The following updates have been made to Maryland's tax code for tax year 2025.
Subtractions, Additions, Deductions and Credits
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New High-Income Tax Bracket - Two new income brackets are now available
-6.25% for taxable income from $500,000 to $1,000,000 (Single filings) and $600,000 to $1,200,000 (Married Filing Joint)
-6.5% for taxable income that exceeds $1,000,000 (Single filers) and income exceeding $1,200,000 (Married filing Joint)
- Capital Gains Surcharge of 2% applied to net capital gains for households with a Federal AGI exceeding $350,000
- Standard Deduction Increase - If you do not itemize, you will now have an increase of $3,350 (single filers) and $6,700.
- Itemized Deduction - Taxpayers with a federal AGI higher than $200,000 ($100,000 for MFS), the itemized deductions they can claim will be reduced by 7.5% of the amount of income that is over this limit.
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Subtractions from Income - Two new subtractions to income and modifications to others.
- Maximum pension exclusion for qualifying retirement income is increased to $41,200 for tax year 2025. Please note this amount will be reduced by any Railroad Retirement and Social Security benefits received.
- Benefit payments resulting from the collapse of the Francis Scott Key Bridge.
- Tuition assistance provided under the Fallen Transportation Workers Scholarship Program. Eligibility restrictions apply.
- Volunteer personnel subtraction modification program: $7,000 for qualifying volunteers certified by a public safety organization.
- Payments to a surviving spouse or beneficiary of a law enforcement officer or firefighter, from a pension or required death benefit, when the death is a result of their employment.
- Eligible law enforcement officers can subtract up to $5,000 of earned income.
- Eligible income related to the redevelopment or sale of race courses in Maryland. Certain restrictions apply.
- Diaper donations, also including certain hygiene products and charitable monetary gifts to certain qualified charities, up to $1,000.
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New tax credits - Two updated tax credits for qualified individuals.
- Venison Donation (Deer meat donation) - Credit of $75 per donated deer, up to $300. Restrictions apply.
- Catalytic Revitalization Projects an Historic Revitalization Credits - Credits may be issued as a single credit at the completion of the project or per completion of phase. See 502CR instructions for more information.
Legislature
- Senate Bill 1188/House Bill 1526: This bill provides a subtraction benefit (noted above) for benefit payments resulting from individuals killed or injured as a result of the Francis Scott Key Bridge collapse. Bill also provides subtraction of tuition assistance provided through the Fallen Transportation Workers Scholarship Fund.
- House Bill 490: Extends income subtraction for donations to diaper banks and certain other charitable entities through tax year 2026.
- Budget Reconciliation and Financing Act of 2025