At a glance
- Corporate tax
- 8.25% flat
- Tax on wages
- Up to 6.5% + county 2.25%–3.30%
- Sales tax
- 6% (3% on SaaS and IT services)
- Economic nexus
- $100,000 or 200 transactions
- Minimum wage
- $15.00/hr (Montgomery up to $18.00)
- UI wage base
- $8,500
- New-employer UI rate
- Up to 2.6%
- Paid leave program
- FAMLI 0.9% from Jan 1, 2027
- Annual report
- Apr 15 — $300 (SDAT Form 1)
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Qualify the corporation in Maryland
Before doing business in MarylandQualify with SDAT ($100), with proof of existence from Delaware dated within 60 days.
Register for Maryland taxes
Before the first payroll or taxable saleRegister with the Comptroller for withholding, corporate income tax and, if needed, sales and use tax, through the combined registration application.
Register for unemployment insurance
Before the first Maryland payrollOpen an unemployment insurance account with the Maryland Department of Labor.
Report new hires
Within 20 days of hireReport each new or rehired employee to the Maryland State Directory of New Hires.
Set up county withholding
At hireCollect Form MW507 from each employee to set state and county withholding, and check whether a county minimum wage applies.
Register for FAMLI
Before January 2027Register with the FAMLI Division and decide between the state plan and a private plan; contributions start on wages paid from January 1, 2027.
Buy workers’ compensation insurance
Before the first Maryland employee startsWorkers’ compensation insurance is required for Maryland employees.
File the annual report
By April 15File Form 1 and pay $300 to SDAT every year, with the personal property return if it applies.
The six areas
- AccountingAccounting and state tax in MarylandMaryland taxes corporations at a flat 8.25% on separate-company returns, with a single receipts factor and services sourced to the customer. For 2025 it decoupled from federal R&D expensing.Corporate income tax rate8.25%
- ReceivablesReceivables and sales tax in MarylandSince July 2025 Maryland taxes SaaS: 3% when sold for use in a business’s systems, 6% for individual use. Remote sellers register at $100,000 or 200 transactions.Sales tax rate6%
- PayablesPayables and contractors in MarylandMaryland wants 1099s only when Maryland tax was withheld, classifies workers for unemployment with the ABC test, and since July 2025 taxes the software and IT services a company buys.1099-NEC and 1099-MISC to MarylandIf withheld
- PayrollPayroll taxes and employer rules in MarylandMaryland payroll withholds state and county income tax, pays unemployment on the first $8,500, and adds FAMLI contributions of 0.9% from January 1, 2027. Montgomery and Howard counties set their own minimum wages.Minimum wage$15.00 an hour
- ComplianceCompliance and filings in MarylandMaryland compliance is a $300 annual report to SDAT by April 15, Form 500 in the fourth month after year end, and unclaimed property by October 31.Foreign qualification$100
- AdvisoryAdvisory: credits and decisions in MarylandMaryland’s R&D credit is 10% over a base and refundable for small businesses. Biotech investors get a refundable credit, and FAMLI adds a payroll cost from January 2027.R&D credit10%
Who you register with
- Comptroller of MarylandCorporate income tax, sales and use tax, withholding, unclaimed property
- Maryland State Department of Assessments and Taxation (SDAT)Foreign qualification, annual report and business personal property return
- Maryland Department of LaborUnemployment insurance account, wage law, worker classification, FAMLI
- Maryland State Directory of New Hires (Department of Human Services)New-hire reporting
- Maryland Department of CommerceR&D tax credit certification, Biotechnology Investment Incentive Tax Credit
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Maryland’s neighbors.
- DCDistrict of ColumbiaResidents-only wage tax, employer-paid family leave, and SaaS taxed at 6%
- DEDelawareWhere startups incorporate: franchise tax every March 1, no sales tax, 8.7% if you operate
- PAPennsylvaniaFlat 3.07% state tax, local wage taxes nearly everywhere, and taxable SaaS
- VAVirginiaFlat 6% tax, no tax on SaaS, local BPOL licenses, and SCC fees priced by shares
- WVWest VirginiaFalling income tax, a 14-day new-hire rule that covers contractors, and taxed services
Common questions
How much of our income does Maryland tax?
On its Maryland share of income. Maryland apportions with a single receipts factor, and receipts from services count in the Maryland numerator when they come from customers in Maryland. A SaaS company’s Maryland factor follows its Maryland customers, not where its staff sit.
Is SaaS taxable in Maryland?
Yes, since July 1, 2025. The Comptroller says SaaS is both a digital product and a software publishing service. Sold for use in a business’s enterprise computer system, it is taxed at 3%; sold for an individual’s use, it is a digital product taxed at 6%. The exemption for customized software was repealed at the same time.
Do we send 1099-NECs to Maryland?
Only if you withheld Maryland tax from the payment. The Comptroller’s instructions say Maryland requires 1099-NEC and 1099-MISC only when Maryland withholding is greater than zero; then they go in with Form MW508 by January 31.
Do we deduct Maryland paid family leave in 2026?
Not yet. FAMLI contributions start on wages paid from January 1, 2027, at 0.9% up to the Social Security wage base, split equally between employer and employee. A company with fewer than 15 employees, counting everyone including out-of-state staff, owes only the employee half and may withhold it. The first quarterly remittance is due April 30, 2027.
We registered in Maryland but haven’t done much there. Do we still file?
Yes. Every entity registered with SDAT files an annual report, Form 1, by April 15, and a stock corporation pays the $300 fee whether or not it has property, income or activity in Maryland. A free extension to June 15 is available. If the company has $20,000 or more of personal property in Maryland, the same form carries the business personal property return.
Can a pre-revenue startup use the Maryland R&D credit?
Possibly, if the research is in Maryland. The Department of Commerce certifies a credit of 10% of Maryland R&D expenses above a base amount, up to $250,000 per applicant, and the credit is refundable for a small business with less than $5 million of net book assets. Applications are due by November 15 of the year after the expenses were incurred, and awards are prorated when the $12 million annual cap is oversubscribed.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Comptroller of Maryland — 2025 Corporation Income Tax Instructions (Form 500)
- Comptroller of Maryland — Form 500D, Corporation Declaration of Estimated Income Tax
- Comptroller of Maryland — Technical Bulletin 56, Data or IT Services and Software Publishing
- Comptroller of Maryland — Business Taxpayers FAQs (remote vendors)
- Comptroller of Maryland — Sales and Use Tax Alert (Wayfair thresholds)
- Comptroller of Maryland — 2025 Employer Reporting of 1099s Instructions
- Maryland Department of Legislative Services — 2026 County Local Tax Rates
- Maryland Department of Labor — Unemployment Insurance Tax Rates
- Maryland Paid Leave (FAMLI) — Make Contributions
- Maryland Department of Labor — Maryland Minimum Wage and Overtime Law
- Maryland Department of Labor — Frequency of Pay
- Maryland Department of Labor — Termination Pay
- Maryland Department of Labor — Worker Classification FAQs for Businesses
- Maryland Department of Human Services — Report New Hires
- Maryland SDAT — Form 1, Annual Report and Business Personal Property Return
- Maryland SDAT — Foreign Corporation Qualification
- Comptroller of Maryland — Business Tax Tip #19, Reporting Unclaimed Property
- Maryland Department of Commerce — Research and Development Tax Credit
- Maryland Department of Commerce — Biotechnology Investment Incentive Tax Credit
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.