Property Management Taxes In Maryland

This guide covers the taxes that actually apply to a property management company operating in Maryland, and to the rental income it handles on behalf of owners. Every figure below is tied to the statute, agency rule, or published guidance that sets it, so you can confirm a rate or deadline before acting on it.

State Income Tax On Rental And Management Income

Maryland taxes individual income at graduated state rates and, on top of that, every county and Baltimore City levies a mandatory local income tax collected on the same return. Rental income and property management fees are ordinary income for both layers. Maryland also imposes an 8.25 percent corporate income tax and a pass-through entity tax whose rate is defined by formula rather than a flat percentage, so a management company operating as an LLC, partnership or S corporation needs to know which rate applies to each class of member.

• For single filers, Maryland state individual income tax rates are 2 percent on Maryland taxable income of $1 through $1,000, 3 percent on $1,001 through $2,000, 4 percent on $2,001 through $3,000, 4.75 percent on $3,001 through $100,000, 5 percent on $100,001 through $125,000, 5.25 percent on $125,001 through $150,000, 5.5 percent on $150,001 through $250,000, 5.75 percent on $250,001 through $500,000, 6.25 percent on $500,001 through $1,000,000, and 6.50 percent on Maryland taxable income in excess of $1,000,000. (Md. Code Ann., Tax-General Section 10-105(a))
• Married-filing-jointly and head of household filers use the same graduated schedule at higher thresholds, with the top 6.50 percent rate applying to Maryland taxable income in excess of $1,200,000. (Md. Code Ann., Tax-General Section 10-105(a))
• The Maryland corporate income tax rate is 8.25 percent, so a management company organized as a C corporation pays at that rate rather than on the individual schedule. (Md. Code Ann., Tax-General Section 10-105(b))
• Maryland imposes a 2 percent surtax on net capital gains for certain high income individuals, with carve-outs that include gain on a principal residence under $1.5 million and gain inside retirement accounts. This matters when an owner-client sells an appreciated rental property. (Md. Code Ann., Tax-General Section 10-105)
• Every Maryland county and Baltimore City must set a county income tax of at least 2.25 percent and not more than 3.30 percent of an individual's Maryland taxable income. Since tax years beginning on or after January 1, 2022, a county may also apply its county income tax on a bracket basis, provided the lowest bracket is at least 2.25 percent and higher brackets are taxed at rates equal to or greater than lower brackets. (Md. Code Ann., Tax-General Section 10-106)
• A nonresident individual who owes Maryland state income tax but is not subject to any county income tax pays a special nonresident tax at a rate equal to the lowest county income tax rate set by any Maryland county, which is the 2.25 percent statutory floor. Out-of-state rental property owners are the typical case. (Md. Code Ann., Tax-General Section 10-106.1)
• A pass-through entity must pay Maryland tax on the distributive or pro rata shares of its nonresident members. For nonresident individual members the rate equals the sum of the special nonresident tax rate under Section 10-106.1 and the top marginal state individual rate under Section 10-105(a). For nonresident entity members the rate is the corporate rate under Section 10-105(b), that is 8.25 percent. (Md. Code Ann., Tax-General Section 10-102.1)
• A pass-through entity may elect to pay Maryland tax on the shares of all of its members, resident and nonresident, at the same statutory rates. An electing pass-through entity files Form 511; a non-electing pass-through entity files Form 510. (Md. Code Ann., Tax-General Section 10-102.1; Comptroller of Maryland, Filing using a Pass-Through Entity in Maryland)

Sales Tax On Rent: What Applies And What Does Not

Ordinary long-term residential rent is not subject to Maryland sales and use tax. Maryland's 6 percent sales and use tax reaches tangible personal property, digital codes and products, and a closed list of enumerated taxable services, and a residential lease is none of those. Short-term lodging is a different story: the statutory definition of tangible personal property was expanded to include an accommodation, a short-term rental and a home amenity rental, so transient stays and hourly amenity rentals are taxable at 6 percent. There is also a separate 2.5 percent state hotel surcharge, and counties impose their own hotel rental taxes.

