Maryland Form MW507 is the Employee’s Maryland Withholding Exemption Certificate, and it tells your employer how much state and local income tax to hold back from each paycheck. You fill it out when you start a Maryland job, and you update it whenever your situation changes. The number of exemptions you claim on Line 1 does most of the work: the higher that number, the less tax comes out of each check. Get it wrong and you’ll either see a surprise bill in April or hand the state more of every paycheck than you needed to.
When to File or Update the Form
Fill out an MW507 on your first day at any Maryland job. Your employer applies your withholding starting with your first paycheck, so waiting costs you. If you don’t turn one in, Maryland regulations require your employer to withhold as if you claimed a single personal exemption, which rarely matches anyone’s real situation.1Library of Maryland. Maryland Code of Regulations 03.04.01.01 – Withholding of Tax at Source
After that, file a new form within ten days of anything that reduces the exemptions you’re allowed to claim: a divorce, a dependent aging out, a spouse starting to claim exemptions on their own MW507. If something changes in the other direction and you’re now entitled to more exemptions, updating is optional but usually worth doing so your employer isn’t over-withholding.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
One deadline sneaks up on people: if you claimed total exemption on Line 3, that status expires February 15 of the following year. File a fresh MW507 by then or your employer reverts to withholding based on one exemption.
The Personal Exemption Worksheet
The back of the form has a worksheet that produces the number you put on Line 1. This is where most of the actual thinking happens. Each exemption is worth $3,200 if your federal adjusted gross income is $100,000 or less; above that, the value phases down and eventually hits zero.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
The worksheet has four lines that add together:
- Line a covers personal and dependent exemptions. Multiply the count (yourself, your spouse if applicable, and each qualifying dependent) by your exemption value. Don’t double-count dependents claimed at another job or on a spouse’s MW507.
- Line b adds an extra exemption value for each dependent age 65 or older.
- Line c is for excess itemized deductions and other adjustments. If your itemized deductions (excluding state and local income taxes) exceed the $3,400 standard deduction, enter the difference. You can also add allowable childcare expenses, qualified retirement contributions, and business losses.
- Line d adds $1,000 if you or your spouse is 65 or older, blind, or both.
Add lines a through d, divide by $3,200, and drop any fraction. That’s your Line 1.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
A shortcut: if your AGI will be $100,000 or less, you file single, and you have no dependents, you can skip the worksheet and just enter “1” on Line 1.
Phaseout for Higher Earners
The full $3,200 exemption value only applies below $100,000 of federal AGI. For single filers and married-filing-separately, it drops to $1,600 between $100,001 and $125,000, to $800 between $125,001 and $150,000, and to zero above $150,000. Joint filers and heads of household keep the full $3,200 through $150,000, with the value phasing out entirely above $200,000.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
If your income puts you above the phaseout, Line 1 will be zero no matter how many dependents you have. Line c on the worksheet, covering itemized deductions and other adjustments, becomes your only lever for lowering withholding.
Filling In the Rest of the Form
The top of Form MW507 asks for your legal name, Social Security number, and home address, including your county. The county field controls which local income tax rate your employer applies, so use your actual residential address rather than a work address or a P.O. box.
- Line 1 is the exemption count from the worksheet.
- Line 2 is a dollar amount if you want extra tax held back from each paycheck. People with side income, rental income, or freelance work often use Line 2 to avoid owing at filing time.
- Line 3 is where you write “EXEMPT” if you owed zero Maryland income tax last year, received a full refund of any withholding, and expect the same this year. Remember, this expires each February 15.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
- Line 4 is for residents of D.C., Virginia, or West Virginia who work in Maryland but don’t maintain a Maryland home for 183 days or more. See the reciprocal section below.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
- Line 8 is for military spouses claiming exemption under the Military Spouses Residency Relief Act. Enter your state of legal residence and write “EXEMPT” in the adjacent box.
Sign and date at the bottom. Without your signature, the form is not valid and your employer cannot change your withholding.
