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Maryland Pay & Tax Guides

21 guides on the parts of Maryland payroll that national calculators and generic tax articles routinely get wrong — the 24 local rates and which two are graduated, what actually goes on each line of Form MW507, how the pension exclusion shrinks against Social Security, and what changes when you commute across a state line.

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What these 21 guides cover

Maryland is an unusual state to be paid in, and most of these guides exist because a national calculator or a generic tax article gets one of these details wrong. Four clusters, and the specific thing each one is trying to settle.

County & local tax

Every Maryland county and Baltimore City levies its own income tax on top of the state rate, currently 2.25% to 3.30%, charged on where you live rather than where you work. Two of the 24 — Anne Arundel and Frederick — use graduated brackets rather than a flat percentage, which is the single most commonly misreported fact about Maryland payroll.

All 24 rates ranked

Form MW507 & withholding

Maryland never adopted the redesigned federal W-4, so it still runs on exemptions. Line 1 of Form MW507 is a count of exemptions capped by the worksheet on page 2; Line 2 is a dollar amount of extra withholding. Confusing the two is the most expensive mistake on the form, and it is easy to make.

How to fill out MW507

Retirement income

Social Security is completely exempt from Maryland state and county tax. The pension exclusion is worth up to $40,600 at 65 — but it shrinks dollar for dollar against the Social Security you receive, and a traditional IRA does not qualify for it at all. Those two caveats decide most Maryland retirees’ bills.

Pension & 401(k) guide

Working across state lines

The DC–Maryland–Virginia commute has its own rules, and Pennsylvania residents get a different treatment again — exempt from Maryland state tax but still liable for the local rate unless a specific line on the MW507 applies. Living in one jurisdiction and earning in another is where most of the confusion sits.

DMV commuter guide

How these guides are written

Tax content is easy to write badly, so it is worth being specific about the method here.

  • Figures come from the calculators, not from prose. Worked examples on these pages are generated by the same tax engine that powers the tools, so an article cannot quietly drift away from what the calculator computes.
  • Statutory numbers are traced to a primary source. Rates, deductions, wage bases and exclusions come from the Comptroller of Maryland and the IRS, and the year they apply to is stated rather than implied.
  • Corrections are visible. When a guide has been wrong, the correction says so in the text rather than being quietly edited out — if you planned around an old figure, you need to know it changed.
  • This is educational, not advice. None of it accounts for your full circumstances, and it is not a substitute for a professional or for the Comptroller’s own guidance.

More on this in our editorial guidelines, and the people who review it.