• The general Maryland sales and use tax rate is 6 percent of the taxable price. (Md. Code Ann., Tax-General Section 11-104(a))
• The Maryland sales and use tax base is tangible personal property, digital codes and digital products, and enumerated taxable services. The lease of a dwelling to a residential tenant is not within any of those categories, so a standard month-to-month or annual residential lease is not subject to the 6 percent sales and use tax. (Md. Code Ann., Tax-General Section 11-101(k) and (m))
• Maryland's definition of tangible personal property expressly includes an accommodation, a short-term rental and a home amenity rental, which is the mechanism that pulls transient lodging into the 6 percent sales and use tax. (Md. Code Ann., Tax-General Section 11-101(k)(1))
• An accommodation is defined as a right to occupy a room or lodgings as a transient guest, and a short-term rental is the temporary use of a short-term rental unit to provide accommodation to transient guests for lodging purposes in exchange for consideration. A short-term rental unit is a residential dwelling unit, or a portion of one, used for short-term rentals. (Md. Code Ann., Tax-General Section 11-101(a-1), (j-1) and (j-3))
• When an accommodation is booked through an accommodations intermediary or a short-term rental platform, the taxable price is the full amount of consideration paid by the buyer, excluding any tax remitted to a taxing authority. A commission the accommodations provider pays back to the intermediary after facilitating the booking is excluded from the taxable price. (Md. Code Ann., Tax-General Section 11-101 (definition of taxable price))
• A separate state hotel surcharge applies at 2.5 percent of the taxable price, on top of the 6 percent sales and use tax on accommodations. (Md. Code Ann., Tax-General Section 11-104(e), referencing Section 11-102(b))
• Beginning July 1, 2024, the 6 percent sales and use tax applies to home amenity rentals. A home amenity is any indoor or outdoor portion of a residential property occupied by the hour for not more than 15 consecutive hours, excluding bedrooms and sleeping quarters. Examples given by the Comptroller include a backyard swimming pool, a backyard pickleball court, and an apartment building's clubroom or rooftop deck, which makes this directly relevant to multifamily managers who rent out amenity space. (Comptroller of Maryland, Technical Bulletin No. 46, Home Amenity Rental Sales and Use Tax, effective July 1, 2024, Sections I and II)
• Home amenity rental providers, intermediaries and platforms are all treated as vendors responsible for collecting and remitting the 6 percent Maryland sales and use tax on home amenity rentals, and local jurisdictions were separately authorized to impose tax on home amenity rentals. (Comptroller of Maryland, Technical Bulletin No. 46, Section I)

Property Tax

Maryland is unusual in that the state, not the county, does the assessing. SDAT appraises every property on a three-year cycle at full cash value, and any increase is phased in over the three years. Counties and municipalities then apply their own rates to that assessment. The two credits owners ask about most, the Homestead Tax Credit and the Homeowners' Property Tax Credit, are principal-residence programs, so a tenant-occupied rental does not qualify for either, and the convenient semiannual payment schedule is likewise a primary-residence feature.

