No, Maryland is not a tax-free state. Residents pay a state income tax that runs from 2% up to 6.5%, a county income tax layered on top, a 6% sales tax on most goods, and property taxes set locally. Maryland also charges inheritance and estate taxes, a vehicle titling tax, and transfer taxes when real estate changes hands. Several credits and exemptions soften the load, especially for retirees, low-income households, and owner-occupant homeowners.
State and Local Income Tax
Maryland’s income tax is progressive. For the 2026 tax year, eight brackets apply, starting at 2% on the first $1,000 of taxable income and reaching 6.5% on income above $1 million for single filers (or above $1.2 million for joint filers). The top two brackets were added by the legislature in 2025; before that, the schedule capped at 5.75%.1Comptroller of Maryland. 2026 Maryland State and Local Income Tax Withholding Information
Every county and Baltimore City charges its own income tax on top of the state rate. For 2026, local rates range from 2.25% in Worcester County to 3.30% in Dorchester and Kent counties, with most jurisdictions clustered near 3.20%.2Maryland Department of Legislative Services. 2026 County Local Tax Rates The local tax follows your residence, not your workplace. Combined, a moderate-income Maryland resident typically faces a total state and local rate between roughly 7% and 10%.
The state standard deduction is modest. For the 2025 tax year (filed in 2026), it’s $3,350 for single filers and $6,700 for married couples filing jointly, heads of household, and surviving spouses.3Comptroller of Maryland. What’s New for the 2026 Tax Filing Season (2025 Tax Year) That’s far below the federal standard deduction, which surprises some first-time filers. Wages, business income, interest, and dividends are all taxable.
Sales and Use Tax
Maryland charges a 6% sales and use tax on most tangible goods and certain services. Alcoholic beverages are taxed at 9%, which replaces the 6% rate rather than adding to it.4Maryland Alcohol, Tobacco and Cannabis Commission. What Is the Sales and Use Tax Rate on Sales of Alcoholic Beverages in Maryland General merchandise, prepared food, and certain digital products all sit at 6%.
The use tax closes the out-of-state loophole. If you buy something outside Maryland for use inside the state and no sales tax is collected, you owe the 6% use tax yourself. That covers online orders from retailers that don’t collect Maryland tax, items brought home from other states, and similar situations.
Several categories escape the sales tax entirely. Most food bought for home consumption is exempt. So are prescription medications, medical supplies sold by or to physicians and hospitals, and a broad range of medical devices, including wheelchairs, hearing aids, corrective eyeglasses, hospital beds, and prosthetic limbs.5Maryland General Assembly. Maryland Code Tax-General 11-211
Property Tax
All real property in Maryland is taxed at both the state and local level.6Maryland General Assembly. Maryland Code Tax-Property 6-101 The state portion is small; the local portion carries most of the bill. County rates across Maryland’s 23 counties and Baltimore City run from roughly $0.97 to $2.25 per $100 of assessed value, so where you live matters.
The Maryland Department of Assessments and Taxation (SDAT) reappraises each property once every three years to estimate current market value. Local assessment offices handle the work, and local governments use the assessed values to calculate your bill.7Maryland Department of Assessments and Taxation. Real Property
The Homestead Tax Credit
The Homestead Tax Credit caps how much your taxable assessment can rise in a single year. The statewide cap is 10%, so even if market value jumps 30% at reassessment, taxable value climbs only 10%.8Maryland Department of Assessments and Taxation. 2025-2026 Tax Rates and Homestead Credit Caps Many counties set tighter caps. The credit applies automatically to owner-occupied primary residences, but you must file a one-time application with SDAT to enroll.
Relief for Lower-Income Homeowners and Renters
The Homeowners’ Property Tax Credit targets households whose tax bill is high relative to income. To qualify, combined gross household income must be under $60,000 and net worth (excluding the home and qualified retirement accounts) must be under $200,000. A sliding formula calculates the credit based on how far your tax exceeds a share of your income.9Maryland Department of Assessments and Taxation. Homeowners’ Property Tax Credit Program The deadline is October 1, but filing by April 15 lets any credit reach your July bill.
