TAXES 16-36, Maryland State and County Income Tax Withholding

Published: December 29, 2016
Effective: Pay Period 25, 2016

Summary

The income tax withholding formula for the counties of Maryland will include the following changes:

The income tax rate for Calvert county will increase from 2.80 percent to 3.00 percent.
The income tax rate for Somerset county will increase from 3.15 percent to 3.20 percent.

No action on the part of the employee or the personnel office is necessary.

Tax Formula

State Abbreviation:	MD
State Tax Withholding State Code:	24
Acceptable Exemption Form:	MW 507
Basis for Withholding:	State Exemptions
Acceptable Exemption Data:	S/M, Number of Allowances
TSP Deferred:	Yes
Special Coding:	Determine the Total Number of Allowances Claimed field as follows: First Position - S = Single; M = Married. Second or Third Positions - Enter the number of exemptions claimed.
Additional Information:	The Maryland State income tax formula contains a computation for Maryland county tax. Residents of the State of Maryland are required to pay the appropriate county tax in addition to the State income tax. Nonresidents of Maryland pay only the State income tax. Refer to the withholding formula for information on the individual county rates.

Withholding Formula (Effective Pay Period 25, 2016)

Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program and Flexible Spending Account - health care and dependent care deductions) from the amount computed in step 1.
Add the taxable biweekly fringe benefits (i.e., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
Multiply the adjusted gross biweekly wages times 26 to obtain the gross annual wages.¹
¹_{If gross annual wages are less than $5,000, taxes will not be withheld.}
Determine the standard deduction by applying the following guideline and subtract this amount from the gross annual wages computed in step 4:
Standard Deduction² = 15 percent x Annual Wages

²_{Minimum of $1,500/Maximum of $2,000}
Determine the dependent allowance by applying the following guideline and subtract this amount from the result of step 5 to determine the taxable income:
Exemption Allowance = $3,200 x Number of Exemptions

Apply the taxable income computed in step 6 to the following table to determine the annual Maryland tax withholding:

Maryland Residents Working in Delaware

The amount to be withheld shall be

3.20 %

Maryland Nonresident Not Subject to Maryland County Tax

Married

If the Amount of Taxable Income Is:	The Amount of Maryland Tax Withholding Should Be:
Over $0 but not over $150,000	6.50%
Over $150,000 but not over $175,000	$9,750.00 plus 6.75% of excess over $150,000.00
Over $175,000 but not over $225,000	$11,437.50 plus 7.00% of excess over $175,000.00
Over $225,000 but not over $300,000	$14,937.50 plus 7.25% of excess over $225,000.00
Over $300,000	$20,375.00 plus 7.50% of excess over $300,000.00

Single

If the Amount of Taxable Income Is:	The Amount of Maryland Tax Withholding Should Be:
Over $0 but not over $100,000	6.50%
Over $100,000 but not over $125,000	$6,500.00 plus 6.75% of excess over $100,000.00
Over $125,000 but not over $150,000	$8,187.50 plus 7.00% of excess over $125,000.00
Over $150,000 but not over $250,000	$9,937.50 plus 7.25% of excess over $150,000.00
Over $250,000	$17,187.50 plus 7.50% of excess over $250,000.00

All Other Employees

Married

If the Amount of Taxable Income Is:	The Amount of Maryland Tax Withholding Should Be:
Over $0 but not over $150,000	4.75%
Over $150,000 but not over $175,000	$7,125.00 plus 5.00% of excess over $150,000.00
Over $175,000 but not over $225,000	$8,375.00 plus 5.25% of excess over $175,000.00
Over $225,000 but not over $300,000	$11,000.00 plus 5.50% of excess over $225,000.00
Over $300,000	$15,125.00 plus 5.75% of excess over $300,000.00

Single

If the Amount of Taxable Income Is:	The Amount of Maryland Tax Withholding Should Be:
Over $0 but not over $100,000	4.75%
Over $100,000 but not over $125,000	$4,750.00 plus 5.00% of excess over $100,000.00
Over $125,000 but not over $150,000	$6,000.00 plus 5.25% of excess over $125,000.00
Over $150,000 but not over $250,000	$7,312.50 plus 5.50% of excess over $150,000.00
Over $250,000	$12,812.50 plus 5.75% of excess over $250,000.00

Divide the result of step 7 by 26 to obtain the biweekly Maryland State tax. Residents of Maryland are to proceed to step 9 to compute Maryland county tax.

If the employee is a resident of the State of Maryland, compute the annual county tax withholding as follows:

Repeat steps 1 through 5.
Determine the dependent allowance by applying the following guideline and subtract this amount from the result of step 9a to determine the taxable county income:

Exemption Allowance = $3,200 x Number of Exemptions

Apply the taxable income computed in 9b to the following guideline to determine the appropriate county income tax:

Compute the Annual Income Tax Withholding For:	By Multiplying the Annual Taxable Wage By:
Allegany	3.05%
Anne Arundel	2.50%
Baltimore	2.83%
Baltimore City	3.20%
Calvert	3.00%
Caroline	2.73%
Carroll	3.03%
Cecil	2.80%
Charles	3.03%
Dorchester	2.62%
Fredrick	2.96%
Garrett	2.65%
Harford	3.06%
Howard	3.20%
Kent	2.85%
Montgomery	3.20%
Prince George's	3.20%
Queen Anne's	3.20%
St. Mary's	3.00%
Somerset	3.20%
Talbot	2.40%
Washington	2.80%
Wicomico	3.20%
Worcester	1.75%

Divide the result of step 9c by 26 to obtain the biweekly Maryland county tax.
Add the results of steps 8 and 9d to determine the resident’s biweekly Maryland State and county tax combined withholding.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) homepage. Select the Publications tab in the center ribbon. Select U.S. Income Tax Formulas from the Publication menu to launch the tax map. Select the desired State from the map provided for the formula.

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