• The Maryland State Department of Assessments and Taxation appraises each property once every three years. Each county contains three reassessment regions, so roughly one third of property accounts are reassessed each year. (SDAT, Homeowners' Guide to Property Tax)
• The assessor determines the full cash value of the property, and state law requires that any increase in full cash value over the old assessment be phased in over the next three years rather than applied all at once. (SDAT, Homeowners' Guide to Property Tax; SDAT, Real Property Data Search definitions (Phase-In Assessments))
• Since July 2000, taxes on a primary residence are payable in two installments, one due by September 30 and one due by December 31, with the option to elect a single annual payment. This semiannual convenience is tied to primary-residence status, so investment and tenant-occupied property is generally billed on the annual schedule. (SDAT, Questions and Answers on Semiannual Property Tax Payment)
• The Homestead Tax Credit limits the annual increase in taxable assessment, and every county and municipality in Maryland must cap taxable assessment increases at 10 percent or less per year. The credit is available only on the owner's principal residence and requires a one-time eligibility application, so it does not apply to tenant-occupied rental property. (SDAT, Maryland Property Tax Credit Programs; SDAT, Application for Homestead Tax Credit Eligibility)
• The Homeowners' Property Tax Credit is likewise a principal-residence program administered by SDAT and is not available for rental property held for investment. (SDAT, Maryland Property Tax Credit Programs; 2025 Homeowners' Property Tax Credit Application (Form HTC))
• Business personal property used in Maryland is separately reported to SDAT on the Personal Property Tax Return filed with the entity's Annual Report, which is a distinct filing from real property assessment. (SDAT, Departmental Forms and Applications, Annual Reports and Personal Property Tax Returns)

Withholding And Employer Taxes

A Maryland management company with staff withholds combined state and county income tax through the Comptroller and pays unemployment insurance to the Maryland Department of Labor on the first $8,500 of each employee's annual wages. The obligation most specific to property managers is the nonresident real property withholding under Tax-General Section 10-912: when an out-of-state owner sells Maryland real estate, tax is collected at the courthouse when the deed is recorded, and closings get delayed when nobody planned for it.

• Maryland unemployment insurance taxable wages are the first $8,500 earned by each employee in a calendar year. (Maryland Department of Labor, Division of Unemployment Insurance, Tax Rates and Quarterly Reporting)
• The Maryland unemployment insurance tax rate for new employers may range from 1.0 percent to 2.6 percent, and the rate table in effect for 2026 is Table A, which contains the lowest rates. (Maryland Department of Labor, Tax Rates and Quarterly Reporting; Tax Rate Table 2026: Table A)
• Maryland employers must report total gross wages and taxable wages and pay unemployment insurance tax each calendar quarter, filing the report and paying the tax within one month after the end of each calendar quarter. (Maryland Department of Labor, Division of Unemployment Insurance, Tax Rates and Quarterly Reporting)
• On the sale or transfer of Maryland real property by a nonresident, the clerk of the circuit court or SDAT must collect income tax withholding when the deed or other instrument of transfer is presented for recording or filing. For a nonresident individual the rate is the sum of the Section 10-106.1 special nonresident rate and the top marginal state individual rate under Section 10-105(a). For a nonresident entity the rate is the corporate rate under Section 10-105(b). (Md. Code Ann., Tax-General Section 10-912)
• The nonresident real property withholding is reported on Form MW506NRS, Maryland Return of Income Tax Withholding for Nonresident Sale of Real Property, with a copy given to the transferor or seller at closing. On the 2024 form the computation used 8.25 percent for a business entity and 8.0 percent for an individual, estate or trust, so managers should pull the current-year form before quoting a figure to an owner. (Comptroller of Maryland, Form MW506NRS (2024), line 8 computation of total payment and tax to be withheld)
• Section 10-912 withholding does not apply when the transferor certifies under penalty of perjury that it is a Maryland resident or resident entity, when the Comptroller issues a certificate that no tax or a reduced tax is due, on transfers resulting from foreclosure or a deed in lieu of foreclosure, on transfers by the United States, the State or a political subdivision, when the transferor certifies the property is the transferor's principal residence, or when the stated consideration is zero. (Md. Code Ann., Tax-General Section 10-912)
• Separately from the real property rule, a pass-through entity that owns Maryland rental property must pay Maryland tax on its nonresident members' distributive or pro rata shares of income, which functions as withholding for out-of-state partners and shareholders. (Md. Code Ann., Tax-General Section 10-102.1)

Federal Obligations

Federal treatment is the same in Maryland as anywhere else. Rental real estate income and expenses go on Schedule E of Form 1040, the building is depreciated while the land is not, and a management company that pays vendors and remits rent to owners in the course of its business has information return obligations. The 1099 reporting threshold changed for payments made after December 31, 2025, which is the single biggest federal compliance change managers need to catch.

