Maryland Wage and Payroll Tax Facts

February 05, 2024

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:

The below information was last updated February 5, 2024. It is not intended as legal or tax advice.


Maryland Minimum Wage Rates

Wage Type

Maryland Rates

Federal Rates

Minimum Wage

$15.00

$7.25

Tipped Minimum Wage

$3.63

$2.13

Actual Tip Credit

$11.37

$5.12

Local Minimum Wage Rates

In addition to the state-wide minimum wage rates above, some cities and counties have unique minimum wage rates as well:

Wage Type

Howard County Rates

Montgomery County Rates

Minimum Wage

$15.00 (Less than 15 employees)
$15.00 (15 or more employees)

$15.00 (10 or fewer employees)
$15.00 (11-50 employees)
$16.70 (51 or more employees)

Tipped Minimum Wage

$3.63 $4.00

Actual Tip Credit

$11.37

$11.00 (10 or fewer employees)
$11.00 (11-50 employees)
$12.70 (51 or more 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
[Over X] - [But not over Y]

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

*As of February 5, 2024, Maryland has yet to release official 2024 tax brackets.
 

Additional Maryland SIT Details

Valid Filing Statuses

  • S = Single
  • M = Married
  • D = Employed in Delaware or other nonreciprocal state
  • N = Nonresident single
  • NM = Nonresident married

Exemptions

  • Any services or individuals not subject to withholding under the Internal Revenue Code
  • Certain interstate carrier employees
  • Low-income singles and students
  • Low-wage employees
  • Persons who owed and expect to owe no Maryland taxes
  • Nonresidents from reciprocating states (D.C., PA, VA, and WV)
  • Spouses of nonresident military servicepersons
  • Providers of emergency services in an area covered under a state of emergency, if requirements are met

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 State Disability Insurance (SDI) Rates

SDI benefits are normally 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 who live and work in different states are only required to pay taxes to the state where they live. Maryland currently has reciprocal agreements with the following states:

  • Pennsylvania
  • Virginia
  • Washington D.C.
  • West Virginia

Nonresidents who commute to Maryland daily for work don't 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) Taxes

Maryland doesn't require employers to collect PSL taxes, but it does have a program providing such leave to eligible employees:

Maryland PSL Details

Covered Employers All employers with 15 or more employees
Accrual Method(s) 1 hour for every 30 hours worked
Annual Accrual Maximum 40 hours per 12-month period based on the employee's anniversary
Carryover Maximum 40 hours
Frontloading Allowed Yes; 40 hours at the beginning of each year
FAQs Safe and Sick Leave

Paid Family and Medical Leave (PFML)

Pending approval from the Maryland General Assembly, the state will begin collecting contributions for its new PFML law on July 1, 2025, and the program's benefits will become available on July 1, 2026. Contributions will be split evenly between employers and employees unless the employer wishes to pay both portions. 

Maryland PFML Details

Covered Employees Employees who worked at least 680 hours over the 12 months prior to the start of the leave
Covered Employers All 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 annually if the leave is for pregnancy or after childbirth
Wage Replacement 90% or up to $1,000 a week
FAQs 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 Unemployment Insurance

Phone

(800) 638-2937 (410) 767-2414

Online Registration

Combined Registration Application Employer Registration Portal

Registration Form

Form CRA

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

bFile Login Page BEACON Login Page

Additional Maryland Payroll Tax Resources

 

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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