2025 Tax Year

Maryland Side Hustle Tax Calculator

Calculate your Maryland state tax (4.75%), federal tax, and self-employment tax on 1099 income.

MD4.75%

6.2 million residents

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2025 rates

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Last updated: January 2026 · Data from IRS Rev Proc 2024-40

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W-2 Income (from your day job)

Side Hustle Income *

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Maryland side hustlers face one of the more complex tax situations in the country. The Old Line State has progressive state income tax rates from 2% to 5.75%, but every Maryland county and Baltimore City levies additional local income taxes ranging from 2.25% to 3.20%.

Maryland Tax Guide

How Side Hustle Taxes Work in Maryland

Maryland has a layered tax system:

**Maryland state tax rates (2025):** - 2.00% to 4.75% on income up to $100,000 - 5.00% to 5.75% on higher incomes

**Local income taxes (mandatory):** - Montgomery, Howard, PG, Baltimore County/City: 3.20% - Anne Arundel County: 2.81% - Worcester County: 2.25% (lowest)

**Combined state + local rates:** - Most Maryland residents: 7.95% to 8.95% (4.75% + local)

Example

What Maryland Side Hustlers Owe

Let's say you're a single filer in Montgomery County with a $65,000 W-2 job and $18,000 in side hustle income from freelance consulting, with $3,000 in business expenses.

**Your estimated taxes on the side hustle:** - Net self-employment income: $15,000 - Federal SE tax (15.3% of 92.35%): ~$2,122 - Federal income tax on side income: ~$3,300 (22% bracket) - Maryland state tax (4.75%): ~$713 - Montgomery County tax (3.20%): ~$480 - **Total additional tax: ~$6,615**

Important Dates

Maryland Tax Deadlines 2025

Maryland estimated tax deadlines: - **Q1**: April 15, 2025 - **Q2**: June 16, 2025 - **Q3**: September 15, 2025 - **Q4**: January 15, 2026

Use Form 502D for Maryland estimated tax payments. County taxes are included.

Save Money

Common Deductions for Maryland Freelancers

Maryland freelancers should maximize deductions given the high combined state and local tax burden. **Home office expenses**: Claim dedicated business space using simplified ($5/sq ft) or actual expense method—especially valuable in high-cost areas like Montgomery County and the DC suburbs. **Business vehicle mileage**: 67 cents/mile for 2025; essential for those serving clients across the Baltimore-Washington corridor. **Equipment and software**: Computers, cameras, tools, and business software; Maryland follows federal Section 179 treatment. **Professional services**: Accounting, legal, and tax preparation fees are fully deductible. **Health insurance premiums**: Self-employed individuals can deduct 100% of health insurance costs. **Retirement contributions**: SEP-IRAs and Solo 401(k)s reduce your federal AGI, which Maryland uses as its starting point—saving you at federal rate plus 7.95% to 8.95% combined state and local taxes. **Marketing expenses**: Website costs, business cards, and promotional materials are deductible. All Schedule C deductions reduce both state and county tax liability. In counties like Montgomery, Howard, or Baltimore, every dollar deducted saves you nearly 9% in combined state and local taxes plus your federal rate.

Common Questions

Maryland Side Hustle Tax FAQ

Does Maryland have local income taxes?

Yes, every Maryland county and Baltimore City levies local income taxes ranging from 2.25% to 3.20% in addition to state taxes.

What is the total tax rate for Maryland side hustlers?

Most Maryland side hustlers pay a combined state + local rate of 7.95% to 8.95% on their self-employment income.

Do I file county taxes separately?

No, Maryland local taxes are calculated and paid with your state return (Form 502).

Do I need to register my side hustle in Maryland?

Most businesses need to register with SDAT (State Department of Assessments and Taxation). If using a trade name, file a Trade Name Application. LLCs must register with SDAT. Sellers may need a Sales and Use Tax License from the Comptroller's office.

Which Maryland county has the lowest local tax rate?

Worcester County has the lowest local rate at 2.25%. Most populous counties (Montgomery, Howard, Prince George's, Baltimore County) have rates of 3.20%. The county rate is based on where you live on December 31st.

How do retirement contributions affect Maryland taxes?

SEP-IRA and Solo 401(k) contributions reduce your federal AGI, which Maryland uses as its starting point. This reduces both state and local taxes—potentially saving you 8-9% in combined state and county taxes on every dollar contributed.

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