Yes. Maryland treats bonuses as taxable wages and requires Maryland income tax withholding on bonus and other supplemental wage payments. Maryland uses a combination of state and local income taxes, which means withholding may vary depending on income level, filing status, and the employee’s county or local jurisdiction.
When a bonus is paid, Maryland withholding may be handled differently depending on how the bonus is processed. For supplemental wages such as bonuses, Maryland generally applies withholding using its percentage method tables, which incorporate both state and local tax rates. You can use the calculator above, powered by Beyond, to estimate Maryland withholding and take-home pay for bonus payments. The calculator uses a 2026 estimate based on Maryland withholding guidance and current payroll assumptions.
How to Calculate Bonus Tax in Maryland
Supplemental wages—including bonuses, commissions, overtime pay, back pay, and certain additional wage payments—are generally treated as wages for withholding purposes.
For Maryland state and local withholding:
– Paid separately from regular wages: withholding is typically estimated using Maryland’s percentage method tables, which apply both state and local tax rates based on the employee’s jurisdiction
– Paid together with regular wages: withholding may be calculated on the total combined wages for the payroll period using Maryland withholding tables
– Actual withholding may vary depending on payroll setup, employee elections, and Form MW507 details
For federal withholding:
– 22% applies to most supplemental wages
– 37% applies to supplemental wages above $1 million in a calendar year
Key Information on Maryland Bonuses
How Are Bonuses Paid in Maryland?
Employers may issue bonuses through:
– Check
– Direct deposit
– Pay card
How Do Bonuses Work?
Bonuses are treated as taxable compensation. They are generally subject to:
– Federal income tax withholding
– Maryland state income tax withholding
– Maryland local (county) income tax withholding
– Social Security tax
– Medicare tax
They are typically reported on the employee’s Form W-2 at year-end.
What Is the Maryland Bonus Tax Rate?
Maryland does not use a single flat tax rate for bonuses. Instead, withholding is based on:
– A state income tax rate (generally up to 5.75%)
– A local county tax rate, which typically ranges from about 2.25% to 3.30% depending on the jurisdiction
Because both components apply, the effective withholding rate for bonuses may vary significantly between employees.
Are Bonuses Taxed Differently Than Standard Pay?
At the Maryland level, bonuses are treated as taxable wages, but withholding may be calculated differently depending on how the bonus is processed.
For supplemental payments, Maryland typically uses its percentage method tables that combine state and local taxes, rather than applying a single flat supplemental rate.
At the federal level, bonuses may be taxed using the supplemental wage method, typically 22% when paid separately, subject to the higher $1 million rule.
How Much Tax Is Taken Out of a Bonus?
For most bonus payments in Maryland, estimated withholding may include:
– Maryland state income tax withholding
– Maryland local (county) income tax withholding
– 22% federal supplemental withholding in most cases
– FICA taxes, including Social Security and Medicare
Because Maryland withholding depends on the employee’s county, income level, and payroll setup, the exact amount taken from a bonus may vary significantly from one employee to another.
Important
This calculator is provided for informational and estimation purposes only. Actual payroll tax withholdings may vary based on an employee’s tax elections, Form MW507 details, payroll setup, and local tax jurisdiction. Employers should consult a qualified tax, legal, or payroll professional for official calculations.
If you need help with payroll processing, withholding setup, or tax compliance in Maryland, the Beyond team is available to help.
Estimate only — not legal or tax advice. Need help managing Maryland payroll more confidently? Contact Beyond HCM for support.
