Maryland is weird. Honestly, if you’re trying to calculate Maryland income tax, you’re probably realizing that the Old Line State doesn't play by the same rules as its neighbors. Most states have a flat tax or a simple progressive bracket system. Maryland does that too, but then it tosses a "local tax" curveball that catches people off guard every single year.
It’s not just about what you owe the folks in Annapolis. It's about where you sleep at night.
If you live in Bethesda, you're paying a different rate than someone in Ocean City. That’s because Maryland is one of the few places in the country where every single county (plus Baltimore City) carries its own mandatory piggyback tax. You can't just look at one chart and call it a day. You have to look at two.
The Progressive Trap: Understanding State Brackets
First, let's talk about the base. The state of Maryland uses a graduated scale. You start at 2% for your first $1,000 of taxable income. By the time you hit over $250,000 as a single filer (or $300,000 for joint filers), you’re looking at a 5.75% rate on those top dollars.
Here is the thing people miss: it’s a "marginal" system.
You aren't taxed 5.75% on every dime you make just because you have a high salary. Only the money within each specific bracket gets hit with that bracket's rate. It's like a series of buckets. The first bucket fills up at 2%, the second at 3%, and so on. Most Marylanders find their effective state rate—the actual percentage they pay overall—settles in somewhere between 4% and 5%.
But that is only half the story.
How to Calculate Maryland Income Tax With Local Rates
This is where the math gets messy. Maryland law allows counties to set their own local income tax rates. These range from 2.25% to 3.20%.
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Think about that for a second.
If you live in a high-tax county like Montgomery or Howard, your local tax rate (3.20%) could actually be higher than some of the lower state brackets. You are essentially paying two separate income taxes on the same dollar. When you combine them, your top marginal rate isn't 5.75%. It’s actually closer to 8.95%. That puts Maryland among the highest-taxed states in the country for high earners, right up there with New York and California, despite what the "base" rates might suggest.
Calculating this requires you to determine your Maryland Adjusted Gross Income (MAGI). You start with your Federal Adjusted Gross Income (AGI). Then you add back certain things, like out-of-state bond interest, and subtract others, like social security benefits (which Maryland generally doesn't tax). Once you have that "Marylandized" number, you apply your exemptions.
As of 2025 and heading into 2026, the personal exemption is generally $3,200, though it phases out if you make over $100,000 ($150,000 for joint filers).
The "Piggyback" Effect in Action
Let's look at a quick, illustrative example. Imagine you’re a single filer living in Baltimore County with a taxable income of $60,000.
Your state tax will be roughly $2,800 based on the graduated brackets. But Baltimore County has a local rate of 3.20%. That means you owe an additional $1,920 just to the county. Total bill? Over $4,700. If you lived in Worcester County, where the local rate has historically been much lower (around 2.25%), you’d save hundreds of dollars just by moving a few hours east.
Location isn't just about the commute; it's a line item on your tax return.
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What Most People Get Wrong About Deductions
Maryland is "coupled" to the federal system in some ways, but stubborn in others. If you take the standard deduction on your federal return, you must take the standard deduction on your Maryland return. You can't mix and match.
The Maryland standard deduction is 15% of your Maryland adjusted gross income, but it has a floor and a ceiling. For the 2025 tax year, the minimum is $1,900 and the maximum is $2,850 for single filers. For those filing jointly, it caps at $5,700.
Wait.
Check those numbers against the federal standard deduction, which is significantly higher (over $15,000 for singles in 2025). This discrepancy is why many Marylanders feel the pinch. You might not owe much in federal tax because of that fat federal deduction, but because Maryland’s deduction is so small, you end up paying state tax on a much larger chunk of your paycheck.
Credits: The Secret to Lowering the Bill
If you're feeling overwhelmed by the percentages, look at the credits. Maryland is actually pretty generous with certain "carrots."
- The Child Tax Credit: Maryland recently expanded this. If you have a child under age 6 or a child with a disability, you might be looking at a refundable credit that wipes out your liability entirely.
- Earned Income Tax Credit (EITC): This is one of the strongest in the nation. Maryland matches a huge percentage of the federal EITC.
- Student Loan Relief: There is a specific credit for Maryland residents who are paying off undergraduate or graduate student loans. You have to apply through the Maryland Higher Education Commission (MHEC) before you even file your taxes, usually by a fall deadline. If you miss that window, you miss the credit.
The Non-Resident Trap
Maybe you work in Baltimore but live in York, Pennsylvania. Or maybe you're a "super-commuter" from Virginia.
Maryland has "reciprocity" agreements with Pennsylvania, Virginia, West Virginia, and D.C. This means if you live in those states but work in Maryland, you generally don't pay Maryland income tax. You pay your home state. However, if you live in Delaware and work in Maryland, you're out of luck. Delaware doesn't have a reciprocity agreement. You’ll have to file a non-resident return in Maryland and then claim a credit on your Delaware return to avoid being taxed twice.
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It’s a paperwork nightmare. Keep your W-2s organized.
Practical Steps to Prepare for Tax Season
Don't wait until April 14th. Maryland’s Comptroller’s office is surprisingly tech-forward, but their systems get slammed in the spring.
First, verify your local tax rate. Rates can change based on county council votes. Check the official Maryland Comptroller website for the current year’s local rate table. Do not trust a third-party blog post from three years ago.
Second, adjust your withholdings. If you owed money last year, file a new Form MW507 with your employer. Maryland's digital "iFile" system is free and generally easier than using big-name software if your return is simple.
Third, track your "add-backs." If you used a 529 plan for education savings, Maryland gives you a deduction of up to $2,500 per beneficiary. If you put in $5,000, you can carry the rest over to future years. Most people forget to track these carryovers and leave money on the table.
Finally, keep an eye on the Maryland RELIEF Act updates or similar legislative tweaks. Maryland politicians love to tinker with tax credits for low-to-moderate-income families during election cycles or periods of inflation. Being aware of a $500 credit change can be the difference between a stressful month and a new set of tires for your car.
Calculate your MAGI, add your county rate to your state bracket, and always check for the MHEC student loan deadline. That's the formula for surviving tax season in the Free State.
Actionable Next Steps:
- Download your 2025 tax year local rate table from the Maryland Comptroller website to see if your county increased its piggyback tax.
- Locate your most recent Federal AGI and use it as a baseline to estimate your Maryland taxable income after applying the $3,200 per-person exemption.
- Check the MHEC website if you have student loans; the application for the Maryland Student Loan Debt Relief Tax Credit typically opens in the summer and closes in the fall, long before tax season begins.