Payroll taxes in Maryland have an impact on employers as well as employees. Business owners should be careful in withholding and remitting taxes accurately and employees must be aware of deductions potentially changing the take-home pay. Within this context, it is important to comply with Maryland payroll tax rates and FICA taxes in Maryland as well as Maryland state income tax for establishing full compliance.
Overview of Payroll Taxes in Maryland
Entrepreneurs and employees in Maryland are responsible for certain payroll tax obligations at the federal, state and local levels as outlined below:
- Federal Payroll Taxes: FICA taxes in Maryland (Social Security and Medicare) and the Federal Unemployment Tax Act (FUTA).
- State Payroll Taxes: Maryland state income tax, Maryland unemployment tax and county-level local income taxes.
- Employer Contributions: Maryland businesses must match Social Security and Medicare deductions and pay state unemployment insurance.
Maryland Payroll Tax Rates (2024)
Payroll taxes in Maryland vary with the amount of income generated, location element and employer contributions. The key components for 2024 are listed below:
1. Maryland State Income Tax
- Maryland has a progressive income tax system with rates from 2% to 5.75% based on the taxable income amount.
2. Local Income Tax
- Maryland counties apply a local income tax along with state income tax with rates from 2.25% to 3.20%..
Both establishments and employees contribute to Social Security and Medicare.
- Social Security Tax: 6.2%
- Medicare Tax: 1.45% (An additional 0.9% is applied for employees earning over $200,000 annually)
4. Maryland Unemployment Tax (SUTA)
- Employers should contribute to Maryland unemployment tax. The rates range from 0.3% to 7.5% in accordance with the employer’s experience rating.
5. Federal Unemployment Tax (FUTA)
- The FUTA rate is 6% on the first $7,000 of each employee’s wages. Employers who pay SUTA taxes on time might qualify for a FUTA credit. This may reduce the effective tax rate to 0.6%.
How to Calculate Payroll Taxes in Maryland
Entrepreneurs in Maryland have an obligation to calculate payroll taxes in Maryland in order to establish proper tax withholding and compliance. Step-by-step actions are outlined below:
Step 1: Gross Pay
- Employee’s total earnings for the pay period should be identified (hourly wages, salary, bonuses or commissions).
Step 2: Federal and State Income Taxes
- IRS tax tables for federal withholding should be used.
- Maryland state income tax brackets must be referred to for determining the correct withholding percentage (2%–5.75%).
Step 3: FICA Taxes in Maryland
- 7.65% must be deducted from the employee’s paycheck (6.2% for Social Security + 1.45% for Medicare).
- Employers must match this contribution.
Step 4: Local Income Taxes (if applicable)
- Local income should be withheld tax based on county rates (2.25%–3.20%).
Step 5: Calculate Unemployment Taxes
- Businesses should set aside as below:
- Maryland unemployment tax (SUTA): Applied from 0.3% to 7.5% in line with the employer’s experience rating.
- Federal unemployment tax (FUTA): 6% on the first $7,000 of wages (might be reduced with timely SUTA payments).
Example Calculation for a $50,000 Salary in MD
| Tax Type |
Amount/Rate |
Notes |
| Federal Income Tax |
IRS tax brackets |
Varies by filing status and deductions |
| Maryland State Income Tax |
$1,000 – $2,875 (2% – 5.75%) |
Maryland state tax rates |
| Local Income Tax |
County rates |
Each county sets its own rates. |
| FICA Taxes |
$3,825 (7.65% of $50,000) |
Social Security (6.2%) and Medicare (1.45%) |
| SUTA |
Employer’s rate |
Employer’s experience rating |
A payroll tax calculator Maryland can be leveraged for quick estimations.
Maryland Payroll Tax Payment & Filing Deadlines
Employers in Maryland should establish compliance with the state and federal payroll tax filing requirements. Filing frequencies change depending on the type of tax as well as employer classification.
Maryland Payroll Tax rates
- Maryland state income tax withholding must be submitted in accordance with the employer’s assigned filing frequency:
- Quarterly: Standard filing schedule for small businesses.
- Monthly: Applies to employers with higher withholding obligations.
- Accelerated: Required for large employers meeting the threshold.
Federal Payroll Taxes
- Businesses should deposit FICA taxes in Maryland and federal income tax as outlined below:
- Monthly Depositors: Small businesses usually follow a monthly schedule.
- Semi-weekly Depositors: Employers with larger tax liabilities should deposit more frequently.
Unemployment Tax (SUTA & FUTA) Deadlines
- Maryland unemployment tax (SUTA): Quarterly paid in line with the rates based on the employer’s experience rating.
- Federal unemployment tax (FUTA): Quarterly paid as well but only if the accumulated tax liability exceeds $500.
Payroll Tax Deductions & Employer Responsibilities
For Employees
Employee wages are subject to the following deductions:
- Pre-Tax Benefits: Contributions to health insurance premiums and retirement plans as well as commuter benefits may have a reducing impact on the taxable income.
- Post-Tax Deductions: Items like wage garnishments, union dues, and after-tax retirement contributions are deducted after taxes.
- FICA Taxes in Maryland: Employees must contribute 6.2% to Social Security and 1.45% to Medicare.
For swift calculations, an online paycheck calculator MD can be leveraged.
Maryland employers have responsibilities as presented below:
- Accurate Withholding & Tax Remittance: Estimating and deducting Maryland state income tax and local taxes alongside FICA taxes in Maryland from employee wages.
- Deposits & Reports: Applying Maryland employer tax rates and federal payroll tax payments in accordance with the deadlines (monthly, quarterly or annually).
- Recordkeeping Compliance: Payroll records, tax filings alongside employee deductions documentation for at least four years.
Payroll Tax Compliance & Avoiding Penalties
Late Payroll Tax Payments
- Late payment penalties: Fines ranging from 2% to 15% of the unpaid amount may be imposed by the IRS and the state authorities.
- Interest on unpaid taxes: Such interest accrues daily until the balance is paid in full.
- Legal action: Persistent non-compliance may result in tax liens or further enforcement measures.
Tips to Ensure Compliance
- Comply with the payroll tax deadlines.
- Maintain accurate records for at least 4 years.
- Leverage payroll software or consult a CPA.
FAQs on Maryland Payroll Taxes
The 5 payroll taxes are federal income tax, state income tax, local income tax, FICA taxes, and unemployment taxes (SUTA and FUTA).
Small businesses should pay federal and state income taxes, FICA taxes, and unemployment taxes just like larger businesses.
It could be due to low taxable income, excessive deductions or an incorrect W-4 form.
The total FICA tax rate is 15.3%. 7.65% withheld from employees and 7.65% paid by employers.
Final Thoughts
Maryland payroll taxes are vital for establishments as well as employees. Businesses prevent surprise penalties and establish seamless payroll operations by complying with tax rates, deadlines and all necessary requirements. An online paycheck calculator MD can be leveraged for quick estimations. If you need professional aid with payroll tax calculations and compliance, contact Watter CPA today.
