Maryland doesn't just have one tax rate. If you're looking for a simple "Maryland state tax percent" and hoping for a single digit, you’re going to be disappointed. Honestly, the way Maryland handles money is a bit like a layer cake—one that costs more depending on which county you decide to call home.
Most states keep it straightforward. Not here. In Maryland, you’re hit with a progressive state income tax, then a local piggyback tax, and finally a flat sales tax that covers almost everything else. If you live in Bethesda, you’re paying a different total than someone in Ocean City. It’s a lot to keep track of, but once you break it down, the "Maryland tax trap" starts to make a little more sense.
The State Income Tax: It’s All About the Brackets
Maryland uses a graduated system for its state-level income tax. Basically, the more you make, the higher the percentage the state takes. For 2026, the state has actually shifted things around for the highest earners. If you're a single filer making under $1,000, you only pay 2%. That sounds great, right? But most of us are in the middle.
The vast majority of Marylanders fall into the 4.75% bracket, which covers taxable income between $3,000 and $100,000 for singles.
Then it gets steeper. For single filers, once you cross $100,000, the rate jumps to 5%. It hits 5.75% after $250,000. Under the new 2026 budget rules, very high earners are seeing even higher numbers. We’re talking 6.25% for income over $500,000 and 6.5% once you're clearing a million bucks.
For married couples filing jointly, those thresholds are slightly wider—you don't hit that top 6.5% until you surpass $1,200,000 in taxable income. It’s also worth noting there is a new 2% surtax on capital gains if your federal adjusted gross income (AGI) is over $350,000. That’s a significant bite for investors that didn't exist a few years ago.
The Local "Piggyback" Tax: The Real Difference-Maker
Here is where it gets weird. Maryland is one of the few states where the counties (and Baltimore City) charge their own income tax on top of the state rate. You don't file a separate return for it; the state just collects it for them.
💡 You might also like: Indo Rupiah to AUD: Why You're Losing Money on the Spread
The rates range from 2.25% to 3.20% (and recently, some counties have been authorized to go up to 3.30%).
If you live in Worcester County, you're looking at the lowest local rate in the state at 2.25%. Head over to Howard County, Montgomery County, or Baltimore City, and you’re paying the max. That 1% difference might not sound like much on paper. On a $100,000 salary, though, that's an extra $1,000 out of your pocket every single year just because of your zip code.
Some counties, like Anne Arundel and Frederick, have even started using their own graduated brackets for local taxes. It’s a mess for DIY tax prep. In Anne Arundel, for instance, the rate might be 2.70% on your first $50,000 but climbs to 3.20% as you earn more.
Sales Tax: The 6% Standard (With a Tech Twist)
The Maryland sales tax percent is a flat 6%. Unlike many other states, there are no local sales taxes in Maryland. If you buy a TV in Annapolis, you pay 6%. If you buy it in Hagerstown, you still pay 6%.
💡 You might also like: The Messy Reality of United States Steel Corporation X: Why This Icon is Fighting for Its Life
However, things are changing for 2026. The state recently expanded what it considers "taxable services." There is now a 3% sales tax specifically on data and information technology services. If you’re a business owner paying for specialized data processing or certain IT consulting, that’s a new cost you have to factor in.
Alcohol is the big exception to the 6% rule. Maryland loves its "sin taxes," so you’ll pay 9% on any beer, wine, or spirits you pick up at the store or order at a restaurant.
What About Retirees?
Retirement in Maryland is a mixed bag. The state is actually becoming a bit more friendly here, which is surprising given the overall tax reputation.
Social Security benefits? Totally exempt. Maryland doesn't touch them.
If you’re 65 or older (or totally disabled), you might qualify for the Maryland Pension Exclusion. For 2026, this allows you to subtract up to $39,500 of your pension or annuity income from your taxable total, provided it comes from an employee retirement system.
The big news for 2026 is the expansion of the military retirement subtraction. Veterans can now subtract up to $40,000 of their military retirement income from their Maryland taxes. This is a massive jump from previous years and is part of a larger effort to keep retirees from moving to tax-free havens like Florida or Texas.
Corporate Taxes and Business Burdens
If you’re running a corporation, the rate has historically been a flat 8.25%. There’s a plan in place to slowly walk this back to 6.25% by 2029, but for 2026, you're likely still looking at 7.75%.
Maryland is often criticized for its "business climate." The Tax Foundation recently ranked Maryland near the bottom of the country for tax competitiveness. Between the high corporate rate and the fact that Maryland is one of the few states that still has both an estate tax and an inheritance tax, it's a tough place for high-net-worth business owners.
🔗 Read more: 1 USD in FCFA: Why the Exchange Rate Never Seems to Match Your Google Search
Actionable Steps for Maryland Taxpayers
Understanding the Maryland state tax percent is just the first step. To actually lower your bill, you need to be proactive.
- Check Your County Rate: If you’re planning a move, look at the local tax rate of your target county. Moving across a county line could save you thousands in income tax alone.
- Maximize the Pension Exclusion: If you're over 65, make sure you're using the Pension Exclusion Worksheet (13A). Many people miss this or don't realize that 401(k) distributions often don't qualify unless they are part of a specific employer-maintained plan.
- Track IT Expenses: For small business owners, start separating your "data and IT services" from other expenses now. That 3% tax is going to be a line item you'll need to account for in your 2026 filings.
- Utilize the Senior Tax Credit: If your AGI is under $100,000 ($150,000 for couples) and you’re 65+, you can snag a non-refundable credit of up to $1,750. This is often overlooked because it’s a credit, not a deduction.
Maryland's tax system is dense, but it's not impossible to navigate. By focusing on the combination of state and local rates, you get a much clearer picture of your actual tax burden. Keep an eye on the 2026 adjustments to standard deductions as well—they’ve increased to $3,350 for individuals and $6,700 for joint filers, which provides a small but welcome cushion for everyone.