Selling a business in Maryland: what the state takes (2026)
Maryland’s top individual income tax rate is 6.5%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 6.5%
- Top Maryland income tax rate (2026)
- $2,125,000
- State tax on a $25M long-term gain
- 32.3%
- Combined federal and state rate on $25M
- 11 of 51
- Rank by total tax on $25M (1 = highest)
How Maryland taxes a business sale
- Income tax
- Top rate 6.5%: Over $1,000,000 Maryland taxable income (single); excludes county tax.
- Long-term capital gains
- Capital gains are taxed as ordinary income (6.5% over $1M single) plus a 2% additional state tax on all net capital gain once federal AGI exceeds $350,000, plus the county income tax.
- Capital-gains-specific taxes
- 2% additional tax on net capital gain for individuals with federal AGI over $350,000 (tax years after 2024; Comptroller Technical Bulletin 58). It is not levied on corporations, but it does reach gain passed through from PTEs and fiduciaries.
- Entity-level taxes
- The elective PTE tax rate for individual members is 8.75% for periods after 2024 (top state rate 6.5% plus the lowest county rate 2.25%). The 2% capital gains tax is not paid at the entity level.
- Local taxes
- All 23 counties and Baltimore City levy a local income tax on Maryland taxable income, including capital gains. The cap rose to 3.30% from 2026. Dorchester (from 2025) and Kent (from 2026) charge 3.30%, Allegany rises to 3.20% in 2026, and the lowest county rate is 2.25%.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Maryland tax | $850,000 | $2,125,000 | $4,250,000 |
| Total tax | $3,230,000 | $8,075,000 | $16,150,000 |
| Effective combined rate | 32.30% | 32.30% | 32.30% |
| Net proceeds after tax | $6,770,000 | $16,925,000 | $33,850,000 |
| Extra tax versus Texas | $850,000 | $2,125,000 | $4,250,000 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Maryland tax
- $2,125,000
- Taxable gain at 6.5%
- $1,625,000
- Maryland 2% tax on net capital gain
- $500,000
- Total tax
- $8,075,000
- Effective rate on the gain
- 32.30%
- Net proceeds after tax
- $16,925,000
Not included: Maryland county income tax (max 3.30%, e.g. Dorchester, Kent) residents pay up to 3.3% on top, about $825,000 on this gain.
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Delaware30.4% combined, $17.40M net
- Pennsylvania26.9% combined, $18.28M net
- Virginia29.5% combined, $17.61M net
- West Virginia28.4% combined, $17.91M net
- District of Columbia34.5% combined, $16.36M net
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Maryland figures are for tax year 2026. Maryland brackets are not indexed. The 6.25% and 6.5% brackets and the 2% capital gains tax apply to tax years after Dec 31, 2024 (Budget Reconciliation and Financing Act of 2025, Ch. 604), so they continue in 2026. County rates are 2026 figures per the Comptroller's Dec 22, 2025 tax alert. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Maryland Comptroller Technical Bulletin 58 (Dec 29, 2025): additional 2% tax on net capital gain
- 2Maryland Tax Alert (rev. Dec 22, 2025): changes to deductions and state/local income tax rates from the 2025 session
- 3Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Maryland,” 2026, https://laurent.capital/research/seller-tax-map/marylandLink (HTML)
<a href="https://laurent.capital/research/seller-tax-map/maryland">The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Maryland</a> (Laurent Capital)Planning a sale and weighing the tax cost?
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