Comparing Maryland vs Virginia taxes comes down to a structural tradeoff: Maryland stacks a local income tax on top of its state rate and reaches a top combined marginal rate above 8.9%, while Virginia caps its state income tax at 5.75% and forbids local income taxes but recoups the revenue through an annual personal property tax on vehicles and, in many places, higher real estate rates. Which state costs you more depends on how much you earn, how many cars you own, whether you’re retired, and whether you expect to pass on or receive an inheritance.
Income Tax: Where Maryland’s Local Tax Changes the Math
Virginia’s state income tax is straightforward. Rates run 2% on the first $3,000 of taxable income, 3% up to $5,000, 5% up to $17,000, and 5.75% on everything above.1Virginia Department of Taxation. Filing Status Because the top bracket starts at just $17,000, nearly every full-time worker in Virginia pays 5.75% on most of their income.
Maryland’s brackets climb more gradually, from 2% at the bottom through 3%, 4%, 4.75%, 5%, 5.25%, and 5.50%, hitting 5.75% only on single-filer income between $250,001 and $500,000. The 2025 legislative session added two new brackets above that: 6.25% on single-filer income between $500,001 and $1,000,000, and 6.50% above $1,000,000. Joint filers reach those thresholds at $600,001 and $1,200,000.2Maryland Comptroller. 2026 Maryland State and Local Income Tax Withholding Information
Looked at in isolation, Maryland’s state rates favor middle-income earners. A worker making $80,000 pays 4.75% on most of that income in Maryland versus 5.75% on nearly all of it in Virginia. But Maryland doesn’t stop at the state rate. Every Maryland county and Baltimore City imposes a local “piggyback” income tax on residents, applied to the same taxable income as the state tax. Local rates are capped at 3.30% for tax years beginning after December 31, 2025, with most counties setting rates between roughly 2.50% and 3.20%.3Maryland Comptroller. Changes to Standard and Itemized Deductions and to State and Local Income Tax Rates from the 2025 Legislative Session
Add a typical 3.20% local rate to Maryland’s 5.75% state rate, and the combined marginal rate exceeds 8.9%. High earners face steeper combined rates once the new 6.25% and 6.50% brackets apply. Virginia law flatly bars localities from taxing income, reserving that revenue source for the state.4Virginia Code Commission. Virginia Code 58.1-300 – Incomes Not Subject to Local Taxation Once the piggyback tax enters the picture, Maryland’s supposed middle-income advantage disappears for most workers and reverses at higher incomes.
Both states offer standard deductions and personal exemptions. Virginia’s standard deduction is $8,750 for single filers and $17,500 for joint filers, though those amounts are scheduled to revert to $3,000 and $6,000 after tax year 2026 unless the legislature acts.5Virginia Department of Taxation. Deductions Maryland calculates its standard deduction as 15% of adjusted gross income within a floor and ceiling that vary by filing status; the 2025 session raised those ceilings substantially.3Maryland Comptroller. Changes to Standard and Itemized Deductions and to State and Local Income Tax Rates from the 2025 Legislative Session
Sales Tax and Groceries
Maryland charges a flat 6% sales and use tax statewide with no local add-ons. Groceries for home consumption and prescription drugs are exempt.6Comptroller of Maryland. Maryland Sales and Use Tax 6% Rate Chart
Virginia’s sales tax varies by region. The base combined rate is 5.3%, but Northern Virginia counties including Fairfax, Loudoun, Arlington, and Prince William pay 6%. Hampton Roads and Central Virginia localities also pay 6%. James City County, Williamsburg, and York County pay 7%.7Virginia Department of Taxation. Retail Sales and Use Tax Virginia taxes groceries and personal hygiene items at a reduced statewide rate of 1%.8Virginia Department of Taxation. Grocery Tax
For general shopping, the two states are close. For a household spending heavily on groceries, Virginia’s 1% grocery rate versus Maryland’s full exemption is a wash on unprepared food, but Virginia’s 1% still applies where Maryland charges nothing on qualifying items.
Vehicle Taxes: The Virginia Bill You Won’t Get in Maryland
Virginia localities tax cars, trucks, and motorcycles every year based on assessed value, applying the local tangible personal property tax rate. On a newer vehicle worth $35,000 or more, this bill can easily top $1,000 a year in higher-rate jurisdictions.
The Personal Property Tax Relief Act partially offsets the burden. The state funds a reduced rate on the first $20,000 of a qualifying vehicle’s assessed value, with the full local rate applying above that. The actual relief percentage varies by locality because Virginia distributes a fixed $950 million pool across all participating jurisdictions.9Virginia Code Commission. Personal Property Tax Relief
Maryland does not tax individually owned vehicles as personal property. Registered vehicles are exempt from property tax valuation entirely.10Maryland General Assembly. Maryland Tax – Property Code Section 7-230 – Personal Property – Vehicles For a household with two or three vehicles, this difference can amount to several thousand dollars per year in Maryland’s favor.
Real Estate Taxes
Local jurisdictions in both states set their own real estate tax rates per $100 of assessed value, and rates vary widely by county. Homeowners in Northern Virginia and in Maryland’s suburban D.C. counties face broadly comparable bills, with the specifics depending on the local rate and how the property was assessed.
