Income Tax Withholding

The purpose of tax withholding is to collect income tax at the source, as wages are earned, as part of the state's "pay-as-you-go" plan of income tax collection.

See our Withholding Tax Alert for important updates.

As an employer, you must record sums that are withheld from employee wages in a ledger account to clearly indicate the amount of state tax withheld. These funds must be submitted to the state on the due date assigned to you.

You may use our withholding tables to determine the correct amount of state and local income tax that must be withheld from employee wages. See the 2007 Withholding Tables and 2008 Withholding Tables.

The total income tax required to be withheld on wages for the purposes of the withholding tables and schedules is calculated without regard to the marginal state income tax rates of less than 4.75 percent.

Local income tax

The local income tax, which is calculated as a percentage of taxable income, is included in the amount shown in the withholding tables. The local income tax rates for Maryland's 23 counties and Baltimore City range between 1.25 percent and 3.2 percent. See the 2007 Percentage Method Tables and 2008 Percentage Method Tables.