Maryland Wage and Payroll Tax Facts
August 1, 2023
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Maryland.
Maryland requires minimum wage rates that are substantially higher than the rates required by the federal government. Howard and Montgomery counties also require wage rates that are even higher than the overall state’s required rate, but they are organized into tiers based on the size of an employer and whether the employer is a government entity.
When it comes to processing payroll, Maryland-based organizations must handle the following taxes in addition to those required by the federal government:
- Personal Income (a.k.a. State Income Tax)
- State Unemployment Insurance (SUI)
- Paid Family and Medical Leave (PFML)
- Local income taxes
The below information was last updated July 28, 2023. It is not intended as legal or tax advice.
Maryland Minimum Wage Rates
|
Wage Type |
Maryland Rates |
Federal Rates |
|
Minimum Wage |
$12.80 (14 or fewer employees) |
$7.25 |
|
Tipped Minimum Wage |
$3.63 |
$2.13 |
|
Actual Tip Credit |
$9.17 (14 or fewer employees) |
$5.12 |
|
Wage Type |
Maryland Rates |
Federal Rates |
|
Minimum Wage |
$12.80 (14 or fewer employees) |
$7.25 |
|
Tipped Minimum Wage |
$3.63 |
$2.13 |
|
Actual Tip Credit |
$9.17 (14 or fewer employees) |
$5.12 |
|
Wage Type |
||
|
Minimum Wage |
$13.25 (small employers) |
$14.50 (10 or fewer employees) |
|
Tipped Minimum Wage |
$3.63 | $4.00 |
|
Actual Tip Credit |
N/A |
$10.00 (10 or fewer employees) |
|
Wage Type |
||
|
Minimum Wage |
$13.25 (small employers) |
$14.50 (10 or fewer employees) |
|
Tipped Minimum Wage |
$3.63 | $4.00 |
|
Actual Tip Credit |
N/A |
$10.00 (10 or fewer employees) |
Maryland State Income Tax (SIT) Rates
Maryland's SIT is progressive, meaning it adjusts based on the income level of the employee paying the tax.
|
Filing Status |
Income Tax Bracket |
2023 Income Tax Rate |
| All | $0 - $1,000 | 2.00% of excess over $0 |
| $1,000 - $2,000 | $20.00 + 3.00% of excess over $1,000 | |
| $2,000 - $3,000 | $50.00 + 4.00% of excess over $2,000 | |
| Single / Married (filed separately) | $3,000 - $100,000 | $90.00 + 4.75% of excess over $3,000 |
| $100,000 - $125,000 | $4,697.50 + 5.00% of excess over $100,000 | |
| $125,000 - $150,000 | $5,947.50 + 5.25% of excess over $125,000 | |
| $150,000 - $250,000 | $7,260.00 + 5.50% of excess over $150,000 | |
| $250,000 or greater | $12,760.00 + 5.75% of excess over $250,000 | |
| Head of Household / Married (filed jointly) | $3,000 - $150,000 | $90.00 + 4.75% of excess over $3,000 |
| $150,000 - $175,000 | $7,072.50 + 5.00% of excess over $150,000 | |
| $175,000 - $225,000 | $8,322.50 + 5.25% of excess over $175,000 | |
| $225,000 - $300,000 | $10,947.50 + 5.50% of excess over $225,000 | |
| $300,000 or greater | $15,072.50 + 5.75% of excess over $300,000 |
|
Filing Status |
Income Tax Bracket |
2023 Income Tax Rate |
| All | $0 - $1,000 | 2.00% of excess over $0 |
| $1,000 - $2,000 | $20.00 + 3.00% of excess over $1,000 | |
| $2,000 - $3,000 | $50.00 + 4.00% of excess over $2,000 | |
| Single / Married (filed separately) | $3,000 - $100,000 | $90.00 + 4.75% of excess over $3,000 |
| $100,000 - $125,000 | $4,697.50 + 5.00% of excess over $100,000 | |
| $125,000 - $150,000 | $5,947.50 + 5.25% of excess over $125,000 | |
| $150,000 - $250,000 | $7,260.00 + 5.50% of excess over $150,000 | |
| $250,000 or greater | $12,760.00 + 5.75% of excess over $250,000 | |
| Head of Household / Married (filed jointly) | $3,000 - $150,000 | $90.00 + 4.75% of excess over $3,000 |
| $150,000 - $175,000 | $7,072.50 + 5.00% of excess over $150,000 | |
| $175,000 - $225,000 | $8,322.50 + 5.25% of excess over $175,000 | |
| $225,000 - $300,000 | $10,947.50 + 5.50% of excess over $225,000 | |
| $300,000 or greater | $15,072.50 + 5.75% of excess over $300,000 |
|
Additional Maryland SIT Details |
|
|
Valid Filing Statuses |
|
|
Exemptions |
|
|
Form W-4 |
Form MW507 |
|
Reconciliation Frequency |
Annual |
|
Additional Maryland SIT Details |
|
|
Valid Filing Statuses |
|
|
Exemptions |
|
|
Form W-4 |
Form MW507 |
|
Reconciliation Frequency |
Annual |
Maryland State Unemployment Insurance (SUI) Rates
SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.
|
Maryland SUI Tax Details |
|
|
Taxable Wage Base |
$8,500 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
1.0% - 10.5% |
|
Rates for New Employers |
2.3% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
No |
|
Maryland SUI Tax Details |
|
|
Taxable Wage Base |
$8,500 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
1.0% - 10.5% |
|
Rates for New Employers |
2.3% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
No |
Maryland State Disability Insurance (SDI) Rates
SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Maryland, however, doesn't require employers to collect an SDI tax.
