Nonresident Income Tax Rate

Nonresidents who work in Maryland or derive income from a Maryland source are subject to the appropriate Maryland income tax rate for their income level, as well as a special nonresident tax rate of 1.25 percent.

By law, the nonresident tax rate must equal the lowest local income tax rate paid by Maryland residents (currently 1.25 percent) combined with the top state tax rate.

Employers must withhold Maryland income tax for nonresidents using the 1.25 percent rate. See our withholding tables or percentage method tables.

Washington, D.C., Pennsylvania and Virginia residents

Residents of the District of Columbia, Pennsylvania and Virginia who did not maintain a place of abode in Maryland for more than six months (183 days or more), are exempt from withholding of Maryland tax on Maryland wages and salary by the authority of a reciprocity agreement between Maryland and these jurisdictions.

West Virginia residents

Wage and salary income for residents of West Virginia is not taxable to Maryland, regardless of the amount of time spent in Maryland, and they are exempt from withholding of Maryland tax on Maryland wages and salary by the authority of a reciprocity agreement between Maryland and West Virginia.

Local tax for certain nonresidents

The local income tax is imposed on certain nonresidents employed in Maryland who reside in jurisdictions of Delaware, New York and Pennsylvania, if they reside in a local jurisdiction that imposes a local income or earnings tax on Maryland residents.

In this case, both state and local income tax withholding is required on wages of Delaware and New York residents who work in Maryland. Since Maryland shares a state tax reciprocity agreement with Pennsylvania, only the local tax should be withheld for Pennsylvania residents working in Maryland and living in a jurisdiction that taxes Maryland residents. The local tax is computed at the rate of the local Maryland jurisdiction where the taxpayer is employed.

If you work in Maryland but reside in a local jurisdiction of Alabama, Indiana, Kentucky, Michigan, Missouri and Ohio that imposes a local income or earning tax on Maryland residents, you must file Form 515. To verify local tax laws, contact your local government in the jurisdiction in which you reside.

Nonresident tax on sale of Maryland property

A nonresident tax on the sale of Maryland property is withheld at the rate of 6.75 percent (1.25 percent plus the top state tax rate of 5.50 percent) for individuals and 8.25 percent on nonresident entities. For more information, see Withholding Requirements for Sales of Real Property by Nonresidents.

Nonresident pass-through entity tax rate

The tax rate for pass-through entities is 6.75 percent on nonresident individual members (including nonresident fiduciary members) and 8.25 percent on nonresident entity members. For more information, see Pass-Through Entities.