Maryland Tax Guide: What You’ll Pay in 2024
Maryland’s income, property and sales taxes are average when compared with other states. The state does not tax Social Security benefits but does tax withdrawals from IRAs. It also is the only state to have both an estate tax and an inheritance tax.
The big picture:
Income tax: 2 percent to 5.75 percent
Maryland has eight tax brackets, ranging from 2 percent to 5.75 percent. The state’s 23 counties and the city of Baltimore also levy a local income tax on residents.
Property tax: 1.05 percent of a home’s assessed value (average)
Property taxes vary depending on where you live in Maryland, with an average property tax rate in 2021 of 1.05 percent of a home’s assessed value, according to the Tax Foundation.
Sales tax: 6 percent (state)
The state levies a 6 percent sales tax statewide, and there are no local sales taxes.
How is income taxed in Maryland?
Maryland has a graduated individual income tax, with eight tax brackets listed below. Note that your income is not all taxed at the same rate.
Maryland’s 23 counties and the city of Baltimore also levy a local income tax that is calculated as a percentage of your taxable income. Rates range between 2.25 percent and 3.2 percent.
Taxpayers Filing as Single, Married Filing Separately, Dependent Taxpayers or Fiduciaries:
Taxpayers Filing Joint Returns, Head of Household, or Qualifying Widows/Widowers:
Source: Comptroller of Maryland
* Taxable income: Gross income (wages, tips, bonuses, etc.) after subtracting for itemized or standard deductions
Watch the video below to learn how to identify your 2023 federal income tax brackets.
Are pensions or retirement income taxed in Maryland?
Withdrawals from IRAs and pensions are taxed as regular income.
The Maryland Pension Exclusion allows residents who are 65 or older, who are disabled or whose spouse is disabled to subtract $36,200 of their taxable pension and retirement annuity income from their federal adjusted gross income. Withdrawals from an IRA do not qualify. Consult the Comptroller of Maryland website and the Maryland Resident Tax Booklet for more information.
The AARP Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.
What about investment income?
Capital gains from investments are taxed as individual income.
Does Maryland tax Social Security benefits?
No, but you may pay federal taxes on a portion of your Social Security benefits, depending on your income. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make between $25,000 and $34,000 in total income — or if you’re a married couple filing jointly and make $32,000 to $44,000 in total income. Also, up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple.
AARP's Social Security Calculator can assist you in determining when to claim and how to maximize your Social Security benefits.
How is property taxed in Maryland?
The average property tax rate in Maryland in 2021 was 1.05 percent of a home’s assessed value, according to the Tax Foundation.
Property taxes in Maryland vary depending on where you live and are based on assessments done every three years by the Maryland Department of Assessments and Taxation. The lowest median property tax paid was $1,565 in Allegany County, while the highest was $6,230 in Howard County, according to 2021 data from the Tax Foundation.
Taxes are levied and collected locally by counties and municipalities.
Your property taxes are calculated based on your home’s assessment and the property tax rate set by counties and municipalities. More information on how your property taxes are calculated is on the Maryland Department of Assessments and Taxation website. Information on how to appeal your home’s assessed property value can be found on the Assessment Appeals Process page of that website.
A homestead tax credit that limits annual increases in a property’s assessed value used in property tax calculations to 10 percent is available to all Maryland residents, regardless of age, who own and live in their homes. Homeowners must file a one-time application to be eligible. In some jurisdictions, the cap may be lower than 10 percent.
Also, you can apply for the Homeowners’ Property Tax Credit Program that caps the amount of property taxes qualified residents pay based on their income. To qualify, you must own and live in your home; your net worth cannot exceed $200,000 (not including retirement accounts and the value of your home); and your household income cannot exceed $60,000. Additional information is available on the Maryland Department of Assessments and Taxation website.
What about sales and other taxes?
Sales tax: Maryland levies a 6 percent sales tax statewide. There are no local sales taxes.
