Yes, Maryland has a state income tax, and most working residents must file a return

Maryland charges state income tax on wages, self-employment income, investment gains, and other earnings. The tax rate ranges from 2% to 5.75% depending on your income level — Maryland uses a progressive system where higher earners pay a higher percentage. If you live in Maryland and earned income during the year, you will almost certainly need to file a state return, even if you do not owe federal tax.

The state also taxes retirement income, including distributions from IRAs and 401(k)s, though Maryland offers some exemptions for military pensions and certain other retirement sources. Understanding which income counts and what deductions you can claim will determine whether you owe tax and how much.

Key Takeaways

  • Maryland's income tax rate starts at 2% for the lowest earners and reaches 5.75% for those in the highest bracket, with six tax brackets in total.
  • You must file a Maryland return if you earned income in the state, even if you are retired or your federal income falls below the filing threshold.
  • Maryland allows a standard deduction that reduces your taxable income, and the amount depends on your filing status and age.
  • Military pensions and certain government employee pensions are exempt from Maryland income tax, but most other retirement income is taxable.
  • The filing important date for Maryland returns is the same as the federal important date, typically April 15, though extensions are available.

Maryland's tax brackets and rates for 2024

Maryland divides income into six brackets. A single filer in 2024 pays 2% on income up to $1,000, then 3% on income from $1,001 to $2,500, then 4% on income from $2,501 to $3,200, then 4.75% on income from $3,201 to $5,100, then 5.25% on income from $5,101 to $10,300, and finally 5.75% on income above $10,300. These brackets adjust each year for inflation, so the exact dollar amounts change annually.

The brackets are different for married couples filing jointly, heads of household, and married couples filing separately. For example, a married couple filing jointly pays 2% on income up to $2,000 rather than $1,000. You can find the current year's brackets on the Maryland Department of Revenue website, which publishes them each January.

Because Maryland uses a progressive system, you do not pay the top rate on all your income — only on the portion that falls in the highest bracket you reach. A single person earning $15,000 pays 2% on the first $1,000, 3% on the next $1,500, 4% on the next $700, and so on, not 5.75% on the entire amount.

Who must file a Maryland state return

You must file if you lived in Maryland for any part of the year and had income above a certain threshold. For 2024, that threshold is $1,000 for most single filers, $2,000 for married couples filing jointly, and $1,000 for heads of household. These thresholds are lower than the federal filing requirements, which means you might need to file a Maryland return even if you do not owe federal tax.

You also must file if Maryland withheld tax from your paychecks or if you made estimated tax payments during the year, even if your income falls below the threshold. This is because you may be may have access to to a refund. Additionally, if you are claimed as a dependent on someone else's return, you may still need to file your own Maryland return depending on your income level.

Part-year residents — people who moved to or from Maryland during the year — must file a Maryland return if they earned income while living in the state. You will report only the income earned during the months you lived in Maryland, not income from before you moved.

Standard deduction and tax credits in Maryland

Maryland allows a standard deduction that reduces the income you actually pay tax on. For 2024, the standard deduction for a single filer is $3,200, for married couples filing jointly it is $6,400, and for heads of household it is $4,800. If you are 65 or older, you get an additional deduction amount — $1,000 for single filers and $800 for married couples filing jointly. These amounts increase each year.

You can also claim the Maryland Earned Income Tax Credit if you work and earn below a certain income level. This credit reduces your tax bill dollar-for-dollar and may result in a refund even if you owe no tax. The income limits and credit amounts vary by filing status and number of dependents. The state also offers credits for property taxes paid, child and dependent care expenses, and contributions to certain retirement accounts.

If you itemize deductions on your federal return instead of taking the standard deduction, you can do the same on your Maryland return. However, most people benefit from taking the standard deduction because it is larger than their itemized deductions would be.

