Maryland’s 2% surtax on capital gains
Maryland has two layers. Gains are first taxed as ordinary income in state brackets that reach 6.5% above $1 million, and every county adds its own local income tax on top. Then, starting with 2025, Maryland added a 2% surtax on net capital gain when federal AGI is more than $350,000.
The surtax applies to the whole year’s covered net gain once the AGI test is met, not just the part above $350,000. Gains from a primary residence sale under $1.5 million and from retirement accounts are among the exclusions explained in Technical Bulletin 58. At AGI of $125,000 the surtax does not apply, and a single filer going from $60,000 to $110,000 of Maryland taxable income pays $2,400 more in state tax before the county layer.
Maryland state bands and covered-gain surtax
Maryland’s 2026 PV worksheet has a ten-band state schedule reaching 6.5%. It also adds a capital-gain surtax when federal AGI is strictly more than $350,000. That surtax is 2% of the complete covered annual net capital gain after statutory exclusions, rather than 2% only of AGI or gain above the trigger. At exactly $350,000 federal AGI, this trigger is not met.
Prepare Maryland taxable income and federal AGI as separate measures. Technical Bulletin 58 explains transaction exclusions that affect the covered gain amount; the approved figure must include the entire annual scenario and state basis / netting, not only the sale shown in the federal worksheet. For example, a $20,000 covered annual gain at federal AGI $350,001 gives a $400 surtax before permitted credit effects.
Supply both annual taxable bases, federal AGI amounts, covered gain totals and complete legally usable credits. County income tax can have its own status-dependent and graduated calculation, so a single guessed local percentage is not included. Use entered final liabilities for local tax, source allocation and unsupported complete-return effects. The state estimate follows current published schedule bases, including $32,322.50 at the joint $600,000 boundary.
Maryland preparation checklist
- Federal AGI trigger and complete annual covered net capital gain
- Strict federal AGI above $350,000
- County schedule and transaction exclusions