Miscellaneous Maryland Tax Information
Reciprocal Agreement(s)
Reciprocal agreements are when workers only pay taxes in the state where they live, not the state where they work. Maryland currently has reciprocal agreements with the following states:
- Pennsylvania
- Virginia
- Washington D.C.
- West Virginia
Nonresidents who commute to Maryland daily for work do not need to have Maryland SIT withheld but must use Form MW507 to file a certificate of non-residence. Nonresidents who commute less frequently are only eligible for partial exemption from Maryland's SIT.
Paid Sick Leave (PSL)
Maryland doesn't require employers to collect PSL taxes, but the state does have the following program guaranteeing such leave:
|
Maryland PSL Details |
|
| Covered Employers | All employers with 15 or more employees |
| Accrual Method(s) | One hour for every 30 hours worked |
| Carryover Maximum | 40 hours |
| Annual Accrual Maximum | 40 hours per 12-month period based on the employee's anniversary |
| Frontloading Allowed | Yes; 40 hours at the beginning of each year |
| FAQ | Maryland Safe and Sick Leave FAQs |
|
Maryland PSL Details |
|
| Covered Employers | All employers with 15 or more employees |
| Accrual Method(s) | One hour for every 30 hours worked |
| Carryover Maximum | 40 hours |
| Annual Accrual Maximum | 40 hours per 12-month period based on the employee's anniversary |
| Frontloading Allowed | Yes; 40 hours at the beginning of each year |
| FAQ | Maryland Safe and Sick Leave FAQs |
Paid Family and Medical Leave (PFML) Taxes
In October 2024, Maryland will begin collecting a payroll tax no greater than 1.2% to fund its new PFML law. The program will apply to all private-sector employers with 15 or more employees, and the tax will be split evenly between said employers and their employees. Employers can choose, however, to pay the employee portion if they wish. The program’s benefits will be available starting January 1, 2026.
|
Maryland PFML Tax Details |
|
| Covered Employees | Employees who worked at least 680 hours over the 12 months prior to the start of the leave |
| Covered Employers | Private-sector employers with 15 or more employees |
| Tax Rate | No greater than 1.2% of the employee’s wages; split evenly between employers and employees |
| Maximum Leave Available | 12 weeks annually; up to 24 weeks if the leave is for pregnancy or after childbirth |
| Wage Replacement | 90% or up to $1,000 a week |
| FAQ | Time to Care Act FAQs |
|
Maryland PFML Tax Details |
|
| Covered Employees | Employees who worked at least 680 hours over the 12 months prior to the start of the leave |
| Covered Employers | Private-sector employers with 15 or more employees |
| Tax Rate | No greater than 1.2% of the employee’s wages; split evenly between employers and employees |
| Maximum Leave Available | 12 weeks annually; up to 24 weeks if the leave is for pregnancy or after childbirth |
| Wage Replacement | 90% or up to $1,000 a week |
| FAQ | Time to Care Act FAQs |
Local Taxes
In addition to the state-wide taxes mentioned above, 23 counties and the city of Baltimore also impose a local income tax on their residents that ranges from 2.25% - 3.20%.
Maryland Employer Registration
The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Comptroller of Maryland for withholding tax topics and the Division of Unemployment Insurance for unemployment tax topics.
|
Registration Details |
Comptroller of Maryland |
Division of Unemploment Insurance |
|
Phone |
(800) 638-2937 | (410) 767-2414 |
|
Online Registration |
https://interactive.marylandtaxes.gov/webapps/comptrollercra/entrance.asp | https://employer.beacon.labor.md.gov/ReBEACONEmployer/home/wfmRegister#/spa/wfmEmployerRegistrationWizard/0 |
|
Registration Form |
https://www.marylandtaxes.gov/forms/current_forms/CRA.pdf | |
|
Registration Instructions |
Online and paper registration options are available. Account numbers will be issued in two weeks via the online process or in three weeks via mail. Separate account numbers for each tax type are issued under the combined registration. |
|
|
Employer Self-Service Login |
https://employer.beacon.labor.md.gov/ | |
|
Registration Details |
Comptroller of Maryland |
Division of Unemploment Insurance |
|
Phone |
(800) 638-2937 | (410) 767-2414 |
|
Online Registration |
https://interactive.marylandtaxes.gov/webapps/comptrollercra/entrance.asp | https://employer.beacon.labor.md.gov/ReBEACONEmployer/home/wfmRegister#/spa/wfmEmployerRegistrationWizard/0 |
|
Registration Form |
https://www.marylandtaxes.gov/forms/current_forms/CRA.pdf | |
|
Registration Instructions |
Online and paper registration options are available. Account numbers will be issued in two weeks via the online process or in three weeks via mail. Separate account numbers for each tax type are issued under the combined registration. |
|
|
Employer Self-Service Login |
https://employer.beacon.labor.md.gov/ | |
Additional Maryland Payroll Tax Resources
- Department of Labor Homepage
- Division of Labor and Industry Forms
- Department of Labor's Family and Medical Leave Insurance
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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