Maryland’s state income tax rules for tax year 2026 keep the same progressive structure up to 5.75% and add two new higher brackets: 6.25% and 6.5% for high earners. If you live, work, or earn income in Maryland, these changes affect how much state tax you owe on your Maryland taxable income (income after deductions and exemptions).
These updates matter most if your income is near the new thresholds, if you expect large capital gains, or if you moved to Maryland and need to plan withholding. They also matter because Maryland’s local (county/city) income tax is collected on the same return, and local rates can push your top combined rate much higher.
Why this matters for immigrants and new residents
If you’re new to the U.S. tax system, Maryland can feel unfamiliar because you pay two layers of income tax on one return:
- Maryland state income tax (with progressive brackets)
- Local income tax (your county or Baltimore City rate, or a flat nonresident rate)
Maryland taxes Maryland taxable income, not your gross pay. That number changes with the standard deduction vs. itemizing and with high-income limits.
⚠️ Important: A higher “top rate” doesn’t mean all your income is taxed at that rate. Only the portion that falls into that bracket is taxed at that bracket’s rate.
Who needs to pay Maryland income tax
You deal with Maryland income tax if you are:
- Maryland resident: You live in Maryland and earn income from anywhere.
- Part-year resident: You moved into or out of Maryland during the year.
- Nonresident: You live in another state but earn Maryland-source income (for example, you work in Maryland).
Before estimating your tax, confirm:
- Your filing status: single, married filing jointly, married filing separately, head of household, or qualifying surviving spouse.
- Whether you will take the standard deduction or itemize.
- Whether you will owe local tax as a resident (county/city) or the nonresident local rate.
How to estimate your Maryland 2026 income tax (5 steps)
- Confirm your Maryland filing status
- Maryland uses one bracket table for single / married filing separately / dependent filers and another for married filing jointly / head of household / qualifying surviving spouse.
- Calculate your Maryland taxable income
- Start from your income and subtract deductions and exemptions.
- For 2026, Maryland’s standard deduction amounts are:
- $3,350 (single / married filing separately / dependent)
- $6,700 (married filing jointly / head of household / qualifying surviving spouse)
- Apply the correct Maryland state brackets (marginal rates)
- Maryland uses graduated rates: each slice of income is taxed at its bracket’s rate.
- Add your local (county/city) income tax
- Residents pay their county (or Baltimore City) local tax with the state return.
- Nonresidents pay a flat 2.25% local rate.
- Account for high-income adjustments
- Itemized deduction limit: Maryland itemized deductions are reduced by 7.5% of federal AGI over $200,000 (or $100,000 if married filing separately).
- Capital gains surtax: A new 2% surtax applies to capital gains for taxpayers with federal AGI over $350,000, with exemptions such as primary residence sales under $1M and retirement accounts.
Maryland 2026 state income tax brackets (tax year 2026)
These brackets apply to tax year 2026 (income earned in 2026, filed in 2027). Maryland keeps rates up to 5.75% and adds 6.25% and 6.5% at higher incomes.
Single, married filing separately, or dependent filers (2026)
| Taxable Income Range | Marginal Rate | Tax Calculation |
|---|---|---|
| $0 – $1,000 | 2.00% | 2% of income |
| $1,000 – $2,000 | 3.00% | $20 + 3% over $1,000 |
| $2,000 – $3,000 | 4.00% | $50 + 4% over $2,000 |
| $3,000 – $100,000 | 4.75% | $90 + 4.75% over $3,000 |
| $100,000 – $125,000 | 5.00% | $4,697.50 + 5% over $100,000 |
| $125,000 – $150,000 | 5.25% | $5,947.50 + 5.25% over $125,000 |
| $150,000 – $250,000 | 5.50% | $7,260 + 5.5% over $150,000 |
| Over $250,000 – $500,000 | 5.75% | $12,760 + 5.75% over $250,000 |
| $500,001 – $1,000,000 | 6.25% | Prior tax + 6.25% over $500,000 |
| Over $1,000,000 | 6.5% | Prior tax + 6.5% over $1,000,000 |
Married filing jointly, head of household, or qualifying surviving spouse (2026)
| Taxable Income Range | Marginal Rate | Tax Calculation |
|---|---|---|
| $0 – $1,000 | 2.00% | 2% of income |
| $1,000 – $2,000 | 3.00% | $20 + 3% over $1,000 |
| $2,000 – $3,000 | 4.00% | $50 + 4% over $2,000 |
| $3,000 – $150,000 | 4.75% | $90 + 4.75% over $3,000 |
| $150,000 – $175,000 | 5.00% | $7,072.50 + 5% over $150,000 |
| $175,000 – $225,000 | 5.25% | $8,322.50 + 5.25% over $175,000 |
| $225,000 – $300,000 | 5.50% | $10,947.50 + 5.5% over $225,000 |
| Over $300,000 – $600,000 | 5.75% | $15,072.50 + 5.75% over $300,000 |
| $600,001 – $1,200,000 | 6.25% | Prior tax + 6.25% over $600,000 |
| Over $1,200,000 | 6.5% | Prior tax + 6.5% over $1,200,000 |
Local Maryland income tax (county/city)
Maryland’s 23 counties and Baltimore City impose a local income tax, paid with your state return. Planning points:
- The maximum county rate rises from 3.2% to 3.3% for tax years after December 31, 2024.
