Maryland law provides that the Comptroller prepare a percentage income tax withholding method that shows the percent of State income tax to be withheld from wages. The percentage used is relative to median local tax rates of Maryland’s 23 counties and Baltimore City.
Withholding is a combination of the State income tax, which has rates graduated per taxable income and local taxes. This combined tax appears under the heading of STATE TAX on all payroll documents, including the Employee’s Earnings Statement (pay stub) that is attached to all payroll checks and deposit advices.
Beginning with calendar year 2008, the State of Maryland added a selection to filing status for tax withholding. You can choose Single, Head of Household (married or unmarried), or Married status but withhold at the Single rate on MW507 withholding form. The tax rate is the same for all categories until you reach $100,000 in yearly income for a single filer. Employees expecting to make more than $100,000 in 2025 and who can file as Married or Head of Household should ensure a proper MW507 form is in place for Maryland taxes.
The county of residence, which determines the rate of the local withholding portion is the county submitted on the Form MW507. The two-position alphabetic code in the box “County Code” on the Employee’s Earnings Statement (pay stub) is the county recorded in the individual’s pay record. Employees that do not submit a withholding certificate are defaulted to the highest rate of local tax, which for the year 2025 will be 3.20%. For most employees who are not residents of Maryland the Nonresident rate (7.0%) is used, which includes no local tax; but does include the Special 2.25% Nonresident rate. Employees may be eligible to claim an Earned Income Tax Credit (EITC) on their 2024 federal and Maryland income tax returns if both their federal adjusted gross income and their earned income is less than the following:
- $59,899 ($66,819 married filing jointly) with three or more qualifying children
- $55,768 ($62,688 married filing jointly) with two qualifying children
- $49,084 ($56,004 married filing jointly) with one qualifying child
- $18,591 ($25,511 married filing jointly) with no qualifying children
Employees who meet this income eligibility should be advised to go to the Internal Revenue Service website at www.irs.gov, or contact their tax advisor, to see if they meet the other federal criteria. Married employees or employees with qualifying children may qualify for up to half of the federal earned income credit. Additionally, certain employees may also qualify for a refundable Maryland credit or a local EITC.
For further Maryland EITC information, visit our website at www.marylandtaxes.gov, or call 1-800-MD-TAXES (1-800-638-2937), or 410-260-7980 from Central Maryland.