State Taxes at a Glance – Maryland
| Type of Tax | 2023 |
|---|
| Individual Rates | 2.00% to 5.75% + local tax rate |
| Corporate / Business Tax Rates | 8.25% (flat tax) |
| Gross Receipts Tax | None |
| Sales Tax | 6.00% |
| Property Taxes | 1.04% as a percentage of primary home |
| Estate or Inheritance Tax | Yes |
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
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 2.38%). This brings 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 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, there is a 7.25% tax to non-resident member, similar to the non-resident tax on distributions in California.
Nonresident Tax in Maryland
If you are a nonresident, they assess an additional 2.25% tax rate in addition to the normal individual tax rate. This is to make up for the loss of local & city income tax. This includes taxes on flow-thru entities such as LLCs and S-Corporations.
Sales and Property Taxes in Maryland
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 1.08%.
Estate & Inheritance Tax in Maryland
Maryland is the only state in the union that has both an estate tax and an inheritance tax (other states, may have either an estate tax or an inheritance tax, but not both).
| Tax Rates / Exemption | Estate Tax | Inheritance Tax |
|---|
| Exemption amount | < $5,000,000 (no tax) | Spouse / Lineal Heirs (no tax) |
| Tax Rate | 0.8% to 16.0% (above $5M) | 10% (all others) |
If you want to learn more about Maryland’s estate and inheritance tax, here is a link to the state’s website.
Maryland DMV Fees
Maryland’s DMV fees are based on weight, and not the value of the vehicle. Therefore, they are not deductible on your Federal Tax Return. If you would like to learn more about Maryland’s DMV fees, here is a link.
Maryland Domicile
Maryland’s presumption is that it’s your domicile if you’ve lived there for over 6 months and that you also maintain a place of abode.
State Tax on Social Security Benefits
Even though Maryland has an income tax, social security benefits are not subject to state tax in “The Old-Line State.”
Payroll 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
- UI Rates – range from 2.20% 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