Is Maryland State Income Tax Currently Being Withheld From Your Pay?

Maryland requires employers to withhold state income tax from employee paychecks, but errors can result in incorrect deductions. If too little is withheld, you may owe taxes when filing your return, while excessive withholding means the state holds more of your money until you receive a refund. Checking your paycheck for proper withholding helps avoid surprises at tax time.

Where to Find Withholding Details

Your pay stub is the most direct way to check Maryland state income tax withholding. Employers provide a breakdown of deductions, including federal and state taxes, Social Security, and Medicare. Look for a line labeled “MD State Tax” or similar. If you receive electronic pay statements, these details should be available through your employer’s payroll portal.

The IRS Form W-2, issued by January 31 each year, also includes state withholding information. Box 17 lists the total amount withheld for Maryland. Comparing this to your expected tax liability can help determine if adjustments are needed.

Maryland’s Comptroller website offers an online withholding calculator to estimate the correct amount based on income, filing status, and allowances. If you suspect incorrect withholding, this tool can help. Reviewing your most recent Maryland tax return can also indicate whether past withholdings covered your tax obligation.

Adjusting the Maryland Form

To change your Maryland tax withholding, update Form MW507, the state’s withholding certificate. This form determines tax deductions based on filing status, dependents, and additional withholding requests. If your financial situation changes—such as getting married, having a child, or taking on a second job—updating this form ensures accurate withholdings.

The MW507 allows you to claim exemptions that affect withholding. Claiming more exemptions reduces withholding, increasing take-home pay but potentially leading to a tax bill. Claiming fewer exemptions results in more tax being withheld, which can help prevent underpayment penalties. Maryland’s tax rates range from 2% to 5.75% depending on income, so adjusting correctly is important.

If you want additional tax withheld, the MW507 includes a section to specify extra withholding. This can be useful for those with freelance income, investment earnings, or other taxable sources without automatic withholdings. Increasing the amount deducted from your paycheck can help offset potential tax obligations from these earnings.

Coordination With Federal Forms

Maryland’s state withholding is linked to federal tax withholding, as both rely on employee withholding certificates. The IRS Form W-4 determines federal tax deductions, influencing how much income is subject to withholding. While Maryland’s Form MW507 operates separately, selections on a W-4, such as filing status and additional withholding amounts, often affect state tax decisions. If an employee claims a high number of allowances or opts for reduced federal withholding, state withholding may also be lower, potentially leading to a tax liability.

The IRS eliminated personal exemptions from the W-4 in 2020, shifting to a system based on income, dependents, and deductions. Maryland still allows personal exemptions, meaning employees who update their W-4 may need to adjust their MW507 separately to ensure accurate state withholding. Failing to do so could result in underpayment, especially if they previously relied on federal exemptions to estimate state tax obligations.

Employees with multiple jobs or a mix of salaried and self-employment income should coordinate their withholdings carefully. The IRS provides a Tax Withholding Estimator to help determine whether federal and state withholdings are sufficient. Maryland taxpayers who claim additional withholding on their W-4 to cover other earnings should verify this adjustment is also reflected in their MW507.

Situations With No State Tax Deducted

Maryland state income tax may not be withheld from a paycheck for several reasons. One common situation occurs when an employee qualifies for an exemption. Maryland allows individuals with no tax liability in the prior year who expect none in the current year to claim exemption on Form MW507. If an exemption is incorrectly claimed or not renewed annually, withholding may stop, leading to a shortfall at tax time.

Certain types of income are not subject to mandatory state withholding. Independent contractors do not have automatic tax deductions, as they are responsible for estimating and paying their own taxes through quarterly estimated payments. Similarly, distributions from retirement accounts, such as 401(k) plans or pensions, may only have state tax withheld if the recipient elects to have it deducted. Failure to do so can result in a substantial amount owed when filing a Maryland tax return.

Employer Responsibilities

Employers must ensure Maryland state income tax is properly withheld from employee paychecks. They are required to deduct the correct amount based on Form MW507 and remit those funds to the state on a set schedule. The frequency of these payments—monthly, quarterly, or annually—depends on the employer’s total withholding liability. Businesses with higher payroll tax obligations must submit payments more frequently to remain compliant.

Failure to withhold or remit state income tax correctly can result in penalties. Maryland imposes fines and interest on late or incorrect payments. Employers must also provide employees with accurate W-2 forms by January 31 each year, ensuring reported withholdings match actual deductions. If discrepancies arise, employees may need to work with payroll departments to resolve issues before filing tax returns.