How does Maryland state income tax work for employers in 2026?

Maryland's rate schedule starts low and stays moderate for most earners. A single filer earning $75,000 sits entirely in the 4.75% bracket (which covers $3,000 to $100,000). The rate only steps above 5% for income above $100,000, with four bands between 5% and 5.75% before the two new top brackets kick in.

The Maryland General Assembly added the 6.25% and 6.50% brackets in the 2025 legislative session, applying them retroactively to 1st January 2025. For 2026 withholding, the updated tables are fully in effect. Employers whose high-earning employees were under-withheld during 2025 should verify that withholding tables and employee MW507 elections are current.

Married filing jointly thresholds are roughly doubled: 6.25% starts at $600,000 and 6.50% at $1,200,000. The standard deduction in 2026 is $3,350 (single) or $6,700 (married filing jointly). Source: Tax Foundation, 2026 State Income Tax Rates.

Your Maryland employees' effective combined rate is state plus county. Check the county tax section below before building cost models.

Maryland has 24 distinct local jurisdictions (23 counties plus Baltimore City), each setting its own income tax rate. Most populous counties charge the maximum 3.20%: Baltimore City, Montgomery County, Prince George's County, Howard County, and Baltimore County are all at the ceiling. Worcester County, on the Eastern Shore, has the lowest at 2.25%. Anne Arundel and Frederick counties use progressive schedules that vary by income level.

The county rate applies to where the employee lives. A Baltimore City resident working remotely for a company headquartered in New York still owes 3.20% county tax, withheld by whoever is their employer of record. For employers hiring across Maryland, you'll encounter multiple rates within a single payroll run.

Employers must collect county residence information via Form MW507. Without a completed MW507 on file, Maryland law requires withholding at the maximum county rate; the Comptroller's 2026 withholding tables use 3.30% as the conservative default for employees with no county information on file. That 3.30% is a withholding proxy, not a statutory county rate (the actual ceiling is 3.20%). Source: LegalClarity, Maryland Tax Withholding Guide 2026.

On an $80,000 salary, the difference between the lowest county rate (2.25%, Worcester: $1,800/year) and the highest (3.20%, Baltimore City: $2,560/year) is $760/year in withheld local tax per employee. Build that into your location-based hiring cost models.

The withholding process starts with Form MW507: every new employee submits this before their first paycheck. MW507 captures filing status, number of exemptions, and county of residence. Without it, you default to the highest withholding rate. Personal exemptions phase out when federal adjusted gross income exceeds $100,000 for single filers or $150,000 for joint filers, disappearing entirely above $200,000.

Maryland assigns employers to one of four payment frequency tiers based on prior-year withholding liability:

Annual reconciliation uses Form MW508, due 31st January each year. Employers filing 25 or more W-2 or 1099 forms must file electronically. Source: Maryland employer withholding guide, 2026.

A named Teamed in-house payroll specialist handles all withholding calculation, remittance timing, and MW508 annual reconciliation for your Maryland employees. Compliance monitoring runs automatically on our platform: payment deadlines tracked, filing frequencies reviewed annually as your payroll grows, MW507 changes picked up in real time. You don't manage four different payment deadlines; we do, on one platform, one invoice. If you want a structured advisory call to review your Maryland withholding setup, that's included.

The registration process: go to BEACON, select "Register an Account," and follow the prompts. If you're setting up multiple Maryland tax accounts at once, the Combined Registration Application (CRA) covers both the Comptroller withholding account and the UI BEACON account in one submission. For help, the Employer Call Center is at 410-949-0033 or toll-free 1-800-492-5524, Monday–Friday 8 a.m.–4:30 p.m.

Teamed's US payroll partners (Suna Solutions as the primary, with PGC as an occasional alternative) handle UI registration and ongoing quarterly BEACON filings for every Maryland employee on the EOR arrangement. You don't register separately; the registration and rate maintenance sit with the partner running your payroll.

Use the EOR vs Entity Crossover Calculator if you're considering setting up your own Maryland entity and running payroll directly. The crossover point depends on headcount and loaded salary; most US-based employers break even on their own entity between 8 and 12 Maryland employees.

