STATE RANKING #40

Quick facts: 

-Maryland is the only state in the union with both an estate tax and an inheritance tax.

-Maryland has a local and city income tax reported on the state tax return.

8.03%*

State Income Tax

State
Income
Tax

8.25%

Cost of Setting Up A Business

state
business
tax

AVERAGE

Property
Taxes

6.00%

Sales
Tax (average)

State Income Taxes in Maryland

Similar to most states, Maryland has multiple tax brackets (8) which range from 2.00% to 5.75%. The highest tax bracket starts at $250,000.

Local & City Income Tax – Similar to Ohio Kentucky, Maryland also has Local & City income tax rates in addition to the regular state income tax. The Local & City tax rates range from 2.25% to 3.20% depending on the jurisdiction (the average rate is 2.28% in 2020). This bring the total average state income tax rate to 8.03%.

State Business Taxes in Maryland

The state of Maryland has a flat Corporate income tax rate of 8.25% on all income. However, Maryland has a unique tax for non-resident members (or shareholders) of flow-thru entities (S-Corps, LLCs, etc.)

If the member of a flow-thru entity is a non-resident member (not a resident of Maryland), there is a 7.25% tax rate to individual members or 8.25% tax rate assets to entity members.

Sales Taxes in Maryland

The state of Maryland only has a state sales tax rate of 6.00%. It is one of the few states in the union that does not have a local sales tax rate. This is most likely due to the state having an additional local and city income tax.

Property Taxes in Maryland

The average property tax rate for residential property in the state of Maryland is 1.04%. Which puts it in line with the national average of 1.05%.

Estate & Inheritance Tax in Maryland

Maryland is the only state in the union that has both an estate tax and an inheritance tax (for other states, if they have an estate tax, they do not have an inheritance tax, or vise versa.)

  • Estate tax – is exempt for the first $5,000,000
  • Inheritance tax – 10% tax on all non-lineal heirs
  • Click here to learn more

Unemployment taxes in Maryland

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Maryland has a wage base of $8,500 for 2020
  • UI Rates – range from 0.30% to 13.50% (a very high upper bound rate!)
  • Schedules – Maryland has a multiple rate schedules regarding UI.

Maryland Business Entities - LLCs

Maryland one of the more expensive states to set up your LLC. Here are some important facts:

  • Maryland has an annual LLC fee of $300.
  • When you register with the state, you pay a one time fee of $100
  • Secretary of State of Maryland website – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #39

State #41