Maryland Retirement

Maryland does not tax Social Security or Railroad Retirement benefits. That means you can subtract the amount of Social Security or Railroad Retirement listed on your federal income tax return from your Maryland state tax return. Social Security and Railroad Retirement benefits are also exempt from county and local income tax in Maryland.

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Maryland Pension Exclusion

If you live in Maryland you can deduct up to $26,100 in pension income from your state income taxes. Only pension income can be deducted; money from IRA, Roth IRA, Simplified Employee Plans and Keogh plans must be reported on your state income tax return.

To claim this deduction you will have to fill out the Pension Exclusion Worksheet in the Maryland Resident Tax Booklet.

Maryland Income Tax

You may take a $1,000 exclusion from your state income tax if you live in Maryland and make less than $100,000 a year. You can also take a $3,200 exclusion for every person that you list on your Maryland state tax return.

Maryland charges a 2% rate for the first $1,000 of taxable income, a 3% rate for $1,000-$2,000 of taxable income, a 4% rate for $2,000-$3,000 of taxable income. For filers with taxable income below $3,000 the rate is the same for individual and married income. Different rates apply for amounts over $3,000.

There is a 4.75% rate for single filers with $3,000-$150,000 of taxable income and married couples filing jointly with $3,000-$200,000 of taxable income, a rate of 5% for individuals with $150,000-$300,000 in taxable income and married couples filing jointly with $200,000-$350,000 in taxable income, a rate of 5.25% for individuals with $300,000-$500,000 in taxable income and married couples filing jointly with $350,000-$500,000 in taxable income.

For taxable incomes over $500,000 married couples and singles pay the same rate. Taxpayers with $500,000-$1 million in taxable income pay a rate of 5.5%. Anybody with more than $1 million in taxable income pays a rate of 6.25%.

You will have to pay local income tax in Maryland; each of the state's 23 counties and the city of Baltimore collects a local income tax. The county income tax rate in Maryland is usually around 3%.

Maryland Sales Tax

Maryland has a state sales tax of 6% that is imposed on most retail sales in the state. There are no local sales taxes in Maryland so the 6% state sales tax is all you pay. No state sales tax is charged on food sold in grocery stores, prescription drugs, or newspapers in Maryland.

Maryland Property Tax

Property taxes in Maryland are assessed by counties, towns, and special districts. The standard rate is around 10cents for each $100 of assessed value. You will have to contact the county government to learn your exact property tax rate in Maryland.

If you use any property for business purposes including equipment such as computers in Maryland you may also have to a Personal Property Tax on it. This tax is assessed and collected by the Department of Assessments and Taxation.

Long Term Care Insurance Tax Credit

If you buy long term care insurance in Maryland you are entitled to a state tax credit for each individual covered. The amount of the credit is $300 for persons under 41 years old and $500 for people over $500. You will have to file form 501, form 505, or form 515 with your state tax return to get this credit.

Capital: Annapolis
Cost of Living Rank: #44
Sales Tax: 6.0%
Income Tax: 2.0% - 5.5%
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