Renters have their own program. Maryland’s Renters’ Tax Credit pays eligible renters up to $1,000 per year as a direct check from the state treasury, with the same $200,000 net worth cap.10Maryland OneStop. Renters’ Tax Credit Application Form RTC (2026)
Inheritance and Estate Taxes
Maryland is one of the few states that imposes both an inheritance tax and an estate tax.
The inheritance tax is 10% of the clear value of property passing to non-exempt beneficiaries. It mainly affects collateral heirs: nieces, nephews, aunts, uncles, and cousins.11Comptroller of Maryland. Estate and Inheritance Tax Information Close family is exempt. A spouse, child, grandchild, parent, grandparent, stepchild, stepparent, or sibling pays no inheritance tax at all.12Office of the Register of Wills. Inheritance Tax
The estate tax is separate and applies to the total value of a decedent’s estate. Maryland’s exemption is $5 million, so estates below that threshold owe nothing. The structure is tied to the federal estate tax credit, though Maryland’s exemption sits far below the current federal number.11Comptroller of Maryland. Estate and Inheritance Tax Information One estate can be hit by both taxes at once, with the inheritance tax applying to specific transfers and the estate tax applying to the whole.
Vehicle and Real Estate Transfer Taxes
Buying a vehicle in Maryland triggers an excise tax, commonly called the titling tax, when the title is issued. The base statutory rate is 6% of fair market value, with a $100 minimum.13Maryland General Assembly. Maryland Transportation Code 13-809 – Imposition of Tax The legislature considered raising this rate in its 2025 session, so confirm the current figure with the Maryland Motor Vehicle Administration before you buy.
Real estate sales bring two more taxes. The state transfer tax is 0.5% of the sale price, dropping to 0.25% for first-time Maryland homebuyers. The recordation tax is charged per $500 of consideration and varies by county, since local governments set their own recordation rates.14Maryland General Assembly. Maryland Code Tax-Property 12-103 – Rate of Tax On a typical home purchase, combined recordation and transfer taxes can add several thousand dollars to closing costs.
Retirement Income
Retirees catch a real break on Social Security. Those benefits are fully exempt from Maryland state income tax, with no phase-out and no special form.
Other retirement income is taxable. Distributions from 401(k) plans, 403(b) plans, 457(b) plans, and traditional pensions all count. Maryland offers a pension exclusion that lets qualifying taxpayers subtract part of that income. For the 2025 tax year, the maximum exclusion is $41,200, and you or your spouse must have been at least 65 or totally disabled on the last day of the tax year.15Comptroller of Maryland. Maryland Pension Exclusion
Not every retirement account qualifies. Distributions from traditional IRAs, Roth IRAs, SEP plans, and Keogh plans are ineligible. The exclusion applies only to income from “employee retirement systems,” which is narrower than many retirees expect. If your retirement income comes mostly from IRA withdrawals, the pension exclusion won’t help.15Comptroller of Maryland. Maryland Pension Exclusion
Credits That Reduce What You Owe
Maryland offers several income tax credits that can meaningfully cut your bill.
- Maryland’s Earned Income Tax Credit equals 50% of the federal EITC you claim. It’s one of the most generous state EITCs in the country and can produce a refund even if you owe no state tax.16Comptroller of Maryland. Tax Credits, Deductions and Subtractions
- The Child and Dependent Care Credit starts at 32% of the federal credit but phases out above $109,300 in federal AGI ($169,900 for joint filers).16Comptroller of Maryland. Tax Credits, Deductions and Subtractions
Maryland has also added a state-level child tax credit in recent years. Eligibility turns on income and dependent status, and the details have moved with recent legislation. Check the Comptroller’s website for the current amount and income limits when you file.
Deadlines and Late Penalties
Maryland individual income tax returns are due April 15, matching the federal deadline. For the 2025 tax year, that’s April 15, 2026.3Comptroller of Maryland. What’s New for the 2026 Tax Filing Season (2025 Tax Year) A federal extension automatically extends your Maryland filing deadline, but any tax owed is still due by the original date. An extension to file is not an extension to pay.
Missing the deadline carries real cost. Late payment penalties can reach 25% of the tax owed, with interest accruing on top.17Comptroller of Maryland. Compliance FAQs If you owe and can’t pay in full, file on time and pay what you can. The penalty for not filing is steeper than the penalty for filing without full payment.