The mechanics differ. Maryland assesses all real property at full cash value on a three-year cycle through the Department of Assessments and Taxation, and any increase phases in over three years.11Maryland Department of Assessments and Taxation. A Homeowner’s Guide to Property Taxes and Assessments Maryland’s Homestead Tax Credit caps taxable assessment increases at 10% per year for owner-occupied primary residences, and many counties impose tighter caps.12Maryland Department of Assessments and Taxation. County and Municipal Homestead Credit Percentages
Virginia localities assess at fair market value on cycles ranging from annually to every four years. Virginia has no statewide assessment cap comparable to Maryland’s Homestead Tax Credit, though localities must hold public hearings before raising rates in response to reassessment-driven revenue jumps. That means a Maryland homeowner in a hot market has more protection against a sudden tax spike than a Virginia homeowner in the same situation.
Retirement Income
Neither state taxes Social Security benefits. Virginia lets taxpayers subtract Social Security income that was included in federal AGI,13Virginia Department of Taxation. Subtractions and Maryland excludes it from state taxation.14Maryland Comptroller. Technical Bulletin 51 – Senior Citizens and MD Income Tax
Beyond Social Security, the states diverge. Virginia offers an age deduction of up to $12,000 for taxpayers who have reached 65. Those born on or before January 1, 1939 get the full deduction regardless of income. For everyone else, the deduction phases out dollar-for-dollar once adjusted federal AGI exceeds $50,000 for single filers or $75,000 for joint filers.15Virginia Code Commission. Virginia Code 58.1-322.03 A single retiree with $62,000 or more in federal AGI gets no age deduction at all. Otherwise, Virginia fully taxes pensions, 401(k) withdrawals, and IRA income.
Maryland’s pension exclusion is more generous. Taxpayers 65 or older can subtract qualifying pension and retirement annuity income up to a cap indexed annually to the maximum Social Security benefit. For tax year 2025, the cap was $41,200.16Comptroller of Maryland. 2025 Pension Exclusion Computation Worksheet 13A The exclusion is reduced dollar-for-dollar by any Social Security or Railroad Retirement benefits received, so retirees with large Social Security checks see a smaller pension exclusion.
For military retirees, Virginia is the more generous state. Virginia allows a subtraction of up to $40,000 of eligible military retirement income for tax year 2025 and later, with no age requirement.17Virginia Department of Taxation. Military Benefits Subtraction FAQ Maryland allows up to $20,000 for military retirees 55 or older, or $12,500 for those under 55.14Maryland Comptroller. Technical Bulletin 51 – Senior Citizens and MD Income Tax
Estate and Inheritance Taxes
Virginia has neither an estate tax nor an inheritance tax. It eliminated its estate tax effective July 1, 2007.18Virginia Department of Taxation. Estate and Inheritance Taxes
Maryland has both. The Maryland estate tax applies to estates with a taxable value above $5 million, with a top marginal rate of 16% on the portion above roughly $10 million. Legislation to repeal the estate tax (Senate Bill 211) was introduced for the 2026 session but had not been enacted as of mid-2025.
Maryland also imposes a separate 10% inheritance tax on assets passing to collateral heirs such as nieces, nephews, aunts, uncles, and cousins. Spouses, children, grandchildren, parents, grandparents, stepchildren, and siblings are exempt.19Register of Wills. Inheritance Tax For families with significant wealth or plans to leave assets to extended relatives, this is one of the clearer reasons to prefer Virginia residency.
If You Commute Across the Potomac
Maryland and Virginia have a reciprocal agreement covering wages and salaries. Cross-border commuters pay income tax only to the state where they live, not where they work.
A Maryland resident working in Virginia should file Form VA-4 with the Virginia employer to stop Virginia withholding.20Virginia Department of Taxation. Reciprocity A Virginia resident working in Maryland should complete line 4 of Form MW 507 to certify nonresidence and avoid Maryland withholding.21Maryland State Government. 2025 MD MW507 Instructions The agreement covers only wages and salaries. Income from a business, rental property, or investments located in the other state may still require a nonresident return.
A Note for Business Owners
Both states offer an elective pass-through entity tax that lets S corporations, partnerships, and LLCs taxed as partnerships pay state income tax at the entity level, working around the $10,000 federal SALT deduction cap.
Virginia’s PTE rate is 5.75%, matching the top individual rate. Owners receive a refundable credit on their individual returns equal to their share of the tax paid.22Virginia Department of Taxation. Virginia Elective Pass-Through Entity Tax Maryland’s PTE rate is higher because it folds in the local tax: for tax years beginning after December 31, 2024, it’s 8.75% on individual and fiduciary members’ shares and 8.25% on entity members’ shares.3Maryland Comptroller. Changes to Standard and Itemized Deductions and to State and Local Income Tax Rates from the 2025 Legislative Session The higher Maryland rate produces a correspondingly larger federal deduction.
Which State Costs You More?
There isn’t one answer, and the honest comparison depends on the profile:
- A middle-income W-2 worker with one or two vehicles: Maryland’s combined state and local income tax usually outweighs Virginia’s vehicle tax, so Virginia is often cheaper overall. The gap widens for households with several cars.
- A high earner above $500,000: Maryland’s new top brackets plus the local piggyback push combined marginal rates well above Virginia’s 5.75% cap. Virginia wins on income; the vehicle tax rarely closes the gap.
- A retiree drawing a pension: Maryland’s pension exclusion of up to $41,200 is more generous than Virginia’s age deduction, which phases out entirely at moderate incomes. Maryland often wins here, though military retirees do better in Virginia.
- A family expecting to leave or receive a large estate, or one leaving assets to nieces, nephews, or cousins: Virginia’s lack of estate and inheritance taxes is a real advantage.
- A cross-border commuter: your residence controls your income tax, so the choice of home state governs the outcome regardless of where the job sits.