Key figures
Maryland payroll
2026, with sources
State and county income tax
Maryland withholding has two parts: the state income tax, graduated up to 6.5%, and a county income tax set by each of Maryland’s 23 counties and Baltimore City, from 2.25% to 3.30% for 2026. Both are withheld together and remitted to the Comptroller. Each employee completes Form MW507, which names the county of residence and so the local rate. Maryland has reciprocal agreements with the District of Columbia, Pennsylvania, Virginia and West Virginia, so residents of those jurisdictions working in Maryland are generally withheld for at home.
Unemployment and FAMLI
Unemployment insurance is paid on the first $8,500 of each employee’s wages. New employers are assigned a rate of up to 2.6%, and Table A, the lowest of Maryland’s six rate tables, is in effect for 2026. Quarterly contribution and wage reports go to the Department of Labor.
FAMLI, Maryland’s paid family and medical leave insurance, starts collecting on wages paid from January 1, 2027: 0.9% of wages up to the Social Security wage base, half employer and half employee, with the employer half waived below 15 employees. Remittances and wage reports are quarterly, due the last day of the month after each quarter, starting April 30, 2027; benefits begin in January 2028. Employers may use an approved private plan instead.
Wages and timing
An example: a startup hires its first Maryland employee, living in Montgomery County and working remotely, at $120,000. It withholds Maryland state tax and Montgomery County’s local tax per Form MW507, pays UI on the first $8,500, reports the hire within 20 days, and from January 2027 adds FAMLI at 0.45% from the employee ($540 a year), with no employer share while it has fewer than 15 employees in total.
- Minimum wage $15.00; Montgomery County up to $18.00 and Howard County $16.00 from July 1, 2026.
- Pay at least every two weeks or twice a month.
- Final wages by the next regular payday.
- New hires reported within 20 days.
The federal baseline
This page covers what Maryland adds. The federal rules underneath it apply here too.
Common questions
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.
Is there local income tax in Maryland?
Both state and county. Maryland’s counties and Baltimore City levy a local income tax, from 2.25% to 3.30% for 2026, collected with state withholding. The employee states their county of residence on Form MW507, and the employer withholds that county’s rate.
What minimum wage applies to our Maryland employee?
It depends on the county. The state minimum is $15.00, but from July 1, 2026 Montgomery County requires $18.00 at 51 or more employees, $16.50 at 11–50 and $15.95 at 10 or fewer, and Howard County requires $16.00 for all employers.
Payroll next door
- DCDistrict of Columbia payrollDC withholds income tax only from DC residents, runs unemployment on the first $9,000 of wages, and charges employers 0.75% for Paid Family Leave, with nothing deducted from employees.
- DEDelaware payrollDelaware payroll means withholding, unemployment insurance on the first $14,500 of wages, and, from 10 employees, Delaware Paid Leave. Wilmington adds a 1.25% wage tax.
- PAPennsylvania payrollPennsylvania’s state payroll is light: 3.07% flat withholding and UC on the first $10,000. The work is local: earned income tax under Act 32, the Local Services Tax, and Philadelphia’s 3.735% Wage Tax.
- VAVirginia payrollVirginia payroll withholds up to 5.75%, pays unemployment on the first $8,000, and follows a minimum wage of $12.77 in 2026 that rises to $15.00 by 2028. Paid family leave contributions start April 1, 2028.
- WVWest Virginia payrollWest Virginia payroll withholds 2.11% to 4.58%, pays unemployment on the first $9,500, and has short timelines: new hires and contractors reported within 14 days, wages at least twice a month.
How Maryland compares
- No tax on wagesStates with no state income tax on wagesMaryland: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programMaryland: state paid leave or disability program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesMaryland: city, county or district taxes on wages. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Maryland guide
- AccountingAccounting and state tax in MarylandCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MarylandSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MarylandPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in MarylandRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in MarylandCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Maryland Department of Labor — Maryland Minimum Wage and Overtime Law
- Maryland Department of Labor — Unemployment Insurance Tax Rates
- Maryland Department of Legislative Services — 2026 County Local Tax Rates
- Maryland Paid Leave (FAMLI) — Make Contributions
- Maryland Department of Labor — Frequency of Pay
- Maryland Department of Labor — Termination Pay
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.