Maryland vs Virginia: The DC Beltway Tax Comparison (2026)

Side-By-Side: Maryland (Howard County) vs Virginia

Single filer, standard deduction, all wage income. MD line uses Howard County's 3.20% rate (the high end). MD lower-tax counties (e.g. Cecil at 2.25%) reduce the differential.

Maryland effective rates use 2026 state brackets and Howard County 3.20% on Maryland taxable income (state and county base are aligned). Virginia effective rates use 2026 brackets with the standard $4,500 single deduction. Numbers rounded; verify against your specific filing.

The Maryland County Map

All 23 Maryland counties plus Baltimore City levy a county income tax. The 2026 rates from the Maryland Comptroller's published table cluster around two bands: high-income suburban counties (Montgomery 3.20%, Howard 3.20%, Prince George's 3.20%, Queen Anne's 3.20%, Anne Arundel 2.81%) and lower-tax rural counties (Worcester 2.25%, Talbot 2.40%, Cecil 2.25%, Garrett 2.65%). Baltimore City is at 3.20%.

For a Maryland resident, the choice of county can move the combined state-plus-county effective rate by approximately 100 basis points. A $150,000 single filer pays about 8.05% effective in Howard County and 6.95% effective in Cecil County, a difference of around $1,650 a year on the same income. Combined with property-tax differences (Garrett County effective property tax around 0.65%, Howard County around 1.05%), the inter-county tax variation within Maryland alone is meaningful.

For non-residents working in Maryland, a flat 2.25% non-resident rate applies in lieu of the county tax, irrespective of the actual county of work. This rate is collected via Form 505. Per the Maryland Resident Income Tax Booklet, the county tax is collected together with the state tax on Form 502.

The Virginia Compressed-Bracket Quirk

Virginia's bracket structure is unusual. The 2% bracket runs from $0 to $3,000 of taxable income. The 3% bracket runs from $3,000 to $5,000. The 5% bracket runs from $5,000 to $17,000. Above $17,000 the rate jumps to 5.75% and stays there. The brackets are not adjusted for inflation and are not doubled for joint filers, which means the 5.75% rate is effectively the only rate that matters for filers above poverty-line income.

Per the Virginia Department of Taxation rates page, the brackets have been unchanged in real terms since 1990, when the top rate threshold was set at $17,000. Successive General Assembly proposals to raise the threshold have not passed.

The practical effect is that Virginia behaves almost like a flat-tax state at most income levels. A $40,000 filer pays 5.75% on the dollars above $17,000 and graduated rates below, producing an effective rate around 4.7%. A $100,000 filer pays 5.75% on the dollars above $17,000, producing an effective rate around 5.3%. A $400,000 filer pays an effective rate around 5.6%. The brackets do not make Virginia progressive in the way California or Hawaii or Oregon are progressive.

Reciprocity: The DMV Cross-Border Worker

Maryland has reciprocity agreements with Virginia, Pennsylvania, West Virginia and the District of Columbia. A Maryland resident working in Arlington or Alexandria files only the Maryland resident return on the Virginia wages. Form MW507 provided to the Virginia employer stops Virginia withholding. The Virginia employer collects Maryland state and county tax via Maryland reciprocity withholding instead. Per the Maryland Comptroller reciprocity page, the agreements eliminate the need for the credit-for-other-state mechanism on cross-border wage income.

Virginia has reciprocity with the District of Columbia, Kentucky, Maryland, Pennsylvania and West Virginia. A Virginia resident working in Bethesda files only the Virginia return on the Maryland wages. Form VA-4 provided to the Maryland employer stops Maryland withholding. The Maryland employer withholds Virginia tax via reciprocity instead.

Reciprocity does not extend to non-wage income. Maryland-source rental income earned by a Virginia resident remains taxable to Maryland and is reported on Form 505 (Maryland non-resident return). Self-employment income sourced to Maryland by a Virginia resident is similarly outside the reciprocity scope. Reciprocity also does not cover the District of Columbia for cross-border purposes the same way it covers state-to-state, because DC's tax law treats non-resident wage income differently per the DC Office of Tax and Revenue.

