Capital Gains Tax in Maryland (2026)
Maryland taxes your gain three ways: state rates of 2%–6.5%, a new 2% surtax on gains over $350,000 of federal AGI, and a county income tax of 2.25%–3.30% that varies by where you live. Pick your county below to fold all three into the federal number.
Reviewed & updated · 2026 tax-year figures · Federal + Maryland (state + county + surtax)
Maryland taxes capital gains as ordinary income — and 2026 added a new layer. The state rate runs 2% to 6.5% (§10-105); a brand-new 2% surtax hits capital gains once federal AGI tops $350,000; and every resident also owes a county income tax of 2.25%–3.30% (§10-106) on the gain. All of it stacks on the federal capital gains tax (0/15/20% under IRC §1(h)) and the 3.8% NIIT. A top-bracket Marylander in a 3.30% county can face a combined rate near 35.6% on a long-term gain.
Net proceeds $174,800$26,200
Show our work federal + MD, step by step
Estimates only, for the 2026 tax year. Not tax advice. Maryland state brackets are fixed by statute; the 2026 standard deduction ($3,350 single / $6,700 joint), the county rates (2.25%–3.30%), and the 2% surtax over $350,000 AGI are the current enacted figures, owner-verifiable against the Comptroller of Maryland. County rates are the Comptroller’s official 2026 amounts.
How does Maryland tax capital gains?
Maryland gives capital gains no rate break at the state level — and in 2026 it made them more expensive. Under Md. Code Tax-General §10-105, a gain is ordinary income taxed across eight brackets from 2% up to 5.75%, and the 2025 Budget Reconciliation and Financing Act added two new top brackets — 6.25% over $500,000 and 6.5% over $1,000,000 (single). There is no preferential long-term rate and no short/long distinction at the state level.
Two more layers make Maryland distinctive. First, the same 2025 law created a 2% surtax specifically on capital gains for anyone whose federal AGI exceeds $350,000 — the only tax of its kind aimed squarely at investment gains (a primary home sold under $1.5M, retirement accounts, and §179 business property are exempt). Second, every Maryland resident owes a county income tax of 2.25% (Worcester) to 3.30% (Dorchester and Kent) under §10-106, and it applies to the gain too. The calculator below folds all three Maryland layers together once you choose your county.
How does Maryland stack on top of federal?
The two systems run in parallel and the amounts are added — Maryland does not replace or absorb the federal tax. For a long-term gain, you owe:
- Federal: 0%, 15%, or 20% depending on where the gain stacks on your taxable income, under IRC §1(h);
- Federal NIIT: an extra 3.8% on net investment income once MAGI passes $200,000 (single) / $250,000 (joint), under IRC §1411; and
- Maryland: the state rate (2%–6.5%), plus your county rate (2.25%–3.30%), plus a 2% surtax if federal AGI tops $350,000 — all on the full gain under §10-105 and §10-106.
Add those together and a top-bracket Marylander in a 3.30% county, tripping the surtax, can pay roughly 20% + 3.8% + 6.5% + 3.30% + 2% ≈ 35.6% on a long-term gain. A short-term gain is worse, because the federal side jumps to ordinary rates (up to 37%) instead of 20%. The calculator above computes every layer separately and shows the exact bands.
What are the 2026 Maryland income-tax brackets?
These are the state brackets Maryland applies to your gain, shown for a single filer (married-filing-jointly widens the top thresholds). Your county rate is added on top — pick it in the calculator. Owner-verifiable against the Comptroller of Maryland.
