets. It necessitates a Maryland SDAT personal property return as part of annual Maryland business tax filing.
- Items like office machinery and inventory are subject to business property tax—not personal income tax.
- Vehicle tax in Maryland, on the other hand, is collected separately by the MVA and is not part of either system.
The distinction between them should be acknowledged in orderto prevent confusion during tax season—especially if you are responsible for both individual and business filings.
If you are unsure about how your income or business assets are taxed in Maryland, Watter CPA presents expert guidance to protect your fully compliant status. Contact us today for financial clarity.
