How Much Tax Is Deducted From a Paycheck in MD?

A portion of an individual’s earnings is withheld from their paycheck to fulfill various tax obligations. This ensures employees contribute to federal, state, and local tax revenues throughout the year, avoiding a single large bill. The specific amounts withheld are determined by federal and state tax laws, and employee-provided information.

Federal Payroll Deductions

Federal payroll deductions include mandatory taxes: Social Security, Medicare, and Federal Income Tax. Social Security and Medicare, known as FICA taxes, fund benefits for retirees, the disabled, and elderly medical care. For 2025, the Social Security tax rate is 6.2% on earnings up to $176,100. The Medicare tax rate is 1.45% on all covered earnings. An additional 0.9% Medicare tax applies to wages exceeding $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately. This additional tax is withheld solely from employee wages. Federal income tax withholding is determined by information an employee provides on Form W-4, the Employee’s Withholding Certificate. This form guides employers on how much to deduct based on filing status, additional income, deductions, and dependent tax credits.

Maryland State Income Tax Withholding

Maryland state income tax withholding is a mandatory deduction. Maryland uses a progressive income tax system. The amount withheld depends on information an employee provides on Maryland Form MW507, the Employee’s Maryland Withholding Exemption Certificate. Employers use this form to determine withholding based on filing status and exemptions claimed. More exemptions generally result in less tax withheld. Employers calculate withholding using state-provided tables or formulas. If an employee does not submit an MW507, employers must withhold tax as if the employee is single with zero exemptions.

Maryland Local Income Tax Withholding

Maryland imposes a local income tax, also known as a “county income tax” or “piggyback tax.” The State of Maryland collects this tax, distributing it to the taxpayer’s county or Baltimore City of residence. Local income tax rates vary significantly by county, with each setting its own flat percentage rate applied to Maryland taxable income. The rate is based on the employee’s residence, not workplace location. Employers withhold this tax based on the employee’s residential address. If an employee does not submit a state withholding certificate, they may be defaulted to the highest local tax rate. For 2025, local tax rates generally range from 2.25% to 3.20%.

Adjusting Your Withholding

Individuals can adjust federal and state income tax withheld from their paychecks. For federal tax, employees use Form W-4, the Employee’s Withholding Certificate. This form allows individuals to specify filing status, account for multiple jobs, claim dependent tax credits, and include other income or deductions. To adjust, obtain a new Form W-4 from your employer or the IRS website, complete it, and submit it to payroll. Common reasons for adjusting include changes in marital status, birth of a child, starting or losing a second job, or significant income changes.

For Maryland state income tax, adjustments are made using Form MW507, the Employee’s Maryland Withholding Exemption Certificate. Similar to the W-4, this form allows employees to update personal exemptions, indicate filing status, and elect additional withholding. Employees can obtain this form from their employer or the Comptroller of Maryland website. Review withholding periodically, especially after significant life events, to ensure the correct amount of tax is withheld. This helps avoid underpayment penalties or overpaying taxes.