Maryland confirmed Tax Table A for 2026, the state's lowest rate table, unchanged from 2025. Your individual rate within the 0.30%–7.50% range tracks your benefit ratio: the total UI benefits charged to your account divided by your taxable wages over three prior fiscal years. The computation date is 1st July preceding the calendar year; rates take effect 1st January. You receive an Experience Rate Notice each January and have 30 days to challenge it.

Maryland is FUTA credit-compliant: no outstanding federal loan balance as of 2026. Employers receive the standard 5.4% credit against the 6.0% federal FUTA rate, leaving a net FUTA liability of 0.60% on the first $7,000 per employee per year. Source: Maryland DOL UI Tax Rates; Bloomberg Tax, Maryland UI Unchanged for 2026.

The $8,500 wage base is one of the lower in the US. Once an employee's calendar-year earnings clear $8,500, UI contributions stop on the excess. For a full-time employee earning $50,000, you're paying UI on 17% of their salary. The effective UI burden is modest; the compliance burden is the filing cadence.

BEACON (employer.beacon.labor.md.gov) is the Maryland Department of Labor's platform for all UI employer interactions: initial registration, quarterly wage reports, UI tax payments, Experience Rate Notice delivery, and rate challenges. The system accepts e-check payments at the time of filing. Paper checks go to P.O. Box 17291, Baltimore, MD 21297-0365.

Quarterly deadlines:

Late filings cost 1.5% interest per month plus $35 per late report. Employers who miss quarterly reports entirely are assigned the maximum 7.50% rate automatically, regardless of their benefit history. For employers running payroll through Teamed, Suna Solutions handles all quarterly BEACON filings and payments as part of the EOR service. You get one platform, one invoice, one contact, not a separate Maryland DOL login to manage.

Three things that catch first-time Maryland employers off guard. First, the county rate is based on residency, not work location. A Baltimore City resident working fully remotely for a Texas company still owes 3.20% local tax, withheld by whoever is the employer of record. Second, Maryland has no reciprocity agreement with all its neighbours for withholding purposes; if your employee splits time between Maryland and another state, you may need to allocate withholding across both. Third, the two new top income tax brackets (6.25% and 6.50%) apply from 1st January 2025 and require updated MW507s for high earners who may have elected out of adequate withholding before the brackets existed.

Maryland's UI wage base of $8,500 is one of the lowest in the country. The maximum annual UI cost per employee at the new employer rate is $221. Compliance cost is low; administrative cost of missing BEACON deadlines (1.5%/month + $35/late report, plus loss of the maximum UI rate exemption) is high relative to the small dollar amounts at stake.

Maryland minimum wage is $15.00/hour statewide. Teamed handles new-hire reporting (Maryland New Hire Registry), MW507 collection, quarterly BEACON filings, and annual MW508 reconciliation for every Maryland employee. You have a real human contact, an actual Teamed operations specialist, not a portal and a chatbot. Questions about county allocation, MW507 correction, or UI rate challenges go to a named person, not a support queue.

What is Maryland's state income tax rate for employers in 2026?

Maryland state income tax uses ten progressive brackets in 2026, from 2% on the first $1,000 to 6.50% above $1 million for single filers. The two new top brackets (6.25% and 6.50%) were added retroactively from 1st January 2025. Employers withhold both state and county piggyback taxes from each paycheck.

What is the Maryland unemployment insurance tax rate in 2026?

Maryland UI rates run 0.30% to 7.50% under Tax Table A, unchanged from 2025. New employers start at 2.60%. The taxable wage base is $8,500 per employee per year, making the maximum UI tax per employee $637.50 annually at the new employer rate.

What is BEACON Maryland unemployment insurance?

BEACON is the Maryland Division of Unemployment Insurance's online employer portal at employer.beacon.labor.md.gov. Employers use it to register for UI, file quarterly wage reports, pay UI taxes, and receive their annual Experience Rate Notice. Quarterly reports are due within one month of each quarter-end.

Does Maryland have a local income tax?

Yes. Maryland has 24 local jurisdictions (23 counties plus Baltimore City), each charging a piggyback income tax of 2.25% to 3.20% on top of state income tax. Employers withhold both together on the same paycheck. The county rate is based on where the employee lives, not where they work.