The Tax Foundation

Maryland

The Facts on Maryland's Tax Climate

Here are some basic facts on Maryland's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 28 in Maryland
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Maryland taxpayers had to work until April 28 (ranked 7th highest nationally) to pay their total tax bill, five days later than national Tax Freedom Day (April 23). Neighboring states' Tax Freedom Days are as follows: Delaware, April 14 (ranked 37th); Pennsylvania, April 21 (ranked 18th); West Virginia, April 8 (ranked 47th); and Virginia, April 25 (ranked 12th).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Maryland's State/Local Tax Burden Fourth-Highest in Nation
Estimated at 10.8% of income, Maryland's state/local tax burden percentage ranks 4th highest nationally, well above the national average of 9.7%. Maryland taxpayers pay $5,669 per capita in state and local taxes.
Maryland's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

Maryland's 2008 Business Tax Climate Ranks 24th
Maryland ranks 24th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Delaware (9th), Pennsylvania (27th), West Virginia (37th) and Virginia (14th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Maryland's Individual Income Tax System
Maryland's personal income tax system consists of seven separate brackets with a top rate of 5.75%, kicking in at an income level of $200,000. Among states levying an individual income tax, Maryland's top rate ranks 28th highest nationally. Maryland's 2005 individual income tax collections were $1,638 per person, which ranked 2nd highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Maryland's Corporate Income Tax System
Maryland's corporate tax structure consists of a flat rate of 8.25% on all corporate income. Among states levying corporate income taxes, Maryland's rate ranks 16th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $150.80 per capita, which ranked the state 21st highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Maryland Levies Sales Tax above National Median
Maryland levies a 6% general sales or use tax on consumers, above the national median of 5.4 percent. State and local governments combined collected approximately $1,033 per capita in sales taxes in 2005, which ranks 42nd highest nationally. Maryland's gasoline tax stands at 23.5 cents per gallon, which ranks 26th highest nationally. Maryland's cigarette tax stands at $2.00 per pack of twenty, ranking 4th highest nationally. The sales tax was adopted in 1947, the gasoline tax in 1922 and the cigarette tax in 1958.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Maryland Property Taxes: Comparatively Modest
Maryland is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Maryland's localities collected $5,539,833,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Maryland collected $478,796,000 in property taxes during FY 2004, making its combined state/local property taxes $6,018,629,000. That brings its combined per capita collections to $1,082, ranking 17th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Maryland is a Beneficiary State
Maryland taxpayers receive about more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2005, Maryland citizens received approximately $1.30 in the way of federal spending. This ranks the state 18th highest nationally and represents an increase from 1995, when Maryland received $1.27 per dollar of taxes in federal spending and also ranked 14th nationally. Neighboring states and what they received in federal spending per dollar of federal tax collected was: Delaware ($0.77), Pennsylvania ($1.07), West Virginia ($1.76), and Virginia ($1.51).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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