If you live in another state, you generally have to pay Maryland income tax on any income you earn from Maryland sources, even though you don’t live there. The main exception is reciprocity: if you’re a resident of the District of Columbia, Pennsylvania, Virginia, or West Virginia, wages you earn in Maryland are taxed only by your home state. Everything else from a Maryland source — rental income, business profits, gambling winnings, gains on Maryland real estate — is still fair game for the Comptroller.
What Maryland Can Tax When You Live Elsewhere
As a non-resident, Maryland taxes only the income you can trace to activities or property inside the state. The calculation starts with your federal adjusted gross income and subtracts what you earned outside Maryland.1Legal Information Institute. Maryland Code of Regulations 03.04.02.06 – Maryland Adjusted Gross Income of a Nonresident Individual
The categories that most often pull an out-of-state person into a Maryland filing:
- Wages and salary for work you physically perform in Maryland. If you spend three days a week at a Baltimore job site and two days working from home in Delaware, only the Baltimore days are Maryland source income.
- Profits from a business, trade, or profession you conduct inside the state, or the Maryland-attributable share of a multi-state business.
- Rent from real property or tangible personal property located in Maryland.
- Gambling winnings from Maryland casinos, racetracks, or the lottery.
- Gains from selling Maryland real estate.
One boundary worth naming: if you keep a place to live in Maryland and are physically present in the state for 183 days or more, the Comptroller treats you as a statutory resident and taxes all your income, not just Maryland-source income. Any part of a calendar day counts as a full day for the 183-day test.2Maryland Comptroller of the Treasury. Administrative Release No. 37 – Maryland Income Tax Living out of state on paper doesn’t help if you spend most of the year in Maryland with a place to sleep there.
Reciprocity for D.C., Pennsylvania, Virginia, and West Virginia Residents
Maryland has reciprocity agreements with the District of Columbia, Pennsylvania, Virginia, and West Virginia. Residents of those jurisdictions who earn wages or salary in Maryland pay income tax only to their home state.3Maryland Comptroller of the Treasury. Administrative Release No. 3 – Nonresident Credits, Reciprocal Income Tax Agreements
To make it work, file Form MW507 with your Maryland employer so they withhold for your home state. D.C., Virginia, and West Virginia residents claim the exemption on Line 4; Pennsylvania residents use Line 5. Both lines require you to certify that you don’t keep a place of abode in Maryland.4Maryland Comptroller of the Treasury. Form MW507 – Employee’s Maryland Withholding Exemption Certificate
If wages are your only Maryland income, reciprocity means you don’t have to file a Maryland return at all.3Maryland Comptroller of the Treasury. Administrative Release No. 3 – Nonresident Credits, Reciprocal Income Tax Agreements
Reciprocity covers wages and salary. Nothing else. Live in Virginia and rent out a house in Maryland? That rent is still taxable by Maryland. Run a business in Maryland from your Pennsylvania home? The Maryland-source share is still taxable. This is where commuters often go wrong, assuming reciprocity is a blanket shield.
The 2.25% Special Non-Resident Tax
Maryland residents pay a local income tax to their county on top of the state rate. Non-residents don’t live in a Maryland county, so the state charges a flat 2.25% special non-resident tax in place of the local tax. For 2026, the total non-resident withholding rate is 7.0%, which includes the state tax plus the 2.25% surcharge.5Maryland Comptroller. 2026 Maryland State and Local Income Tax Withholding Information
The surcharge appears as a separate line on Form 505. Many non-residents expect to pay only the state rate and are surprised at filing time. There’s no way to avoid it if you have taxable Maryland source income.
Selling Maryland Real Estate From Out of State
Gains from selling Maryland real property are taxable Maryland source income. When a non-resident sells, the buyer or settlement agent has to withhold a percentage of the sale price and send it to the Comptroller as a prepayment. For individual sellers, the withholding rate was 8% through 2024.6Comptroller of Maryland. Application for Certificate of Full or Partial Exemption – MW506AE
If that withholding would exceed the actual tax on your gain, apply for a full or partial exemption on Form MW506AE at least 21 days before closing. You’ll document the purchase price, capital improvements, and settlement costs. After the sale, file a Maryland non-resident return to reconcile the withholding against your actual tax and claim any refund.
Retirement Income Is Generally Off Limits
If you worked in Maryland, built up a pension or retirement account, and then moved away, federal law generally stops Maryland from taxing that income. Under 4 U.S.C. § 114, states can’t tax retirement income received by non-residents, regardless of where it was earned. That covers pensions, 401(k) distributions, IRA withdrawals, and similar retirement plan payments.
The federal shield only works if you’re truly a non-resident. If Maryland still counts you as a domiciliary or statutory resident, the protection doesn’t apply. Make sure your domicile has actually moved before treating a Maryland pension as exempt.
When You Actually Have to File
Non-residents with Maryland source income file Form 505, the Nonresident Income Tax Return.7Maryland Comptroller of the Treasury. Maryland Form 505 – 2025 Nonresident Income Tax Return You don’t have to file if any of the following are true:
- Your Maryland gross income is below the minimum filing threshold for your filing status. For 2024, that was $14,600 for single filers and $29,200 for joint filers, and the figures adjust annually.
- You had no income from Maryland sources.
- You live in D.C., Virginia, or West Virginia and your only Maryland income was wages.
- You live in a Pennsylvania locality that doesn’t tax Maryland residents, and your only Maryland income was wages.
Maryland returns are due April 15. The Comptroller encourages electronic filing, and the taxpayer services line at 1-800-638-2937 is open through the filing season.9Comptroller of Maryland. Comptroller Announces Start of 2026 Tax Season in Maryland
Penalties If You Skip a Filing You Owed
Owe Maryland tax and miss the deadline, and penalties plus interest run from the original due date. The late payment penalty can reach 25% of the unpaid tax. Interest is charged on top of the penalty at a rate the Comptroller sets each year; for 2025 the rate was 11.4825%, and it resets annually.10Maryland Comptroller. Tax Guidance – Penalty and Interest Charges
The people most exposed are the ones who never realized they had a Maryland obligation in the first place. If you rent out Maryland property or sell Maryland real estate, the state expects a return even if you’ve never set foot in it as a resident. Not knowing about the filing rule doesn’t get the penalty waived.