Maryland LLC Taxes Explained: The State + County Stack (2026)
Maryland is the only state in this series where your income tax has two governments in it: graduated state rates of 2%–5.75%, plus a county income tax of 2.25%–3.2% that every single jurisdiction levies. Here's each layer your LLC touches, with an estimator that computes your county's exact stack.
A default Maryland LLC is a pass-through: profits land on your personal return facing Maryland's graduated state rates (2%–5.75%) plus your county's income tax (2.25%–3.2% — all 23 counties and Baltimore City levy one; Baltimore City and Montgomery County sit at 3.2%). Add 15.3% federal self-employment tax on 92.35% of net profit. The LLC itself owes no entity-level income tax — its only recurring state charge is the $300 Form 1 (waivable via MarylandSaves). Sellers collect 6% sales tax. Around $60–80K profit, model an S-Corp election.
- State income tax
- 2%–5.75% graduated
- County income tax
- 2.25%–3.2% — everywhere
- Top combined marginal
- ~8.95% (Balt. City/MoCo)
- Entity-level tax
- None
- Sales tax
- 6% — no local rates
- S-Corp threshold
- ~$60–80K profit
The 5 Layers of Maryland LLC Taxation
Federal: income + self-employment tax
Pass-through profits hit your 1040 at your federal bracket, plus 15.3% SE tax on 92.35% of net profit — usually the biggest line.
Maryland state income tax: 2%–5.75%
Graduated brackets that reach the 5.75% top rate at moderate incomes (over $250K single / $300K joint for the very top bracket, but 4.75% applies across most middle income) — the estimator below runs the real bracket math.
County income tax: 2.25%–3.2%
Maryland's signature layer — every county and Baltimore City taxes resident income at locally set rates, collected with your state return. This is a full second income tax, not a surcharge.
Entity level: only the $300 Form 1
No franchise tax, no entity income tax — the $300 annual report (waivable via MarylandSaves) is the whole bill.
Sales tax: 6% (if applicable)
Flat statewide, zero local add-ons; 3% on certain data/IT services, 9% on alcohol. See Step 7.
Estimate Your Combined Bill — With Your County
Maryland LLC Tax Estimator
Single-member default taxation · state brackets + your county rate · educational estimate
Models SE tax (15.3% on 92.35% of profit, employer-half deduction reflected in the Maryland base), simplified state brackets (2–3–4–4.75% through the schedule, 5%+ tiers above $100K single), and your selected county rate on the same base. County rates shown are representative 2026 figures and can change annually; excludes federal income tax, standard deductions, credits, and QBI. Educational only — confirm with a Maryland CPA.
The County Tax, Concretely
| Jurisdiction (examples) | County Rate | With 4.75% State (typical bracket) |
|---|---|---|
| Baltimore City · Montgomery | 3.20% | ~7.95% combined |
| Prince George's · Howard | ~3.2% | ~7.95% combined |
| Anne Arundel | ~2.8% | ~7.55% combined |
| Worcester (lowest) | 2.25% | ~7.00% combined |
The county tax follows your residence, not your LLC's address — a Frederick resident running a Baltimore City LLC pays Frederick's rate. It's collected through your regular Maryland return (Form 502), so there's no separate filing — just a real rate difference of nearly a full percentage point across the state, worth knowing before you move.
The S-Corp Question (~$60–80K Profit)
An S-Corp election changes federal taxation only: reasonable salary (payroll-taxed) plus distributions that escape the 15.3% SE tax. File Form 2553 — never Form 8832, which is the C-Corp election. Break-even lands around $60–80K of consistent profit after payroll and accounting costs. Maryland wrinkles: distributions still face the full state-plus-county income stack (the election shields SE tax, not income tax), and Maryland's PTE election lets the entity pay state tax deductibly at the federal level — a genuine SALT-cap workaround worth raising with your CPA in the same conversation. Run your numbers in the S-Corp election guide.
Your Maryland Tax Calendar
| Date | What's Due |
|---|---|
| Jan 15 / Apr 15 / Jun 15 / Sep 15 | Quarterly estimated taxes — federal and Maryland (state + county), on pass-through profit |
| Mar 15 | Form 1065 (multi-member LLCs) + K-1s |
| Apr 15 | Form 1040 + Maryland Form 502 — and SDAT Form 1 ($300 or waived), all the same day |
| Monthly/Quarterly | Sales & use tax returns to the Comptroller per your assigned schedule |
| Apr 30 | Trader's license renewal (retail — license year ends) |
Ahmad Adil's Take: Maryland founders consistently under-withhold for one reason — they budget the state rate and forget the county is a full second income tax, not a rounding error. In Baltimore City or Montgomery County your marginal state-plus-local rate runs about 7.95% before federal — closer to Maine's territory than to Kentucky's 3.5%. My Maryland rule: set aside 33–37% of profit in the high-rate counties (30–34% in the cheaper ones), have the S-Corp and PTE-election conversations together at $70K+, and remember everything lands April 15 — taxes, Form 1, the whole year — so February bookkeeping isn't optional here, it's survival.
- ✓Forms your Maryland LLC for $39 + the state fee
- ✓Files through Maryland Business Express (SDAT) — expedited processing
- ✓Free Maryland resident agent the first year
- ✓No upsells · No data selling · Privacy by Default
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Maryland LLC — FAQ
Ahmad Adil is the founder and CEO of LLC School. The figures here — the $100 Articles of Organization ($150 expedited online), the $300 Form 1 annual report due April 15, the MarylandSaves fee waiver, and Maryland’s state-plus-county income tax stack — reflect current Maryland SDAT and Comptroller guidance. This is educational content, not legal or tax advice.
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