MD
Maryland Small Business Tax Guide
The sales, income and corporate tax points a Maryland small business deals with, from the Comptroller and the Maryland Code, each with its date. General information, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Maryland before making filing or planning decisions.
Tax landscape for small businesses
Maryland sales tax starts with one rate. In the words of the Comptroller of Maryland's sales and use tax article (Maryland, updated September 18, 2026), "Effective January 3, 2008, the Maryland sales and use tax rate is 6 percent". Selling at fairs or craft shows without a permanent license needs a temporary one; the article says "If you participate in three or more events each year, please register for a permanent sales and use tax license."
Income tax has two layers in Maryland: state and local. The Comptroller's income tax rates article (Maryland, updated February 3, 2026) gives the state brackets, with this warning: "The chart shown below outlining the 2025 Maryland income tax rates and brackets is for illustrative purposes only." On the local layer, it says: "Local officials set the rates, which range between 2.25% and 3.30% for the current tax year." and "Your local income tax is based on where you live - not where you work, or where your tax preparer is located." For corporations, Maryland Code, Tax-General §10-105(b) (Maryland, checked October 31, 2026), says: "The State income tax rate for a corporation is 8.25% of Maryland taxable income."
Worked example (sample figures, not tax advice): a Maryland shop sells $2,400.00 worth of taxable goods. Applying the Comptroller's 6 percent (Maryland, updated September 18, 2026), $2,400.00 × 6% = $144.00 of sales tax, so the customer owes $2,544.00. The Comptroller's article publishes a cent-by-cent bracket for small amounts, so check it for low-priced items.
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Sales and use tax | "6 percent" (the Comptroller of Maryland's sales and use tax article (Maryland, updated September 18, 2026)) | In force since "Effective January 3, 2008". Event sellers without a permanent license use a temporary one. On exemptions, the Comptroller's tax exemptions article (Maryland, checked November 1, 2026) says it "issues sales and use tax exemption certificates to certain qualifying organizations", and: "An exemption certificate should not be confused with a resale certificate, which is used by manufacturers, wholesalers and retailers to purchase, free of tax, the items they sell." A seller making an exempt sale "must record the organization's name and certificate number on the record of sale." |
| State income tax | Brackets up to "$58,385.00 plus 6.5% of the excess over $1,000,000" in the 2025 chart (the Comptroller's income tax rates article (Maryland, updated February 3, 2026)) | The Comptroller calls its chart illustrative and points filers to the tax booklet tables. |
| Local income tax | "range between 2.25% and 3.30%" (the Comptroller's income tax rates article (Maryland, updated February 3, 2026)) | Set by local officials and based on where you live. The article doesn't say which tax year "the current tax year" means; its own tables list local rates separately for 2025 and 2026. |
| Corporate income tax | "8.25%" (Maryland Code, Tax-General §10-105(b), checked October 31, 2026) | Applied to Maryland taxable income. |
Filing requirements
This list isn't a complete checklist for your business.
Sales and use tax license
The Comptroller of Maryland's sales and use tax article (Maryland, updated September 18, 2026) says: "If you participate in three or more events each year, please register for a permanent sales and use tax license." For one-off events it says: "Individuals who do not have a permanent sales and use tax license are required to obtain a temporary license and collect a 6 percent or 9 percent sales and use tax for sales at various events, such as craft shows and fairs." For sellers outside Maryland, the Comptroller's out-of-state vendors article (Maryland, updated November 25, 2019) says such a vendor "must register with the Maryland Comptroller, collect and pay sales and use tax, and file Maryland sales and use tax returns". That includes a seller that, "during the previous calendar year or the current calendar year", meets either test: "The person's gross revenue from the sale of tangible personal property or taxable services delivered in the State exceeds $100,000" or "The person sold tangible personal property or taxable services for delivery into the State in 200 or more separate transactions."
Local income tax by residence
The Comptroller's income tax rates article (Maryland, updated February 3, 2026) says: "Your local income tax is based on where you live - not where you work, or where your tax preparer is located."
Federal estimated tax
The IRS's estimated taxes page (IRS, In the US (federal), last reviewed or updated September 25, 2026) says: "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Self-employment tax deduction (IRS, In the US (federal), last reviewed or updated October 30, 2026): "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income."
- Health insurance for the self-employed (same IRS page): "Under Section 2042 of the Small Business Jobs Act, a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance."
- Maryland's treatment of these federal deductions isn't covered here; confirm it with the Comptroller or a tax professional.
Practical tips
- Put the sales tax on its own invoice line so the customer can see the charge.
- Ask the Comptroller or a tax professional which local income tax rate applies to you.
- Before you sell at events, check which sales and use tax license the Comptroller requires.
- Hand your accountant clean numbers. Billed's financial reporting page says: "All reports in Billed can be exported for use with your accountant, bookkeeper, or tax software."
Frequently asked questions
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At a glance
| Tax | Source wording |
|---|---|
| Sales and use tax | "6 percent" (Comptroller of Maryland, updated September 18, 2026) |
| Local income tax | "range between 2.25% and 3.30%" (Comptroller of Maryland, updated February 3, 2026) |
| Corporate income tax | "8.25%" (Maryland Code, Tax-General §10-105(b), checked October 31, 2026) |
| Federal self-employment tax | "The self-employment tax rate is 15.3%." (IRS, In the US (federal), last reviewed or updated October 30, 2026) |
When this isn't for you
This guide sticks to Maryland's general sales, income and corporate taxes for small businesses. Alcohol, admissions and other special taxes, payroll details and multi-state questions are left out, and it isn't tax advice; the Comptroller of Maryland or a tax professional can answer for your business.