Maryland Income Tax Brackets & Rates 2026

Maryland Income Tax Overview for 2026

Maryland (MD) uses a graduated income tax system with 8 brackets, where rates range from 2% to 5.75%. Maryland also imposes local county income taxes ranging from 2.25% to 3.2%, making the combined rate among the highest in the nation.

For the 2026 tax year, Maryland residents must file both state and federal income tax returns. Your MD state tax is calculated on your state taxable income, which generally starts with your federal adjusted gross income (AGI) and applies state-specific adjustments and deductions. The Maryland standard deduction is $2,550 for single filers and $5,150 for married couples filing jointly.

Because Maryland uses graduated brackets, your effective tax rate will be lower than the top marginal rate. Only the portion of income within each bracket is taxed at that rate. Your combined federal and MD effective tax rate depends on your total income, filing status, deductions, and credits.

SALT Deduction and Maryland Taxes in 2026

The State and Local Tax (SALT) deduction allows taxpayers who itemize on their federal return to deduct state and local taxes paid, including state income taxes and property taxes. Under the One Big Beautiful Bill Act (OBBBA), the SALT cap has been raised to $40,000 for the 2026 tax year, up from the $10,000 cap that was in place since 2018.

For Maryland residents, this is significant. With a top state rate of 5.75%, many MD taxpayers pay substantial state income taxes. Combined with property taxes, the $40,000 SALT cap provides meaningful relief compared to the previous $10,000 limit. Taxpayers should compare their total SALT amount against the $40,000 cap to determine whether itemizing benefits them over the standard deduction.

The $40,000 SALT cap applies to the combined total of state income taxes (or sales taxes if elected), local income taxes, and property taxes. This cap is the same regardless of filing status. Use our SALT Deduction Calculator to determine your optimal strategy.

How Federal Taxes Apply to Maryland Residents

All Maryland residents are subject to federal income tax, which uses seven progressive brackets for 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The federal standard deduction is $16,100 for single filers and $32,200 for married filing jointly. Under the OBBBA, new provisions include tax-free overtime pay, tax-free tips for service workers, and an additional $4,000 deduction for seniors aged 65 and older.

Your total tax liability as a MD resident combines your federal tax obligation with your Maryland state tax plus FICA taxes (Social Security at 6.2% and Medicare at 1.45%). Self-employed individuals in Maryland owe both the employee and employer portions of FICA (15.3% total) but can deduct the employer portion. Use our Federal Income Tax Calculator to compute your exact federal liability.

Tax Planning Tips for Maryland Residents

• Evaluate itemizing vs. standard deduction: With the $40,000 SALT cap, MD residents with high state income and property taxes should compare their itemized deductions against the standard deduction each year.
• Maximize retirement contributions: Contributing to a 401(k) or traditional IRA reduces both your federal and Maryland taxable income, providing a double tax benefit.
• Consider HSA contributions: If eligible, an HSA provides triple tax savings: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. The 2026 limit is $4,300 for individuals.
• Review withholding: Use your combined federal and state tax liability to ensure proper withholding, avoiding both underpayment penalties and excessive refunds.
• Track estimated payments: If you have self-employment income or significant investment income, make quarterly estimated payments to both the IRS and Maryland to avoid penalties.

Maryland vs. Other States: Tax Comparison

Compared to the national landscape, Maryland's top rate of 5.75% is near the national average. Some states have no income tax (FL, TX, NV), while others like California (12.3%) charge significantly more. When comparing states, consider the full tax picture including property taxes, sales taxes, and cost of living, not just income tax rates.

Maryland Tax Overview

Maryland has 8 state brackets with a top rate of 5.75%, but all 23 counties and Baltimore City impose additional local income taxes ranging from 2.25% to 3.2%. This means the combined state and local income tax rate can reach nearly 9% in some jurisdictions. Maryland also imposes a unique "county piggyback" tax that is calculated as a percentage of the state tax liability. The state has a separate estate tax with a $5 million exemption and an inheritance tax of 10%.

Maryland has a state sales tax rate of 6.00% and an average effective property tax rate of 1.04%. When combined with the income tax, these additional levies form the complete state tax picture that residents should evaluate. The Maryland tax authority (Comptroller of Maryland) oversees all state tax administration and can be reached at (410) 260-7980 for questions about filing, payments, and account issues.

Understanding how Maryland's tax system interacts with federal taxes is critical for accurate financial planning. Your combined effective tax rate includes federal income tax (10% to 37%), Maryland state income tax, FICA taxes (7.65% for employees), and any applicable local taxes. Proper planning across all these layers can save thousands of dollars annually.

Maryland Tax Deductions and Credits

Maryland offers a standard deduction of 15% of Maryland AGI (minimum $1,800, maximum $2,550 for single; maximum $5,150 for MFJ). The state provides a personal exemption of $3,200, a dependent credit, an earned income credit (50% of federal EITC for those without dependents, 100% for those with dependents), a poverty level credit, a child and dependent care credit (up to $860), and a credit for student loan debt relief (up to $5,000). Maryland also provides a pension exclusion of up to $36,200 for retirees 65 and older.

In addition to state-specific benefits, Maryland residents can take advantage of federal tax deductions and credits. For the 2026 tax year, key federal provisions include the standard deduction ($16,100 single, $32,200 married filing jointly), the child tax credit (up to $2,000 per qualifying child), the earned income tax credit for low-to-moderate income workers, and the $40,000 SALT deduction cap under the OBBBA. Maryland state income taxes are included in the SALT calculation, so residents paying significant state income tax should evaluate whether itemizing produces a larger deduction than the standard deduction.

Taxpayers should also explore retirement-related tax benefits available to Maryland residents. Contributions to 401(k) plans (up to $23,500 for 2026, plus $7,500 catch-up for age 50+) and traditional IRAs (up to $7,000, plus $1,000 catch-up) reduce both federal and state taxable income. Health Savings Account (HSA) contributions provide a triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Tax Tips for Maryland Residents

Maryland residents should check their county income tax rate, as it varies significantly by jurisdiction (Anne Arundel 2.81%, Baltimore County 3.2%, Montgomery County 3.2%). File electronically to receive refunds within 2-3 weeks. If you work in DC, Virginia, West Virginia, or Pennsylvania, Maryland has reciprocal agreements; file only in Maryland. Seniors 65 and older should claim the pension exclusion of up to $36,200 to reduce state taxable income. The student loan debt relief credit requires a separate application through the Maryland Higher Education Commission.

For the 2026 tax year, Maryland residents should also be aware of key provisions under the OBBBA. Overtime pay (beyond 40 hours per week) is exempt from federal income tax, tips earned by service workers are federally tax-free, and seniors age 65+ receive an additional $4,000 federal deduction. These provisions apply to MD residents regardless of state tax status and can significantly impact take-home pay and total tax liability.