• Rental real estate income and expenses are reported on Schedule E (Form 1040), Supplemental Income and Loss. (IRS, Publication 527, Residential Rental Property)
• Residential rental buildings placed in service are depreciated under MACRS over a 27.5 year recovery period. Land is never depreciable, so the purchase price must be allocated between land and improvements before depreciation begins. (IRS, Publication 527, Residential Rental Property, Depreciation of Rental Property)
• A business must report payments of $600 or more during the calendar year to a person who is not an employee for services, including payments to an attorney, on Form 1099-NEC. For payments made after December 31, 2025, that threshold rises to $2,000, with inflation adjustment in calendar years after 2026. (IRS, Instructions for Forms 1099-MISC and 1099-NEC)
• Rents paid in the course of a business are reported on Form 1099-MISC using the same dollar test: $600 or more during the calendar year, rising to $2,000 for payments made after December 31, 2025. (IRS, Instructions for Forms 1099-MISC and 1099-NEC)
• The threshold change comes from the statutory amendments made by Public Law 119-21. Before that law the $600 reporting level for Form 1099-MISC, Form 1099-NEC and Form W-2 had been in place since 1954 and was never indexed to inflation. (IRS, Instructions for Forms 1099-MISC and 1099-NEC; IRS Publication 1099, General Instructions for Certain Information Returns)
• General instructions covering who must file information returns, recipient statement requirements and filing deadlines are consolidated in IRS Publication 1099, General Instructions for Certain Information Returns. (IRS, Publication 1099 (2026), General Instructions for Certain Information Returns)

Filing Deadlines

Maryland's individual income tax return is due April 15, with an electronic-filing exception that follows the federal date. Sales and use tax runs on a monthly cycle keyed to the 20th, unemployment insurance is quarterly, and the SDAT entity filing is its own April 15 deadline that companies routinely forget because it sits with a different agency.

• An individual or partnership required to file a Maryland income tax return must file on or before April 15 of the next taxable year, or for a fiscal year filer, on or before the 15th day of the 4th month after the end of that year. (Md. Code Ann., Tax-General Section 10-820(a)(1))
• If the due date for an electronically filed federal return is later than April 15, an individual who files the Maryland return electronically and electronically pays any balance due may use the federal due date instead. (Md. Code Ann., Tax-General Section 10-820(a)(3))
• Maryland individual estimated income tax is due with an initial declaration on or before April 15 of the tax year, then quarterly on or before June 15, September 15 and January 15. (Md. Code Ann., Tax-General Section 10-820(b)(1))
• Each vendor must file a Maryland sales and use tax return on or before the 20th day of the month that follows the month in which the vendor makes any retail sale or sale for use, and for other periods the Comptroller specifies by regulation, including periods with no sales. (Md. Code Ann., Tax-General Section 11-502(a))
• Unemployment insurance quarterly contribution and wage reports must be filed and the tax paid within one month after the end of each calendar quarter. (Maryland Department of Labor, Division of Unemployment Insurance, Tax Rates and Quarterly Reporting)
• All domestic and foreign business entities must file the Annual Report and, where applicable, the Personal Property Tax Return with SDAT online or by mail on or before April 15. A 60 day extension may be requested, making the extended due date June 15. (SDAT, Departmental Forms and Applications, Annual Reports and Personal Property Tax Returns)
• A pass-through entity that has not made the entity-level election files Form 510, and an electing pass-through entity files Form 511 to report and remit the electing PTE tax on all members' distributive or pro rata shares of income. (Comptroller of Maryland, Filing using a Pass-Through Entity in Maryland)

Registration And Recordkeeping

A Maryland property management company generally has three separate registrations to keep current: a sales and use tax license with the Comptroller if it collects tax on short-term stays or amenity rentals, an employer withholding and unemployment insurance account, and an entity registration with SDAT that has to be renewed by annual report every year. Sales and use tax records must be kept at least four years.

