If you live or work in Montgomery County, the Montgomery County Maryland income tax is a local tax of 3.20% on your Maryland taxable income, among the highest local rates in the state.1Department of Legislative Services. 2026 County Local Tax Rates You don’t send it to the county. The Comptroller of Maryland collects it as part of your regular state return and routes the local share to the county treasury, which means one filing covers both.
How the County Tax Is Collected
Maryland’s local income tax is often called a “piggyback” tax because it rides on top of the state return. Under Maryland Tax-General Code § 10-103, each county sets its own rate and applies it to the same Maryland taxable income figure used for state tax.2New York Codes, Rules and Regulations. Maryland Code Tax-General 10-103 – County Income Tax There is no separate county form, no separate county office to deal with, and no separate deadline. Counties can set a rate between 2.25% and 3.30% of Maryland taxable income.3Maryland General Assembly. Maryland Code Tax-General 10-106 – County Income Tax Rate Montgomery County’s 3.20% has been in place since fiscal year 2004 and remains the figure on the official 2026 rate tables.1Department of Legislative Services. 2026 County Local Tax Rates
Who Owes Montgomery County Income Tax
Residents
You owe the tax if you qualify as a Maryland resident and your home is in Montgomery County. Maryland defines “resident” two ways: either you are domiciled in Maryland on the last day of the tax year, or you keep a place of abode in the state for more than six months and are physically present in Maryland for at least 183 days.4Maryland Comptroller of the Treasury. Administrative Release No. 37 – Domicile and Residency
If you live in the county but commute to a job in Virginia, D.C., or elsewhere, you still owe the full 3.20% based on your home address. Where your paycheck originates doesn’t matter; where you live does. If you moved into or out of the county partway through the year, file as a part-year resident and prorate the local liability based on your dates of residency.
Nonresidents Working in the County
People who live outside Maryland but earn wages or salary from a job physically located in Montgomery County also owe the local income tax. The statute covers nonresidents who derive income from personal services performed in the county.2New York Codes, Rules and Regulations. Maryland Code Tax-General 10-103 – County Income Tax A nonresident pays the local tax at a rate set for their specific situation, which may differ from the resident rate, and files Maryland Form 505 rather than Form 502.
Reciprocal State Residents
Maryland has reciprocal tax agreements with Pennsylvania, Virginia, West Virginia, and the District of Columbia.5Maryland Comptroller of the Treasury. Maryland Income Tax Administrative Release No. 3 Residents of those four jurisdictions are generally exempt from Maryland tax on wages earned here, and Maryland residents are exempt from tax on wages earned there. If you live in Montgomery County and work in D.C., you pay Maryland and Montgomery County taxes on that income, not D.C. taxes.
Remote Workers and Military Families
If you live in Montgomery County but work remotely for an out-of-state employer, you still owe the 3.20% because you’re a resident. If you split time between the county and a non-reciprocal state, track your work days carefully, because the allocation of income between jurisdictions often depends on how many days you physically worked in each location. Workers in states without a reciprocal agreement may face taxes in both states on the same income and will need to claim credits to avoid double taxation.
Military families stationed in Montgomery County have additional protections. Under the Servicemembers Civil Relief Act and the Military Spouses Residency Relief Act, service members and their spouses can keep their legal residence in their home state rather than the state where they’re stationed. A military spouse who maintains legal residence in Texas, for example, would not owe Montgomery County income tax while living here, though the protection applies specifically to earned income and not necessarily to rental income from local property.
What Income the Tax Applies To
The county tax uses the same income base as your Maryland state return, which starts from federal adjusted gross income and then accounts for Maryland additions and subtractions. In practice the 3.20% rate reaches:
- Wages, salaries, tips, bonuses, and self-employment earnings
- Interest, dividends, and capital gains
- Pension distributions and retirement account withdrawals, though qualifying retirees can subtract a portion (the maximum exclusion is indexed to the Social Security annual benefit cap and reduced by any Social Security payments you receive)
Some income is excluded. Interest on U.S. government bonds is not subject to Maryland or county tax, and Social Security benefits are exempt from Maryland income tax entirely. Those subtractions lower the figure the 3.20% rate is applied to, so they directly reduce your county tax bill.