| Maryland taxable income (single, 2026) | State rate |
|---|---|
| $0 – $1,000 | 2% |
| $1,000 – $2,000 | 3% |
| $2,000 – $3,000 | 4% |
| $3,000 – $100,000 | 4.75% |
| $100,000 – $125,000 | 5% |
| $125,000 – $150,000 | 5.25% |
| $150,000 – $250,000 | 5.5% |
| $250,000 – $500,000 | 5.75% |
| $500,000 – $1,000,000 | 6.25% (2025 Budget Act) |
| Over $1,000,000 | 6.5% (2025 Budget Act) |
How this calculator works & where the numbers come from
No black box. The federal side uses the same unit-tested engine as our main calculator: net gain = proceeds − basis; classify by holding period; for long-term gains, subtract the standard deduction and stack the gain across the 0/15/20% bands per IRC §1(h); add 3.8% NIIT where modified AGI crosses the §1411 threshold; short-term gains are computed as the true marginal difference in ordinary tax. The Maryland side takes the same taxable gain (after any §121 exclusion), subtracts the Maryland standard deduction ($3,350 single / $6,700 joint), and stacks the gain across the state brackets (2%-6.5%) under §10-105. It then adds your county tax — a flat rate for 22 counties, or a graduated stack for Anne Arundel and Frederick (§10-106) — and, if federal AGI tops $350,000, a 2% capital-gains surtax. The three Maryland layers plus federal are summed.
CHECK
Primary sources (linked, not just named)
- Md. Code Tax-General §10-105 — state rates
- Md. Code Tax-General §10-106 — county income tax
- Comptroller of Maryland — state & local rates
- 26 U.S.C. §1(h) — federal capital gains rates
- 26 U.S.C. §1411 — 3.8% NIIT
- 26 U.S.C. §121 — home-sale exclusion
- IRS Topic No. 409 — Capital Gains and Losses
- IRS Publication 550 — Investment Income
Maryland capital gains tax, answered
Does Maryland have a separate capital gains tax rate?
No preferential rate — and now an extra surtax. Maryland taxes gains as ordinary income at 2%–6.5% (§10-105). Since 2025 it adds a 2% surtax on capital gains once federal AGI tops $350,000, and every resident also pays a 2.25%–3.30% county tax on the gain. There is no long-term discount at the state level.
How much is capital gains tax in Maryland for 2026?
Add the state rate (2%–6.5%), your county rate (2.25%–3.30%), and — over $350k AGI — the 2% surtax, then the federal tax. Federally a long-term gain is taxed at 0/15/20% (IRC §1(h)) plus 3.8% NIIT. A top earner in a 3.30% county tripping the surtax can pay near 20% + 3.8% + 6.5% + 3.30% + 2% ≈ 35.6% combined. Pick your county in the calculator for the exact figure.
How does Maryland capital gains tax stack on top of federal?
They are computed separately and summed. The federal side taxes long-term gains at 0/15/20% and adds 3.8% NIIT. Maryland adds three layers: state tax (2%–6.5%), county tax (2.25%–3.30%), and the 2% surtax over $350k AGI. Your total is federal + NIIT + Maryland state + county + surtax.
What is Maryland's new 2% capital gains surtax?
A 2% tax on net capital gains for taxpayers with federal AGI over $350,000, enacted in the 2025 Budget Reconciliation and Financing Act and effective for tax years after 2024. It is on top of the regular state and county tax. Gains from a primary residence sold for under $1.5 million, from retirement accounts, and from §179 business property are exempt. The calculator applies it automatically once your income plus gain crosses $350,000 (and turns it off for an exempt primary-home sale).
Does the 3.8% federal NIIT apply to Marylanders?
Yes — the NIIT is federal and applies in every state. Once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), the 3.8% surtax under IRC §1411 hits the lesser of your net investment income or the amount over the threshold. It is separate from — and in addition to — Maryland's own 2% state capital-gains surtax, so a high earner can owe both.
Does Maryland conform to the $250k/$500k home-sale exclusion?
Yes. Maryland follows the IRC §121 exclusion of up to $250,000 ($500,000 joint) on a primary residence, so only gain above the exclusion is taxed. On top of that, a primary residence sold for under $1.5 million is exempt from the new 2% surtax. Remaining gain is still subject to state and county tax. See our home-sale hub.
Compare Maryland with other state hubs
With its new 6.5% top rate, 2% capital-gains surtax, and a county tax on top, Maryland is now one of the heaviest states for a large investment gain — rivaling California (13.3%), Minnesota (9.85%) and Oregon (9.9%) once county tax and the surtax are counted. It is far above flat-tax Virginia (5.75%) and Pennsylvania (3.07%), and worlds apart from no-income-tax Texas. Every state page combines the same unit-tested federal engine with that state’s own rules. The main Capital Gains Tax Calculator lets you fold any state’s rate into your federal receipt.