• Maryland law requires vendors to obtain a sales and use tax license. Registration for a sales and use tax license and other business tax accounts is done through Maryland Tax Connect, which is also where sales and use tax returns are filed online. (Comptroller of Maryland, Technical Bulletin No. 46, Section III, Licensing and Recordkeeping Requirements)
• Rental providers, intermediaries and platforms must keep records of all sales and sales for use and retain those records for a minimum of four years. Records must include the taxable price on which the sales and use tax is computed. (Comptroller of Maryland, Technical Bulletin No. 46, Section III)
• The statutory definition of vendor sweeps in accommodations intermediaries, home amenity rental intermediaries, short-term rental platforms, home amenity rental platforms, marketplace facilitators and marketplace sellers, so a management company that books stays on behalf of owners can itself be the licensed vendor. (Md. Code Ann., Tax-General Section 11-101 (definition of vendor))
• Every domestic and foreign business entity registered in Maryland must file an SDAT Annual Report each year by April 15 to remain in good standing, and entities with business personal property in Maryland file the Personal Property Tax Return with it. SDAT states that filing both together online is the simplest method. (SDAT, Departmental Forms and Applications, Annual Reports and Personal Property Tax Returns)
• Employers must establish an unemployment insurance account with the Maryland Department of Labor and report gross and taxable wages each quarter; the Department assigns the employer's experience rate from the applicable annual rate table. (Maryland Department of Labor, Division of Unemployment Insurance, Tax Rates and Quarterly Reporting)

Recent Changes Worth Tracking

• Effective Tax year 2025: Maryland added two new top individual income tax brackets, 6.25 percent on Maryland taxable income from $500,001 through $1,000,000 and 6.50 percent on income above $1,000,000 ($1,200,000 for joint filers), replacing 5.75 percent as the top rate. (Chapter 604 of the Acts of 2025 (House Bill 352, Budget Reconciliation and Financing Act of 2025); Md. Code Ann., Tax-General Section 10-105(a))
• Effective Enacted by the Budget Reconciliation and Financing Act of 2025 and reflected in current Tax-General Section 10-106: The maximum county income tax rate a Maryland county or Baltimore City may impose was increased from 3.20 percent to 3.30 percent. The statutory floor remains 2.25 percent. (Chapter 604 of the Acts of 2025 (HB 352); Md. Code Ann., Tax-General Section 10-106)
• Effective Taxable years 2025 through 2028: A 2 percent capital gains surcharge was enacted for individuals meeting specified conditions with federal adjusted gross income of $350,000 or higher, with exclusions that include gain on a principal residence under $1.5 million and gain in retirement accounts. (Chapter 604 of the Acts of 2025 (HB 352); Department of Legislative Services, BRFA of 2025 Summary)
• Effective July 1, 2025: Maryland created a new 3 percent sales and use tax rate on the taxable services described in Tax-General Section 11-101(m)(14) and (15), which are data services and information technology services. If a different rate could also apply to the same sale, the higher rate governs. Management companies buying software, hosting or IT support should expect this line item on vendor invoices. (Md. Code Ann., Tax-General Section 11-104(l); Chapter 604 of the Acts of 2025 (HB 352))
• Effective July 1, 2024: The 6 percent sales and use tax was extended to home amenity rentals, meaning hourly rentals of a residential property's amenity space such as a pool, court, clubroom or rooftop deck, with providers, intermediaries and platforms all responsible for collection. (Chapter 805 of the Acts of 2023; Comptroller of Maryland, Technical Bulletin No. 46)
• Effective July 1, 2027: Enacted amendments rewrite the accommodations definitions so that accommodation expressly includes a short-term rental unit and accommodations intermediary expressly includes a short-term rental platform, consolidating the treatment of transient lodging under one set of terms. (Chapter 638 of the Acts of 2025, amending Md. Code Ann., Tax-General Section 11-101)

Tax is one half of Maryland compliance. See our guide to Maryland property management laws and regulations for licensing, trust account, and disclosure rules.