Retirement income and pension exemptions

Maryland taxes most retirement income, including distributions from traditional IRAs, 401(k)s, and similar plans. However, the state exempts certain types of retirement income entirely. Military pensions — payments from the U.S. Armed Forces — are not taxed by Maryland. Government employee pensions, including those from federal, state, and local government jobs, are also exempt.

Social Security benefits are not taxed by Maryland, which is a significant advantage for retirees. If you receive a pension from a private employer, that income is taxable. If you receive both a government pension and other income, you report them separately on your return.

If you are over 65 and receive income from a pension, IRA, or annuity, Maryland offers an additional exemption. You can exclude up to $31,200 of retirement income from taxation if you are single, or up to $41,600 if you are married filing jointly. This exemption applies to income from pensions, IRAs, 401(k)s, and annuities, but not to wages from continued employment or to Social Security (which is already exempt).

How to file your Maryland return

You can file your Maryland return using tax software, by mail, or through a tax professional. The Maryland Department of Revenue does not offer a free online filing system directly, but it accepts returns prepared through most commercial tax software providers. If you use software that prepares your federal return, you can usually prepare your Maryland return in the same program.

If you file by mail, you will use Form 502 (the Maryland Individual Income Tax Return) or Form 505 (for part-year residents). You can read these forms from the Maryland Department of Revenue website. Mail your completed return to the address shown in the form instructions, along with any supporting documents and payment if you owe tax.

The important date to file is typically April 15, the same as the federal important date. If you need more time, you can request an automatic extension, which gives you until October 15. An extension to file does not extend the important date to pay — if you owe tax, you should pay by April 15 to avoid interest and penalties, even if you file your return later.

What happens if you do not file or pay on time

If you owe Maryland income tax and do not pay by the important date, the state charges interest on the unpaid amount. The interest rate is set quarterly and compounds daily. You will also face a failure-to-pay penalty if your payment is late, typically 0.5% of the unpaid tax per month, up to a maximum of 25%.

If you do not file your return by the important date and you owe tax, you face an additional failure-to-file penalty of 5% per month, up to 25%. These penalties stack on top of the interest, so the longer you wait, the more you owe. If you cannot pay the full amount by April 15, you can still file your return on time and request a payment plan from the Maryland Department of Revenue.

If you filed late or did not file at all, you can still file now. The state will calculate the interest and penalties owed, but filing and paying is always better than continuing to ignore the debt. The Maryland Department of Revenue can work with you on a payment arrangement if you cannot pay in full when ready.

Frequently Asked Questions

Do I have to pay Maryland income tax if I work in Maryland but live in another state?

Yes, Maryland taxes income earned within the state, regardless of where you live. However, you may also owe tax to the state where you live. Most states have agreements to prevent double taxation, so you typically claim a credit on your home state return for tax paid to Maryland. You should file returns in both states and report the same income on each.

Is Maryland income tax withheld from my paycheck automatically?

Yes, if you work in Maryland, your employer withholds state income tax from your paycheck based on the W-4 form you complete. The amount withheld depends on your income, filing status, and the number of allowances you claim. If too much is withheld, you receive a refund when you file your return; if too little is withheld, you owe tax.

What if I moved to Maryland partway through the year?

You file a Maryland return reporting only the income you earned while living in the state. You will also file a return in your previous state for income earned there. Each state taxes only the income earned within its borders during the time you lived there. Make sure to report your move date correctly on both returns.

Can I deduct federal income tax paid from my Maryland return?

No, Maryland does not allow a deduction for federal income tax paid. You can deduct state and local property taxes and sales taxes (you choose one or the other), but not federal tax. This is true whether you itemize deductions or take the standard deduction.

What if I owe Maryland tax but cannot pay by April 15?

File your return on time anyway. You can request a payment plan from the Maryland Department of Revenue, which allows you to pay in installments. Interest and penalties will still explore to the unpaid balance, but setting up a plan shows good faith and may help you avoid additional enforcement action. Contact the Department of Revenue to discuss your options.