Retirement Income: Virginia's Edge for Federal Retirees

Both states exempt Social Security benefits in full. Beyond that, the rules diverge.

Maryland provides a pension exclusion of approximately $39,500 for filers age 65 or older in 2026 (indexed annually), and an additional military retirement exemption of up to $20,000 for veterans age 55+. The state and county tax then apply at full rates to retirement income exceeding the exclusion.

Virginia offers an age-deduction of up to $12,000 per filer age 65+, with an income-based phase-out (reduced $1 for every $1 of adjusted gross income above $50,000 single or $75,000 joint). Military retirement pay is fully exempt for taxpayers age 55+ up to $40,000 in 2026 under the HB 1128 phase-in begun in 2022. Federal civilian pensions receive no special exemption beyond the age-deduction.

For the typical DMV-area federal retiree drawing a $60,000 FERS or CSRS pension at age 67, Maryland (Montgomery County) taxes the pension at combined state plus county rates around 8% on the dollars above the $39,500 exclusion, producing roughly $1,640 in MD tax on the $20,500 above-exclusion portion. Virginia taxes the same pension with the $12,000 age-deduction (potentially phased out for higher earners) producing roughly $2,750 to $3,400 depending on phase-out. For a moderate-income federal retiree below the Virginia phase-out threshold, Maryland is meaningfully cheaper. For a higher-income federal retiree above the Virginia phase-out, Virginia is roughly comparable.

Property Tax: Virginia's Other Edge

Maryland's effective property-tax rate runs around 1.05% statewide per the Tax Foundation summary, with county-level variation from approximately 0.6% (Garrett, Worcester) to 1.4% (Charles, Howard with municipal add-ons). Virginia's effective rate is around 0.82% statewide, with city-level variation from 0.55% (Northern Virginia outer suburbs) to 1.05% (Manassas, parts of Prince William).

For a $600,000 home, the typical annual property tax bill is approximately $4,900 to $5,800 in Fairfax County, Virginia, and approximately $5,800 to $7,100 in Montgomery County, Maryland. Over 10 years, the difference is roughly $10,000 to $15,000 in cumulative property tax favouring Virginia at the same home value.

For a high-value home (e.g. $1.5 million in McLean, Virginia, vs $1.5 million in Bethesda, Maryland), the annual property tax differential expands to approximately $4,000 to $6,000 a year favouring Virginia. Combined with the income-tax differential of approximately $5,000 to $8,000 a year for a high earner, the total annual tax favouring Virginia residency in the DMV can reach $9,000 to $14,000 for a comparable household, before sales-tax and excise differences.

Persona Verdicts

• $100K single tech worker, Bethesda vs Arlington: Bethesda (MoCo, 3.20% county) total state+county: roughly $7,800. Arlington (no county): roughly $5,143. Virginia is cheaper by about $2,650 a year on income tax alone. Property tax adds another $1,000-$1,500 in favour of Virginia at comparable home value.
• $250K joint federal contractor couple, Howard County vs Loudoun County: Howard County: roughly $21,200 in combined state+county tax. Loudoun County: roughly $13,800 in state tax. Virginia is cheaper by about $7,400 a year on income tax alone.
• $60K FERS federal retiree at 67, Silver Spring vs Falls Church: Silver Spring (MoCo): roughly $1,640 on the above-exclusion portion of the pension. Falls Church: roughly $2,750-$3,400 depending on age-deduction phase-out. Maryland is cheaper for moderate-income retirees who can use the full pension exclusion.
• $200K military retiree at 55, Annapolis vs Virginia Beach: Annapolis: $20K of military pension exempt under MD veteran exemption, balance taxed at combined ~7.5%. Virginia Beach: up to $40K of military pension exempt under HB 1128, balance taxed at flat-ish 5.6%. Virginia is structurally more generous on military pensions for under-65 retirees and roughly equivalent at older ages.