Keeping This Straight

Tax rates and thresholds move more often than most operators expect, and the figures circulating in older articles go stale quickly. Check any rate against its citation before you quote it to an owner, and re-check them at the start of each tax year.

This guide is a starting point for professional managers, not tax or legal advice. For a specific filing, work with a CPA familiar with Maryland rental property, and confirm current figures with the Comptroller of Maryland (income, sales and use, and withholding taxes), with the Maryland State Department of Assessments and Taxation (SDAT) handling real and personal property assessment and business annual reports or the IRS.

Sources

Every fact above is drawn from one of the official sources below.

• Md. Code Ann., Tax-General Section 10-105(a), Maryland General Assembly, Statute Text, Tax-General Section 10-105
• Md. Code Ann., Tax-General Section 10-106, Maryland General Assembly, Statute Text, Tax-General Section 10-106
• Md. Code Ann., Tax-General Section 10-106.1, Maryland General Assembly, Statute Text, Tax-General Section 10-106.1
• Md. Code Ann., Tax-General Section 10-102.1, Maryland General Assembly, Statute Text, Tax-General Section 10-102.1
• Md. Code Ann., Tax-General Section 11-104(a), Maryland General Assembly, Statute Text, Tax-General Section 11-104
• Md. Code Ann., Tax-General Section 11-101(k) and (m), Maryland General Assembly, Statute Text, Tax-General Section 11-101
• Comptroller of Maryland, Technical Bulletin No. 46, Home Amenity Rental Sales and Use Tax, effective July 1, 2024, Sections I and II, Comptroller of Maryland, Technical Bulletin No. 46
• SDAT, Homeowners' Guide to Property Tax, Maryland State Department of Assessments and Taxation
• SDAT, Questions and Answers on Semiannual Property Tax Payment, Maryland State Department of Assessments and Taxation
• SDAT, Maryland Property Tax Credit Programs; SDAT, Application for Homestead Tax Credit Eligibility, Maryland State Department of Assessments and Taxation
• SDAT, Departmental Forms and Applications, Annual Reports and Personal Property Tax Returns, Maryland State Department of Assessments and Taxation
• Maryland Department of Labor, Division of Unemployment Insurance, Tax Rates and Quarterly Reporting, Maryland Department of Labor, Division of Unemployment Insurance
• Maryland Department of Labor, Tax Rates and Quarterly Reporting; Tax Rate Table 2026: Table A, Maryland Department of Labor, Division of Unemployment Insurance
• Md. Code Ann., Tax-General Section 10-912, Maryland General Assembly, Statute Text, Tax-General Section 10-912
• Comptroller of Maryland, Form MW506NRS (2024), line 8 computation of total payment and tax to be withheld, Comptroller of Maryland, Form MW506NRS
• IRS, Publication 527, Residential Rental Property, Internal Revenue Service
• IRS, Instructions for Forms 1099-MISC and 1099-NEC, Internal Revenue Service
• IRS, Instructions for Forms 1099-MISC and 1099-NEC; IRS Publication 1099, General Instructions for Certain Information Returns, Internal Revenue Service
• Md. Code Ann., Tax-General Section 10-820(a)(1), Maryland General Assembly, Statute Text, Tax-General Section 10-820
• Md. Code Ann., Tax-General Section 11-502(a), Maryland General Assembly, Statute Text, Tax-General Section 11-502
• Comptroller of Maryland, Filing using a Pass-Through Entity in Maryland, Comptroller of Maryland
• Chapter 604 of the Acts of 2025 (House Bill 352, Budget Reconciliation and Financing Act of 2025); Md. Code Ann., Tax-General Section 10-105(a), Maryland General Assembly, Chapter 604 of 2025 (HB 352)
• Chapter 604 of the Acts of 2025 (HB 352); Department of Legislative Services, BRFA of 2025 Summary, Maryland Department of Legislative Services, BRFA of 2025 Summary