Exemptions: Most groceries, certain medical supplies and medicine are among items that are exempt from sales tax in Maryland.
Gas and diesel: The state charges a motor fuels tax of 47 cents per gallon gasoline and 47.75 cents per gallon of diesel. It does not charge an additional sales tax for motor fuels.
Vehicle tax: Maryland charges a one-time 6 percent excise tax on the price of a car that is seven years old or newer when it is purchased.
Alcohol: Maryland levies a 9 percent alcoholic beverages tax on alcohol if you use it in the state. Also, vendors pay excise taxes, some of which might be included in the retail price. The excise tax for beer is 9 cents per gallon, wine is 40 cents per gallon and distilled spirits is $1.50 per gallon.
Lottery: Maryland taxes lottery winnings. The state will automatically withhold income tax on prizes worth more than $5,000 at a rate of 8.75 percent on a resident’s winnings and 8 percent on a nonresident’s winnings, in addition to withholding federal tax.
Will I or my heirs have to pay inheritance and estate tax in Maryland?
Maryland is the only state in the country that charges both an inheritance tax and an estate tax to estates and beneficiaries meeting certain criteria.
Most direct relatives, including spouses, children, stepchildren, siblings, parents, grandparents, grandchildren and step-grandchildren, are exempt from the inheritance tax. The inheritance tax is 10 percent of the clear value, which is fair market value minus qualified expenses. Nonrelatives and distant relatives who receive an inheritance are taxed at the 10 percent rate.
Estates worth $5 million or more are subject to the estate tax. The estate tax is 16 percent on the amount that exceeds $5 million.
Are there any tax breaks for older Maryland residents?
Maryland offers many tax breaks for older residents.
- Senior tax credit: Maryland has a Senior Tax Credit for residents 65 and older who meet income eligibility guidelines. To qualify, your federal adjusted gross income cannot be more than $100,000 for a single filer, or more than $150,000 if you file jointly, as a surviving spouse or head of household. The nonrefundable tax credit is $1,000 for single filers or $1,750 for joint filers, surviving spouses or heads of household.
- Age 65 or blind exemption: Residents who are at least 65 on the last day of the tax year or who are blind may be eligible for an exemption of $1,000. You and your spouse can each claim the exemption if you qualify. If any other dependent you claim is 65 or older, you also can receive an extra exemption of up to $3,200. The Maryland Resident Tax Booklet has more information.
- Working and married tax credit: Married residents of any age who both receive wages, interest, pension, business or other kinds of income and who file a joint return can subtract up to $1,200 of the income of the spouse with the lesser income. A worksheet is included in the Maryland Resident Tax Booklet with more information.
- Centenarian tax credit: If you are at least 100 years old on the last day of the year, you may subtract up to $100,000 of income. The Maryland Resident Tax Booklet has more information.
Are military benefits taxed in Maryland?
Military retirement pay is taxable in Maryland. However, retirees or their spouses who receive military retirement income, including death benefits, may be able to subtract more in tax year 2023 from their federal adjusted gross income under a change in Maryland law. They can subtract up to $12,500 of their military retirement income from their federal adjusted gross income if they are younger than 55, or subtract up to $20,000 if they are 55 or older.
What is the deadline for filing Maryland taxes in 2024?
The deadline to file a state tax return for Maryland is April 15, which is also the deadline for federal tax returns. For help estimating your federal income taxes, use AARP’s Tax Calculator.If you request a tax extension, the deadline to file taxes is Oct. 15. However, taxes owed are still due by April 15. If you do not owe state income taxes and you requested a federal income tax extension, you do not need to file anything additional with the state to receive a six-month extension. If you owe state income taxes, file this form to receive an extension. Learn more about extensions here.
Maura Kelly Lannan is a writer, editor and producer for AARP who covers federal and state policy. She has worked as a reporter for the Associated Press, the Chicago Tribune and the Waterbury, Connecticut, Republican-American. She also has written for Bloomberg Government, The Boston Globe and other publications.