- Counties can adopt progressive local rates if revenue-neutral.
- Nonresidents pay a flat 2.25% local rate.
- The highest combined state + local marginal rate for residents is 9.8% (up from 8.95%).
- The highest combined state + local marginal rate for nonresidents is 8.75% (up from 8%).
- Example: Anne Arundel County raised its middle bracket to 2.94% for income $50,001–$400,000 (single) effective after December 31, 2024.
Documents to gather before you file
Identity and residency
- SSN or ITIN
- Maryland address history if you moved
- Move-in or move-out date if you were a part-year resident
Income
- Wage forms (often a W-2)
- Independent contractor forms (often a 1099)
- Investment income and capital gains statements (brokerage year-end statements)
Deductions (especially if itemizing or high income)
- Records for itemized deductions you plan to claim
- Federal adjusted gross income (federal AGI), since Maryland limits can depend on it
Local tax details
- County (or Baltimore City) where you lived, if you’re a resident
- If you’re a nonresident, confirmation you will use the 2.25% local rate
Timeline and effective dates
These 2026 bracket rules apply to income earned in 2026 and filed in 2027.
Key rule:
– The bracket and local-rate changes were enacted in the FY 2026 Budget Reconciliation and Financing Act (H.B. 352) and apply to tax years beginning after December 31, 2024, with most taking effect July 1, 2025.
Common mistakes
Confusing “tax rate” with “effective tax rate”
Maryland’s brackets are marginal. If you reach the 6.25% or 6.5% bracket, only income above the threshold is taxed at that rate.
Forgetting local tax
Many estimates miss the county/city tax layer, which matters most at the top combined rates.
Using the wrong bracket table
Thresholds differ by filing group. For married filing jointly, the top bracket thresholds start at $600,001–$1,200,000 for 6.25% and above $1,200,000 for 6.5%.
Ignoring the itemized deduction reduction
If federal AGI exceeds $200,000 (or $100,000 for married filing separately), Maryland reduces itemized deductions by 7.5% of the amount over that threshold, increasing Maryland taxable income.
Missing the capital gains surtax trigger
If federal AGI is over $350,000, capital gains can face the new 2% surtax, with exemptions (including primary residence sales under $1M and retirement accounts).
Key takeaway: If your income is near the new top brackets or you expect large capital gains, plan ahead for both the 6.25% / 6.5% brackets and the 2% capital gains surtax.
Next steps
- Find your expected 2026 Maryland taxable income and use the correct bracket table for your filing status.
- Add your local tax (county/city if resident, or 2.25% if nonresident).
- If your income is near the new high brackets or you expect a large stock sale or property sale, plan for the 6.25% / 6.5% brackets and the 2% capital gains surtax.
- If your withholding is set for a prior year, update payroll settings to avoid a large bill when you file in 2027.
- If you want more immigration-focused personal finance guides for life in Maryland and the U.S., visit VisaVerge.com.
Maryland is implementing new tax brackets of 6.25% and 6.5% for high earners in 2026. The state utilizes a unique two-layer system where residents pay both state and local taxes on one return. Key updates include a 2% capital gains surtax for those with high federal adjusted gross incomes and reductions in itemized deductions. Taxpayers should review their filing status and residency to estimate liability.
