Federal & State Regulations | Employment taxes - Maryland

State Info

Summary of differences between federal and state regulations

Income tax withholding

The withholding of Maryland income tax is part of the state's "pay-as-you-go" plan of income tax collection. Its purpose is to collect income tax at the source, as the wages are earned. As an employer, you must record sums that are withheld from employee wages in a ledger account to clearly indicate the amount of state tax withheld. These funds must be submitted to the state on the due date assigned to you.

Graduated withholding for the first $3,000 in wages is eliminated. All withholding is calculated using a flat tax rate.

Unemployment taxes

All states finance UC primarily through contributions from subject employers on the wages of their covered workers. In addition, three states (Alaska, New Jersey, and Pennsylvania) collect contributions from employees. These taxes are deposited by the state to its account in the UTF in the Federal Treasury, and are withdrawn as needed to pay benefits.

Many states have adopted a higher tax base than what is provided in FUTA. Hawaii's wage base is usually higher and changes periodically. In all states, an employer pays a tax on wages paid to each worker within a calendar year up to the amount specified in state law. In addition, most of the states provide an automatic adjustment of the wage base if federal law is amended to apply to a higher wage base than that specified under state law. As a result of the many variables in states taxable wage bases and rates, benefit formulas, and economic conditions, actual tax rates vary greatly among the states and among individual employers within a state.

Wages subject to unemployment tax in this state equal $8,500.

Minimum and maximum rates in this state are 0.3 and 7.5 %. Rates apply to experience rated employers only and do not include applicable surtaxes or penalties.