Talking about taxes in Maryland usually triggers a specific kind of groan. You know the one. It’s that realization that living in the "Old Line State" comes with a price tag that’s a bit more layered than a Smith Island cake. If you’re looking at the state tax rate for maryland, you can’t just look at one number and call it a day. It’s not like Florida or Texas where things are relatively flat. Here, it’s a tiered, progressive system that loves to play tag-team with your local county.
Honestly, the way Maryland handles its money is unique. While most states have a state rate and maybe a local sales tax, Maryland flips the script. We have a unified sales tax but a deeply fragmented income tax. Basically, your neighbor across the county line might be paying a totally different amount for the exact same salary. It’s kinda wild when you think about it.
The 2026 Shift: Maryland's New Income Brackets
For a long time, the state's top rate was a steady 5.75%. But as of the 2025 legislative session, things changed for the high-earners. If you're pulling in a significant paycheck, the state tax rate for maryland now features a couple of "super-brackets" that didn't exist a few years ago.
The state kept the progressive ladder for most people, but they've added new rungs at the top. For taxable income over $500,000 (single) or $600,000 (joint), the rate jumps to 6.25%. If you're lucky enough to clear $1 million, you're looking at 6.50% at the state level alone.
But for the rest of us? The rates still start at 2% for the first $1,000 and climb steadily. Most middle-class Marylanders find themselves sitting in the 4.75% bracket for the bulk of their income. It sounds manageable until you remember the "piggyback tax."
The Local Tax "Hidden" in Plain Sight
This is where Maryland gets sneaky—well, not sneaky, but definitely complicated. Every single county in Maryland, plus Baltimore City, adds its own local income tax on top of the state rate. You don't file a separate return for it; the state collects it for the counties.
📖 Related: Elon Musk: Special Government Employee or Power Broker?
For 2026, many counties have pushed their rates right up against the state-mandated cap. Traditionally, that cap was 3.20%, but new rules allowed some areas to nudge it up to 3.30%.
- The "Maxed Out" Crew: Places like Baltimore City, Montgomery County, and Prince George’s County are usually at the ceiling.
- The "Bargain" Counties: If you live in Worcester County, you're only paying 2.25%. That’s a massive difference over a 30-year career.
- The Progressive Local Experiment: Anne Arundel County and Frederick County don't just use one flat local rate anymore. They’ve actually set up their own mini-brackets. In Anne Arundel, you might pay 2.70% on your first $50,000 but 3.20% on everything over $400,000.
When you combine a 5.75% state rate with a 3.20% local rate, you’re suddenly handing over nearly 9% of your top-tier earnings. That’s why Maryland often feels "high tax" even if the base state rate doesn't look that scary on paper.
Sales Tax: The 6% Rule (Mostly)
Thankfully, sales tax is the one area where Maryland stays simple. It’s 6% across the board. No matter if you’re buying a laptop in Bethesda or a souvenir in Ocean City, the rate is the same. There is no local sales tax in Maryland. Period.
However, there’s a "sin tax" twist. If you’re grabbing a six-pack or a bottle of rye, the rate jumps to 9%. Short-term car rentals? That’ll be 11.5%.
If you want to dodge the tax legally, mark your calendar for the second Sunday in August. That’s the start of "Shop Maryland Tax-Free Week." Most clothing and footwear under $100 are exempt. Also, in February, there’s a weekend for Energy Star products. If you’ve been eyeing a new fridge, that’s the time to strike.
Property Taxes and the 2026 Reassessment
If you own a home, you probably just got a "Group 2" reassessment notice in the mail. The Maryland Department of Assessments and Taxation (SDAT) recently finished looking at about 800,000 properties. Values are up—about 12.7% on average across the state.
But don’t panic just yet. Maryland has a "Homestead Credit" that is a total lifesaver. It caps how much your taxable assessment can go up each year, regardless of how much the market value exploded. At the state level, the cap is 10%. Many counties are even nicer; some cap it at 3% or 5%.
You have to apply for this credit, though. It’s not always automatic for new homeowners. If you haven't filed that one-time application, you're literally leaving money on the table.
Retirement in Maryland: It’s Not All Bad News
There’s a common myth that Maryland is a nightmare for retirees. Sorta true, but sorta not.
Social Security is 100% exempt from state taxes. That’s a big win.
✨ Don't miss: Martin Nesbitt and Anita Blanchard: Why This Chicago Power Couple Still Matters
Then there’s the Pension Exclusion. For 2026, if you're 65 or older, you can exclude up to $36,200 of your pension income from your state taxes. There’s a catch, though—you have to subtract any Social Security benefits you received from that $36,200 limit. If your Social Security check is big enough, it might wipe out your pension exclusion entirely.
Military retirees have it even better. If you’re 55 or older, you can subtract up to $20,000 of your military retirement pay. Under 55? You still get a $12,500 deduction. The state has been getting much more aggressive about keeping veterans in-state, and these exemptions are the proof.
New Credits for 2026: Families and Workers
If you’re working and not making a ton, the Maryland Earned Income Tax Credit (EITC) is one of the most generous in the country. It’s now worth up to $4,000 for some families.
And for parents with little ones, the Maryland Child Tax Credit offers $500 per child if your income is under $15,000. It’s specifically targeted at those who need it most, especially families with kids under age 6 or children with disabilities.
Actionable Steps for Maryland Taxpayers
- Verify your Homestead status: Go to the SDAT website and search your address. If it doesn't say "Approved" under the Homestead heading, fix it immediately.
- Check your county's 2026 rate: If you moved recently, your withholding might be wrong. A jump from 2.25% to 3.20% is enough to cause a nasty surprise at tax time.
- Track your itemized deductions: Since 2025, if your income (FAGI) is over $200,000, Maryland started phasing out itemized deductions. You lose 7.5% of your deductions for every dollar over that threshold.
- Consider the "529" perk: Maryland gives you a $2,500 deduction per beneficiary if you contribute to a Maryland College Investment Plan. It’s one of the few "easy" ways to lower your taxable income.
Maryland's tax code is a beast, but it’s a predictable one once you know where the trapdoors are. Between the local "piggyback" rates and the new state brackets, the state tax rate for maryland is less of a single number and more of a moving target based on where you live and how much you earn. Keep an eye on those county-level changes—they usually happen in the summer and can shift your take-home pay before you even realize why.