Maryland Bonus Tax Calculator:
Employers' Trusted Tool for Accurate Bonus Payments
The bonus tax calculator from Beyond, located at the top of this page, assists employers in quickly estimating the take-home pay (or net pay) employees should receive for bonuses.
Does Maryland Tax Bonuses?
Yes. In Maryland, bonuses are taxed the same as regular wages. Employers must also apply the local tax rates based on the employee’s county of residence. Commissions and other supplemental wages are treated exactly like regular income for withholding purposes.
How to Calculate Bonus Tax in Maryland
The method involves adding the bonus to the employee’s regular wages and then using Maryland’s comprehensive tax tables for both state and local rates (this is how the beyond calculator above determines the final figures). Maryland also permits the use of a supplemental rate when calculating this.
What is the Bonus Tax Rate in Maryland?
Maryland utilizes a progressive state income tax rate structure, ranging from 2% to 5.75%. Additionally, local rates must be applied, which range from 2.25% to 3.2%. The crucial takeaway is that the combined state and local rates may exceed 8.95%.
How Can Employers in Maryland Pay Bonuses to Employees?
Bonuses can be issued through the following common payment methods:
– Check
– Direct deposit
– Pay card
How Do Bonuses Work in Maryland?
Employers are required to withhold both state and local taxes based on the employee’s county of residence and must properly report bonuses as wages on Form W-2.
Why Are Bonuses Taxed Differently Than Standard Pay?
They are not taxed differently—all compensation is subject to the same withholding structure, unless the payment is made to nonresidents who are subject to specific rules.
How Much Tax is Taken Out of a Bonus in Maryland?
Here is the breakdown of the potential withholding:
– Federal: 22%
– State + Local: up to 8.95%
– Combined Total: as much as 30.95%