resources
Maryland Updates Withholding Guidance For 2025
July 22, 2025
At a Glance
- Maryland’s budget bill increases the state's top income tax rate from 5.75% to 6.50%.
- Standard deduction changes from a calculation to a flat amount of $3,350.
- Changes are effective for the tax year beginning January 1, 2025.
Summary
On May 20, 2025, Maryland Governor Wes Moore signed HB 352, which includes a plan to increase the state's individual income tax rate for the highest earners beginning in tax year 2025.
Filing Status | Income Tax Bracket [Over X] – [But not over Y] | 2025 Income Tax Rate |
Single / Married (filed separately) | $250,001 - $500,000 | $12,760.00 + 5.75% of excess over $250,000 |
| $500,001 - $1,000,000 | $27,135.00 + 6.25% of excess over $500,000 | |
| $1,000,001 or greater | $58,385.00 + 6.50% of excess over 1,000,000 | |
| Head of Household / Married (filed jointly) | $300,001 - $600,000 | $15,072.50 + 5.75% of excess over $300,000 |
| $600,001 - $1,200,000 | $32,322.50 + 6.25% of excess over $600,000 | |
| $1,200,001 or greater | $69,822.50 + 6.50% of excess over $1,200,000 |
Additionally, Maryland's standard deduction for income taxes is changing to a flat $3,350 for all tax brackets, as the state moves away from calculating standard deduction amounts based on gross income.
Maryland’s Form MW507, the Employee’s Maryland Withholding Exemption Certificate, will not be revised in conjunction with these changes. Employers, therefore, do not need to request updated forms from their employees.
Next Steps
Paylocity will update the 2025 Maryland withholding information to ensure accurate withholding moving forward. This change will not require any adjustments of withholding amounts in payroll, as any additional tax due will be determined for individuals as part of their personal income tax filing for tax year 2025.
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
Keep Up With Compliance
Between constantly changing employment laws and updates to the Affordable Care Act (ACA), keeping your workplace compliant can be a time-consuming and costly challenge. Eliminate the stress and stay up to date with our Compliance Dashboard. View compliance alerts and get a bird’s eye view of what you need to do to avoid fines and penalties.
