Maryland taxes capital gains at 5.75%. Combined with federal taxes, your effective rate on a home sale could reach 24.6%.
MD State Rate
5.75%
Top rate; local surcharge possible
Federal Rate
15%
Most common long-term bracket
Combined Effective
24.6%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Maryland is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Maryland don't qualify for the exclusion. You'll owe 5.75% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Maryland, homes sold in February sell for 6% more than those sold in October (-7%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Maryland and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 3.07% | $4,605 | Flat tax rate | |
| 5.12% | $7,680 | Top marginal rate | |
MarylandYou | 5.75% | $8,625 | Top rate; local surcharge possible |
| 5.75% | $8,625 | Top marginal rate | |
| 6.6% | $9,900 | Top marginal rate | |
| 10.75% | $16,125 | Top marginal rate |
Selling in Pennsylvania instead of Maryland would save $4,020 in state tax on a $150K gain.
Maryland taxes capital gains at rates up to 5.75%, plus local county income taxes that range from 2.25% to 3.2%. Combined, sellers can face 8-9% in state and local taxes.
The DC suburbs (Montgomery, Howard, Prince George's counties) drive the state's most expensive real estate market. Many sellers in these areas face significant gains above the federal exclusion.
Maryland does not offer a preferential capital gains rate. The county surcharge makes Maryland one of the more expensive states for capital gains when you include local taxes.
The Baltimore metro offers more affordable housing where gains are typically within the federal exclusion.
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