Baltimore, Md. and Counties Tax Income Too

Published July 1, 2008

A new tax rate of 6.25 percent for Maryland tax filers who report $1million or more of income comes on top of income taxes imposed by the state’s 23 counties and the City of Baltimore.

The local tax rates vary from 1.25 percent to 3.20 percent.

The highest state income tax bracket in the nation is 9.9 percent, in Rhode Island, but in 2006 state lawmakers there created an optional flat tax with a rate of 5.5 percent. The flat tax option eliminates many deductions and credits available under the multi-tiered tax system. Rhode Island taxpayers themselves are allowed to decide whether to use the simpler flat tax with the lower rate or the more complicated multi-tier system with credits and deductions.

Rhode Island lawmakers, led by House Speaker William J. Murphy (D-West Warwick), said they created the optional flat tax to make Rhode Island more competitive with neighboring states, all of which had lower maximum income tax rates and thus were more successfully recruiting entrepreneurs and wealthy investors.

Steve Stanek