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Official Tax Guide

Maryland Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Maryland state taxes. Income tax (2% - 5.75%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

Maryland State Tax Guide 2025

Moving to Maryland offers a blend of vibrant city life, historic charm, and scenic coastlines. As you plan your relocation, understanding the state’s tax structure is essential for budgeting and financial planning. This guide provides a clear overview of Maryland’s tax system for 2025, focusing on key areas that will impact new residents.

1. Income Tax

Maryland employs a progressive income tax system, meaning your tax rate increases as your income rises. This is a key distinction from a flat tax system, where everyone pays the same rate regardless of earnings.

State Income Tax Brackets

For the 2025 tax year, the state income tax rates range from 2% to 5.75%. The specific brackets and rates are subject to annual adjustments by the state legislature. Here is the general structure based on the provided data:

  • Lowest Bracket: 2% (applies to the first portion of taxable income)
  • Highest Bracket: 5.75% (applies to the highest level of taxable income)

Note: The income levels for each bracket vary based on filing status (e.g., single, married filing jointly). It is crucial to consult the official Maryland Comptroller’s website or a tax professional for the precise bracket thresholds for 2025.

Local Income Taxes

In addition to state income tax, Maryland residents are subject to local (county) income taxes. These rates vary by county and are in addition to the state tax. Local tax rates typically range from approximately 1.25% to 3.2%. When calculating your total income tax liability, you must combine your state rate with your county's specific rate.

2. Sales Tax

The statewide sales tax rate in Maryland is 6%. This tax applies to most retail goods and some services.

  • Local Taxes: Maryland does not allow counties to levy additional local sales taxes on top of the state rate. The 6% rate is uniform across the entire state, making it simple to calculate at the point of sale.
  • Taxable Items: The 6% rate applies to a wide range of goods, but there are notable exemptions, including:
    • Most groceries (subject to a reduced rate of 0% for food products intended for human consumption).
    • Prescription and non-prescription drugs.
    • Clothing and footwear (under a certain price threshold per item).

3. Property Tax

Property taxes in Maryland are primarily levied by local governments (counties and municipalities) to fund schools, public safety, and other services.

  • General Context: While Maryland’s average effective property tax rate is slightly above the national average, rates can vary significantly depending on the county. Homeowners should expect rates to fall within a range, often between 0.8% and 1.2% of the assessed property value.
  • Assessment Process: Property is assessed at 100% of its market value. Tax bills are issued annually, and payments are typically made in semi-annual installments.
  • Homestead Tax Credit: Maryland offers a Homestead Property Tax Credit, which limits the annual increase in taxable assessments for owner-occupied primary residences. This is an automatic benefit for most homeowners, but you must ensure you have applied with your local assessment office if you are a new resident.

4. Other Taxes

Beyond income, sales, and property taxes, Maryland has several other taxes to be aware of:

  • Gas Tax: Maryland’s gas tax is a combination of a fixed rate and a rate tied to inflation. It is subject to change annually. As of 2025, it remains one of the higher gas taxes in the region, which helps fund transportation infrastructure.
  • "Sin" Taxes: The state imposes higher excise taxes on products like alcohol and tobacco. For example:
    • Cigarettes: A per-pack excise tax is applied in addition to the standard sales tax.
    • Alcohol: Excise tax rates vary by type (beer, wine, spirits).
  • Inheritance Tax: Maryland is one of the few states with both an inheritance tax and an estate tax. The inheritance tax applies to property left to beneficiaries who are not closely related to the decedent (e.g., friends, nieces, nephews). Spouses, parents, grandparents, and children are generally exempt.

5. Retirement Income Taxes

For retirees, Maryland’s tax treatment of retirement income is a mix of benefits and standard taxation.

  • Taxed Income: Maryland generally taxes most retirement income, including distributions from traditional 401(k)s, 403(b)s, and traditional IRAs, as well as most government pensions.
  • Exemptions and Exclusions:
    • Social Security: Benefits are not taxed for individuals with federal adjusted gross income (AGI) below a certain threshold. For higher-income retirees, a portion of Social Security benefits may be taxable.
    • Military Pensions: Military retirement pay is fully exempt from Maryland state income tax.
    • Public Pensions (State/Local): A portion of retirement income from Maryland state or local government pensions may be exempt from state income tax, depending on the specific plan and the retiree's age.
    • Age-Based Exemption: Taxpayers aged 65 or older may be eligible for an additional standard deduction, which can lower their overall tax liability.

6. Comparison to Neighbors

Understanding how Maryland’s tax structure compares to its neighboring states can help in your relocation planning.

  • Virginia:

    • Income Tax: Virginia has a progressive income tax with rates from 2% to 5.75%, similar to Maryland's top rate.
    • Sales Tax: Virginia’s state sales tax is 4.3%, but with local additions, the combined rate can reach 6% in some areas, similar to Maryland.
    • Property Tax: Virginia’s average effective property tax rate is lower than Maryland's.

  • Pennsylvania:

    • Income Tax: Pennsylvania has a flat 3.07% income tax rate, which is significantly lower than Maryland’s top rate.
    • Sales Tax: Pennsylvania has a 6% statewide sales tax, similar to Maryland.
    • Property Tax: Pennsylvania’s property tax rates are generally comparable to Maryland's.

  • Delaware:

    • Income Tax: Delaware has a progressive income tax system with a top rate of 6.6%, slightly higher than Maryland's.
    • Sales Tax: Delaware is one of the few states with no sales tax, which is a major financial advantage for consumers.
    • Property Tax: Delaware’s property tax rates are generally lower than Maryland's.

  • Washington, D.C.:

    • Income Tax: D.C. has a progressive income tax system with a top rate of 8.5% on income over $250,000, which is higher than Maryland's top rate.
    • Sales Tax: D.C.’s sales tax rate is 6%, the same as Maryland’s.
    • Property Tax: D.C.’s effective property tax rate is slightly lower than the Maryland average.

Disclaimer: Tax laws are complex and subject to change. The information provided in this guide is for general informational purposes only and is based on data for the 2025 tax year. It is not a substitute for professional tax advice. Please consult a Certified Public Accountant (CPA) or other qualified tax professional to discuss your specific financial situation.