Payroll Done Right

Maryland Payroll Requirements: What Employers Need to Know in 2026

Maryland payroll requires employers to withhold both state and county income tax on the same paycheck, making it one of the more administratively layered states for income tax withholding. The state income tax ranges from 2% to 5.75% across eight graduated brackets. On top of that, every Maryland county and Baltimore City imposes its own income tax — rates range from 2.25% in some counties to 3.2% in Baltimore City, Montgomery County, Prince George's County, and Howard County. The state Comptroller of Maryland issues combined withholding tables that reflect both the state rate and the applicable county rate, so employers look up a single combined withholding amount based on the employee's county of residence.

Maryland also has the Time to Care Act, the state's Paid Family and Medical Leave program. The contribution rate for 2026 is 0.9% of covered wages, split between employer and employee. Employers with 15 or more employees contribute a share; smaller employers pay only the employee portion. The program is administered by the Maryland Department of Labor, and quarterly reports are filed through the same employer portal used for unemployment insurance. State Unemployment Insurance uses a taxable wage base of $8,500 with a new employer rate of 2.3%, for a maximum first-year SUI obligation of $195.50 per worker. Learn how Maryland SUI experience rates work and how the Time to Care Act contribution schedule is structured.

Maryland's minimum wage is $15.00 per hour statewide in 2026. The state reached the $15.00 milestone in January 2024 and currently has no scheduled increases built into state law beyond inflation adjustments beginning in 2025. Some counties — including Montgomery County and Prince George's County — have set higher local minimum wages, so employers with worksites in those jurisdictions must pay the applicable local rate. Maryland allows a tip credit: tipped employees must receive direct cash wages of at least 50% of the applicable minimum wage rate per hour, with total compensation reaching the full minimum after tips.

Maryland's Healthy Working Families Act requires employers with 15 or more employees to provide up to 40 hours of paid sick leave per year, accrued at one hour for every 30 hours worked. Employers with fewer than 15 employees must provide 40 hours of unpaid sick leave under the same accrual schedule. Both paid and unpaid leave may be used for the employee's own illness, a family member's illness, or absences related to domestic violence or sexual assault. Employers must provide written notice of sick leave rights at the time of hire. Read the full Maryland payroll compliance guide for Healthy Working Families Act recordkeeping rules, Time to Care Act registration steps, and county tax withholding procedures.

Final paycheck timing in Maryland requires payment on the next regular payday following the employee's last day of work, for both discharged and resigned employees. Maryland does not require same-day payment on discharge. New hire reporting must be submitted within 20 days of hire to the Maryland New Hire Registry. Required information includes the standard new hire data elements plus the employer's Maryland tax account number in addition to the federal EIN.

Maryland employers file the quarterly MW508 withholding return to reconcile income tax withheld, and a separate quarterly report for unemployment contributions. First-time Maryland payroll setups require registration with the Comptroller of Maryland for combined state and county income tax withholding and with the Department of Labor for both SUI and the Time to Care Act PFML account. Walk through the Maryland new employer registration guide with step-by-step instructions for all required accounts, including how to identify the correct county withholding table for each employee.