Question 1

What is Maryland's state income tax rate for 2025?

Accepted Answer

Maryland imposes a 10-bracket progressive income tax under Md. Tax-Gen §10-105 ranging from 2.00% to 6.50% for single filers, with the two new top brackets of 6.25% ($500,000 to $1 million) and 6.50% (over $1 million) added effective January 1, 2025 by the 2025 legislative session. The top rate rose from the prior 5.75% ceiling.

Question 2

Does Maryland impose a mandatory local income tax on top of the state rate?

Accepted Answer

Yes. Every Maryland resident is subject to a mandatory county or Baltimore-City piggyback local income tax ranging from 2.25% to 3.20% (statewide average approximately 3.10%) under Md. Tax-Gen §10-103, collected on the same Form 502 as the state tax. This makes Maryland one of only a handful of states with universal mandatory local income taxation, meaningfully increasing the true marginal rate over the state-only figure.

Question 3

Does Maryland tax Social Security and retirement income?

Accepted Answer

Maryland fully exempts Social Security benefits from state income tax under Md. Tax-Gen §10-207(o). Taxpayers age 65 or older may claim a pension exclusion of up to $39,500 for TY2025 under Md. Tax-Gen §10-209, applicable to qualified retirement plan distributions from 401(k), 403(b), pension, and annuity income (but not from IRAs — the IRA subtraction is capped separately).

Question 4

What is Maryland's standard deduction for 2025?

Accepted Answer

Maryland's TY2025 standard deduction under Md. Tax-Gen §10-217 is 15% of Maryland AGI capped at $3,350 for single, MFS, and HOH filers and $6,700 for MFJ filers, with a floor of $1,700 single and $3,450 MFJ. Personal exemptions of $3,200 per filer and per dependent remain available and phase out for AGI over $100,000 single / $150,000 MFJ per §10-211.

Question 5

What new Maryland tax changes took effect for tax year 2025?

Accepted Answer

The 2025 legislative session added two new top brackets (6.25% on $500,000–$1,000,000 and 6.50% on income over $1,000,000) and imposed a 2% surtax on net capital gain income for taxpayers with federal AGI above $350,000, both effective January 1, 2025 under Md. Tax-Gen §10-105 as amended. Standard deduction, personal exemption, and pension exclusion amounts continue their annual cost-of-living adjustments.

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