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Maryland state income tax

By Brent Chudoba, editor Updated

Maryland has a state income tax. It is graduated, with a top marginal rate of 6.5%. Graduated from 2% on the first $1,000 of taxable income up to 6.5% on income over $1M ($1.2M for joint filers/HOH/qualifying surviving spouse). The 2025 Budget Reconciliation and Financing Act (Ch. 604) added two new top brackets for tax years beginning after 12/31/2024: 6.25% on $500,001-$1,000,000 ($600,001-$1,200,000 joint) and 6.5% above that. All 23 counties and Baltimore City also levy a local income tax on top of the state rate, ranging from 2.25% (lowest, e.g. Worcester County) to 3.30% (highest, Dorchester County for TY2025; local rates can change annually). Capital gains are taxed under special rules (see below).

Does Maryland have a state income tax?

Yes. Maryland taxes individual income on a graduated schedule topping out at 6.5%. Graduated from 2% on the first $1,000 of taxable income up to 6.5% on income over $1M ($1.2M for joint filers/HOH/qualifying surviving spouse). The 2025 Budget Reconciliation and Financing Act (Ch. 604) added two new top brackets for tax years beginning after 12/31/2024: 6.25% on $500,001-$1,000,000 ($600,001-$1,200,000 joint) and 6.5% above that. All 23 counties and Baltimore City also levy a local income tax on top of the state rate, ranging from 2.25% (lowest, e.g. Worcester County) to 3.30% (highest, Dorchester County for TY2025; local rates can change annually).

Maryland income tax at a glance (reviewed August 29, 2026)
ItemMaryland
State income taxYes, graduated
Top marginal rate6.5%
Capital gainsSpecial rules, up to 8.5%
State sales tax6%
Avg. property tax rate0.92% of home value
Estate / inheritance taxEstate tax (exemption $5,000,000)

How does Maryland tax capital gains?

Maryland taxes capital gains under special rules rather than at the ordinary income rate. The top rate that applies is 8.5%. You still owe federal capital gains tax on top of any state tax. See how capital gains tax works in 2026.

What about retirement income in Maryland?

Retirement income is taxed differently from wages in many states. For how Maryland treats Social Security, pensions, and 401(k)/IRA withdrawals, see Maryland retirement taxes.

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