Taxo Taxes in Maryland: State Tax Guide 2026
Data Notice: The Maryland tax information in this article reflects projected 2026 rates and thresholds. State tax law is subject to legislative revision. Confirm current rates with Maryland’s official tax authority before making filing decisions. [taxes-maryland-2026]
Taxes in Maryland: State Tax Guide 2026
Tax information in this article on taxes in maryland: state tax guide 2026 is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change, and individual circumstances vary. Consult a qualified tax professional or CPA for guidance specific to your situation.
Maryland is one of the few states where residents pay both a state income tax and a mandatory local (county) income tax, pushing the combined top rate above 8% in some jurisdictions. The state also levies an estate tax with a lower threshold than the federal exemption. On the plus side, Maryland does not tax Social Security benefits, offers a generous pension exclusion for retirees, and has property taxes near the national average.
Maryland Income Tax Rates (2026)
Maryland uses a progressive income tax with eight brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 2.00% | $0 – ~$1,000 |
| 3.00% | ~$1,001 – ~$2,000 |
| 4.00% | ~$2,001 – ~$3,000 |
| 4.75% | ~$3,001 – ~$100,000 |
| 5.00% | ~$100,001 – ~$125,000 |
| 5.25% | ~$125,001 – ~$150,000 |
| 5.50% | ~$150,001 – ~$250,000 |
| 5.75% | Over ~$250,000 |
Married filing jointly brackets are higher, with the top rate of 5.75% applying above ~$300,000.
County income tax (required): Every Maryland county and Baltimore City levies a local income tax ranging from 2.25% (Worcester County) to 3.20% (Howard, Montgomery, Prince George’s, and several other counties). This is applied as a percentage of Maryland taxable income, not as a separate tax system.
Combined top rate: A high earner in Montgomery County pays 5.75% state + 3.20% local = 8.95% combined.
Sales Tax
| Component | Rate |
|---|---|
| State rate | 6.00% |
| Local add-on | None |
| Combined rate statewide | 6.00% |
Maryland does not permit local sales tax add-ons. The 6.00% rate is uniform statewide.
Exempt from sales tax: Most groceries, prescription and nonprescription medications, and medical devices. Alcoholic beverages are subject to a 9.00% sales tax rate.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.01% |
| National average | 0.99% |
Property taxes vary by county. Baltimore City has one of the highest rates in the state at approximately ~$2.25 per $100 of assessed value, while Howard County is approximately ~$1.01. Maryland reassesses property every three years, phasing in increases over three annual installments.
Homestead tax credit: Limits the amount of property tax increase due to reassessment to 10% per year (less in some counties — Montgomery County caps it at 0%). This protects long-term homeowners from sudden tax jumps.
Homeowners’ tax credit: Income-based credit for homeowners whose property taxes exceed a percentage of gross income. Available to households of any age.
Other Taxes
- Estate tax: Maryland imposes an estate tax on estates above ~$5,000,000, with rates up to 16%. Maryland is one of only two states (along with New Jersey historically) that imposes both an estate tax and an inheritance tax.
- Inheritance tax: 10% on inheritances to non-lineal heirs (siblings, nieces/nephews, friends, etc.). Direct descendants, spouses, parents, grandparents, and charities are exempt.
- Capital gains: Taxed as ordinary income at state + local rates (up to ~8.95%).
- Fuel tax: ~$0.47 per gallon (increased under the Transportation Infrastructure Investment Act).
- Cigarette tax: ~$3.75 per pack.
- Digital advertising tax: Maryland was the first state to impose a tax on digital advertising revenue, though the tax has faced legal challenges. Rates range from 2.50% to 10% based on global annual gross revenue.
Tax Breaks and Credits
- No tax on Social Security: Maryland does not tax Social Security benefits.
- Pension exclusion: Residents aged 65+ or totally disabled can exclude up to ~$36,200 of pension income, including from 401(k) and IRA distributions, if their federal AGI is under ~$100,000 (single) or ~$150,000 (joint).
- Maryland EITC: ~45% of the federal EITC for filers with qualifying children (one of the most generous state EITCs). ~100% of the federal EITC for childless filers.
- Child tax credit: Maryland offers a state child tax credit for families with dependents under 6 and income under ~$15,000.
- Student loan debt relief credit: Up to ~$5,000 for qualifying Maryland residents with student loan debt (competitive application process).
- 529 plan deduction: Up to ~$2,500 per beneficiary per year.
Key Takeaways
- Maryland’s combined state and local income tax can reach ~8.95%, putting it among the highest effective rates in the region
- The mandatory county income tax (2.25%–3.20%) is unusual and significantly increases the total burden
- Maryland is one of the few states with both an estate tax and an inheritance tax
- Retirees benefit from no Social Security tax and a generous ~$36,200 pension exclusion
- Property taxes are near the national average, with strong homestead and income-based credit protections
Next Steps
- Compare Maryland to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Make sure you claim everything you can — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.
About This Article
Researched and written by the Taxo editorial team using official sources. This article is for informational purposes only and does not constitute professional advice.
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