Reciprocal State Exemption
Maryland has reciprocal income tax agreements with Pennsylvania, Virginia, West Virginia, and the District of Columbia.3Comptroller of Maryland. Administrative Release No. 3 – Nonresident Credits, Reciprocal Income Tax Agreements If you live in one of those places and commute to a Maryland job, you owe income tax on your wages to your home state, not Maryland. Complete Line 4 on the MW507 to stop your Maryland employer from withholding.
Two limits are worth knowing. The exemption covers wages and salary only, so any other Maryland-sourced income (rent from a Maryland property, for example) still requires a Maryland nonresident return. And the exemption doesn’t apply if you maintain a home in Maryland for 183 days or more during the calendar year.4Comptroller of Maryland. Personal Tax Tip 56 – When You Live in One State and Work in Another
If your employer has already withheld Maryland tax before you submit the corrected form, you’ll recover it by filing a Maryland nonresident return claiming a refund.
Military Spouse Exemption
Under the Military Spouses Residency Relief Act, your Maryland wages are exempt from Maryland income tax if three conditions all apply: your spouse is an active-duty service member stationed in Maryland under military orders, you are in Maryland solely to be with your spouse, and you keep legal residence in another state.5Comptroller of Maryland. Maryland Form MW507M – Exemption From Maryland Withholding Tax for a Qualified Spouse of a Servicemember
Claiming the exemption takes two forms and a piece of ID. File an MW507 with “EXEMPT” on Line 8 and your state of legal residence, complete Form MW507M, and attach a copy of your spousal military identification card. Your employer needs all three before processing the exemption, and you’ll repeat the paperwork with any new Maryland employer while you’re in the state.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate
Like the reciprocal exemption, this one applies only to wages and salary. Investment income, self-employment income, and other non-wage earnings sourced in Maryland are not covered.
MW507 Is Not the Same as Federal W-4
The federal W-4 was redesigned in 2020 and no longer uses personal allowances; it asks for dollar amounts for dependents, other income, and deductions.6Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate The MW507 still uses the older exemption-count system, where each exemption is worth $3,200 and you enter a single number on Line 1.
You need both forms when starting a Maryland job, and getting one right does not carry over to the other. If you and a spouse both work, read the worksheet’s warning carefully: exemptions claimed at another job or on a spouse’s MW507 cannot be counted again on yours.
Submitting the Form
Hand the completed MW507 to your employer’s payroll or HR department. Do not send it to the Comptroller of Maryland; your employer keeps it on file.2Comptroller of Maryland. Maryland Form MW507 – Employee’s Maryland Withholding Exemption Certificate The current PDF is available on the Comptroller’s website, and most employers include a copy in onboarding.7Comptroller of Maryland. Employer Withholding Forms Download the 2026 version to make sure you’re working with current exemption values.
Reviewing your MW507 once a year is a good habit even when nothing dramatic has changed. Small shifts, such as picking up freelance income or losing a dependent’s eligibility, can quietly open a gap between your withholding and your actual liability.
What Happens If You Get It Wrong
Filing a false MW507 or deliberately withholding information on the form is a misdemeanor under Maryland law, punishable by a fine of up to $500, up to six months in jail, or both.8New York Codes, Rules and Regulations. Maryland Tax-General 13-1007 – Fines and Penalties for Income Tax Withholding That’s for willful conduct. Honest mistakes don’t trigger criminal charges, but if you accidentally claim too many exemptions you’ll owe the shortfall plus interest at filing time.
Maryland’s underpayment interest rate changes annually; for the 2025 tax year (filed in 2026) it runs about 10.8%.9Comptroller of Maryland. What’s New for the 2026 Tax Filing Season An underpayment penalty can also kick in if you owed more than $500 at filing and didn’t cover enough through withholding or estimated payments. If you have income your employer doesn’t know about, entering an extra dollar amount on Line 2 is the simplest way to stay clear of that threshold.