Flat-Fee Tax Preparation for Maryland Residents

Maryland imposes both a state income tax (graduated rates up to 5.75%) and a county/city income tax (rates from 2.25% to 3.2% depending on the county) — every MD resident owes both layers

The MD Pass-Through Entity Tax election allows eligible entities to pay MD income tax at the entity level, bypassing the federal SALT cap

Maryland imposes both a state estate tax (on estates over $5M) and a state inheritance tax (10% on assets passing to non-direct heirs) — a dual estate/inheritance tax burden unique in the region

MD real estate transfer tax is 0.5% state plus county transfer taxes ranging from 0% to 1.5% — combined rates vary significantly by county

Maryland requires non-resident real estate sellers to withhold 8% of the total payment (or 8.25% for entities) at settlement — a significant cash flow item for out-of-state investors

The MD Homestead Property Tax Credit limits annual assessment increases on primary residences to 10% per year — a protection against rapid property tax increases

Maryland has a high income tax burden relative to neighboring states (VA, DE), making cross-border tax planning relevant for MD businesses and commuters

MD businesses with employees in DC or VA must handle multi-state payroll withholding — the DC/MD/VA reciprocity agreement simplifies this for employees but not for all entity-level obligations

Maryland Real Estate Tax

Maryland's real estate market — particularly the DC suburbs in Montgomery and Prince George's counties, and Baltimore metro — is among the most active in the Mid-Atlantic. Non-resident sellers face mandatory 8% withholding at settlement. The combined state and county transfer taxes vary significantly by location, making cost analysis essential for deal underwriting. MD's estate tax at $5M affects real estate-heavy estates.

Maryland Business Tax

Maryland businesses face a combined state + county income tax burden that can exceed 9% for owners in higher-rate counties. The MD PTET election is particularly valuable for MD business owners subject to the SALT cap given the high combined rates. Maryland's proximity to DC creates opportunities but also multi-state nexus complexity for businesses serving the federal government and DC market.

Do I need to file a Maryland state tax return?

If you are a Maryland resident or earned MD-source income above the filing threshold, you must file a MD 502 return. Maryland residents owe both state income tax (up to 5.75%) and county/city income tax (up to 3.2%), for a potential combined rate approaching 9%. Non-residents with MD-source income file a MD 505.

What is Maryland's county income tax?

Every Maryland county and Baltimore City imposes a local income tax on residents, in addition to the state income tax. County rates range from 2.25% (several counties) up to 3.2% (Prince George's County and some others). Unlike local taxes in some states, the Maryland county income tax is collected on your state return — you file one MD return that covers both state and county obligations.

Does Maryland have an estate tax and inheritance tax?

Yes — Maryland is one of only two states that imposes both an estate tax and an inheritance tax. The MD estate tax applies to estates over $5M with rates up to 16%. The MD inheritance tax (10%) applies to assets passing to non-collateral heirs — for example, assets left to a sibling, niece, or non-family member. Direct lineal heirs (spouses, children, grandchildren, parents) are exempt from inheritance tax. Proper estate planning in MD requires addressing both taxes.

I'm selling investment property in Maryland as a non-resident — what do I need to know?

Maryland requires non-resident sellers to withhold 8% of the total payment (or 8.25% for entities) at settlement and remit it to the MD Comptroller. This is not your final tax — it's a prepayment of estimated MD tax. After filing your MD non-resident return, you will receive a refund if the withholding exceeded your actual tax liability. The withholding requirement applies to all real estate dispositions in MD by non-residents.