Maryland Capital Gains Tax Rate (2026)
Maryland capital gains tax overview
Maryland has a state rate of 2–5.75% plus a county/city income tax (typically 2.25–3.2%). Most Maryland residents pay 7.5–9% combined on capital gains.
Federal + Maryland combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Maryland investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Maryland State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 5.75% | 5.75% | 9.6% |
| 15% | 5.75% | 20.8% | 24.6% |
| 20% | 5.75% | 25.8% | 29.6% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Maryland does not have an equivalent.
How Maryland compares to other states
Maryland's top rate of 5.75% places it in the lower-middle tier of state capital gains taxation. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Maryland: 5.75% — total with 15% federal = 20.8%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Maryland residents
With a top state rate of 5.75%, minimizing capital gains tax is particularly important in Maryland. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%). Maryland does not offer a preferential state rate, but federal savings alone are often 7–17%.
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 26% ($5,150) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Maryland state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Detailed Maryland capital gains tax rules
Tax history and legal basis
Maryland taxes capital gains as ordinary income with a progressive system. County income taxes (2.25% to 3.2%) are imposed on top of the state tax.
Exemptions and special treatment
Maryland does not offer preferential capital gains rates. The state's effective rate includes both the state rate (up to 5.75%) and a mandatory county tax (2.25-3.2%), pushing the all-in state+local rate to 8-8.95%. Retirement income receives some exemptions but capital gains do not.
Filing requirements
File Form 502 (resident). The county tax is computed on the same return based on your county of residence as of December 31. Estimated payments required if owing $500+. Filing deadline is April 15.
Recent changes and legislative updates
Maryland's combined state + county rates make it a high-tax state for capital gains — total state/local can reach 8.95% in some counties (Howard, Montgomery). Combined with federal rates and NIIT, Maryland residents in wealthy suburbs can face total rates above 32%. The state has considered but not passed additional 'millionaire' surcharges.
Worked example: $50,000 capital gain in Maryland
Here's exactly what a Maryland resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Maryland state tax (5.75%) | −$2,875 | Applied to the full gain amount |
| Total tax owed | −$10,375 | Federal + state combined |
| You keep | $39,625 | 79.3% of your gain |
After both federal and Maryland state tax, you keep $39,625 of your original $50,000 gain. The effective combined rate is 20.8%.
Frequently asked questions — Maryland
Does Maryland tax short-term and long-term gains differently?
No — Maryland taxes both short-term and long-term capital gains as ordinary income at the same rates as wages. There is no state-level preferential rate for patience. The federal system, however, taxes long-term gains at 0/15/20% vs. up to 37% for short-term — a significant difference that applies regardless of state.
Do I need to file a Maryland tax return if I only have capital gains?
If you have capital gains income and meet Maryland's filing threshold, you are required to file a Maryland state income tax return. The threshold is typically similar to the standard deduction amount — check the MD Department of Revenue for the current year's filing requirements.
What if I moved to Maryland mid-year?
If you moved to Maryland during the year, you are a part-year resident. Maryland generally taxes capital gains realized while you were a Maryland resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.