Taxes. No one loves paying them, but where you live can make a huge difference in how much you owe.
Maryland has earned a reputation for being a high-tax state — but how does it actually compare to its neighbors and the places where many Marylanders move for a tax break?
If you’ve ever wondered whether it’s worth staying put or packing up for a lower-tax paradise, let’s break it down.
Maryland: A Mixed Bag of Taxes
Maryland’s tax system is a double-edged sword. On the one hand, the state income tax follows a progressive structure, ranging from 2.00% to 5.75% — which doesn’t sound too bad.
But then comes the kicker: local income taxes.
Every county in Maryland, plus Baltimore City, tacks on its own income tax, adding anywhere from 2.25% to 3.20% on top of the state rate. That means Marylanders can face a combined tax burden as high as 8.95%.
And that’s just the income tax.
Property taxes in Maryland tend to be moderate compared to national averages, but sales taxes hover at 6% statewide. While Maryland doesn’t have the highest tax rates in the country, it also doesn’t offer many ways to lower your tax bill — something our neighbor states do much better.
How Maryland Stacks Up Against Its Neighbors
If you’re looking for a slight tax break but don’t want to move too far, here’s how Maryland compares to the states next door:
- Virginia – A progressive state income tax system with rates from 2% to 5.75%, but no additional local income tax. Lower overall tax burdens make it an attractive alternative.
- Delaware – No sales tax (yes, zero) and a progressive income tax that ranges from 2.2% to 6.6%. Many Marylanders cross the border just for the tax-free shopping, but it’s also a draw for retirees looking to cut costs.
- Pennsylvania – A flat 3.07% income tax — significantly lower than Maryland’s combined rate. However, fewer deductions and credits mean some taxpayers may still owe more than expected.
- West Virginia – A progressive system from 3% to 6.5% with a lower cost of living, making it an attractive option for transplants.
The Southern Migration: Why Marylanders Head South
For those looking to escape Maryland taxes entirely, the South is calling. Places like Florida, North Carolina and South Carolina have seen an influx of Marylanders in recent years, particularly retirees. Here’s why:
- Florida – No state income tax. Enough said. It’s a haven for retirees, remote workers and anyone looking to keep more of their paycheck.
- North Carolina – A flat 4.75% income tax and lower property taxes make it an attractive alternative to Maryland’s higher rates.
- South Carolina – A progressive system ranging from 0% to 7%, but with retiree-friendly tax breaks that make it more affordable in the long run.
Should You Stay or Should You Go?
Taxes shouldn’t be the only factor in deciding where to live, but they certainly play a role — especially if you’re planning for retirement or running a business.
While we obviously love Maryland, the tax burden here is undeniably higher than many neighboring states and more southern destinations. Whether it makes sense to relocate depends on your income, property ownership and financial goals.
Before making any big moves, talk to a tax professional.
At JRJ, we help individuals and business owners understand their tax burden and plan strategically for the future. Whether you’re staying put or considering a tax-friendly escape, we can help you make the smartest financial decision.
(Tax rates are subject to change. Consult a tax professional for the most up-to-date information.)