Filing and Paying
Residents file Maryland Form 502. Nonresidents with county income file Form 505.6Comptroller of Maryland. Individual Tax Forms and Instructions The local calculation happens on the state form, typically on the second page. You enter your political subdivision code so the Comptroller knows which county should receive the local share; that code is listed in the form instructions and on the Comptroller’s website.
The math is straightforward: multiply your Maryland taxable income by 0.0320. If your Maryland taxable income is $80,000, your Montgomery County tax is $2,560, which appears alongside your state tax liability on the return.
Electronic Filing
Maryland’s iFile system lets you file and pay online, and the Comptroller processes electronically filed returns the same day they are transmitted.7Comptroller of Maryland. Income Tax Refund Information If you’re expecting a refund, electronic filing is significantly faster than paper.
Paper Filing and Payment
Paper returns go to the Comptroller of Maryland, Payment Processing, PO Box 8888, Annapolis, MD 21401-8888.6Comptroller of Maryland. Individual Tax Forms and Instructions Paper returns take about 30 days to process.8Comptroller of Maryland. Check Your Refund Status If you owe, include Form PV (the personal tax payment voucher) with your check or money order payable to the Comptroller of Maryland.9Maryland Comptroller. Maryland Form PV – Personal Tax Payment Voucher Online payment by credit card or electronic check is also available through the state portal, though those methods may carry a processing fee. Forms can be downloaded from the Comptroller’s website or requested at taxforms@marylandtaxes.gov.
Estimated Payments for Income Without Withholding
If you have self-employment earnings, rental income, or investment gains that aren’t subject to withholding, you may need to pay quarterly estimated taxes to Maryland. The threshold is lower than many people expect: if you anticipate owing more than $500 beyond what’s already withheld, estimated payments are required.10Maryland Comptroller of the Treasury. Personal Tax Tip 54 – Should You Pay Estimated Tax to Maryland Those payments cover both state and local tax.
To avoid interest charges, your four installments together must equal at least 90% of the current year’s liability or 110% of the prior year’s liability, whichever is less.10Maryland Comptroller of the Treasury. Personal Tax Tip 54 – Should You Pay Estimated Tax to Maryland The quarterly due dates are April 15, June 15, September 15, and January 15 of the following year. If a date falls on a weekend or holiday, the deadline shifts to the next business day. One useful exception: if you make the first three quarterly payments and file your final return before January 31 with the remaining balance paid in full, you can skip the fourth quarter payment.
Penalties and Interest if You Fall Behind
Missing the deadline or underpaying carries real cost. Maryland charges a penalty of up to 25% of the unpaid tax for late payments.11Comptroller of Maryland. Penalty and Interest Charges A separate failure-to-pay penalty of up to 10% is assessed under Maryland Tax-General Code § 13-701.12New York Codes, Rules and Regulations. Maryland Code Tax-General 13-701 – Assessment of Penalty for Failure to Pay Tax or File Return
Interest also accrues on unpaid balances, at a rate that changes annually. The rate was 11.4825% in calendar year 2025.11Comptroller of Maryland. Penalty and Interest Charges Because penalties and interest apply to your combined state and local liability, falling behind at the 3.20% local rate can compound quickly.
The Federal SALT Cap
Montgomery County’s 3.20% local tax, combined with Maryland state tax of up to 5.75%, makes the federal state and local tax deduction relevant for many filers. For 2026, the SALT deduction is capped at $40,400 for most filers, or $20,200 for married filing separately. Those caps were set under federal budget legislation passed in 2025 and include a 1% annual increase through 2029. The deduction phases down for filers with modified adjusted gross income above $505,000.
The cap only matters if you itemize. If you take the standard deduction, your Montgomery County tax has no effect on your federal bill. For high earners in the county, reaching the cap is common, which means a portion of the state and local taxes you pay provides no federal benefit.