Overview
Maryland is unique in how it handles state and county taxes. The state and local (county) withholding amounts are combined and reported together as the Maryland State Tax. Every Maryland employer must withhold both state and county taxes, and the combined amount is remitted to the state.
State Income Tax (SIT)
Maryland uses a progressive state income tax with county taxes that are combined with the state amount. Employees complete Form MW507 to specify their filing status. The combined state and county calculation is reported as a single Maryland State Tax amount. Maryland also has a reciprocal agreement with Pennsylvania, and a special exemption for PA residents.
| Tax Structure | Progressive (state + county combined) |
| State Withholding Form | Form MW507 |
| Filing Statuses | S, M, MH |
| County Taxes | Combined with state; reported as single amount |
| Reciprocity | Pennsylvania residents may claim exemption |
Supplemental Wages
Maryland supports the following supplemental calculation methods. Supplemental wages such as bonuses and commissions will be calculated using the applicable method.
Employer State Unemployment Tax (SUTA)
Your assigned SUTA rate will be based on your company’s experience with unemployment claims. New employers typically start at the default rate of 2.3%.
| Tax Type | Employer-paid only |
| Default New Employer Rate | 2.3% |
| Rate Assignment | Experience-rated; assigned annually by the state |
Other Taxes & Obligations
Local Taxes: Maryland has county taxes that may apply depending on the employee’s work and residence location. Be sure to verify which local jurisdictions apply to each employee.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026. For the most current requirements, please refer to:
Official reference: Maryland Taxes
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