Maryland LLC Taxes: The Complete Filing Guide (2025)
Running an LLC in Maryland means dealing with taxes at federal, state, and sometimes local levels. This guide simplifies everything you need to know to stay compliant and avoid surprises, from income tax and sales tax to city-specific requirements.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
Maryland LLC Tax Basics
Navigating your Maryland LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain Maryland’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.
Use the links below to jump directly to the section you need:
- Maryland LLC Taxes at a Glance
- Understanding LLC Taxation Basics
- Federal Tax Obligations
- Maryland State Taxes
- Local Tax Considerations
- Tax Calendar and Filing Tips
- Tax Strategies for Maryland LLCs
- Forms and Resources
Maryland LLC Taxes at a Glance
| Tax Type | Rate | Filing Deadline | Forms Required |
|---|---|---|---|
| Federal Income Tax | 10%-37% (personal brackets) | April 15, 2025 | Form 1040 + Schedule C or Schedule E/K-1 |
| Self-Employment Tax | 15.3% | April 15, 2025 | Schedule SE |
| Maryland Income Tax | 2%-5.75% | April 15, 2025 | Form 502 |
| Maryland Corporate Income Tax | 8.25% | April 15, 2025 | Form 500 |
| Federal Payroll Taxes (If Employees) | 7.65% employer + 7.65% employee (FICA) | Quarterly (April 30, July 31, October 31, January 31) | Form 941 |
| Maryland Unemployment Tax (If Employees) | 0.3%-7.5% (new employers: 2.6%) | Quarterly | Filed online |
| Federal Unemployment (FUTA) | 6% on first $7,000 per employee (0.6% after credits) | January 31, 2026 (annual) | Form 940 |
| Sales & Use Tax | 6% | Monthly, quarterly, or annually based on sales volume | Filed online |
| Local Income Tax | 2.25%-3.2% (varies by location) | April 15, 2025 | Form 502 |
| Annual Report | $300 fee | April 15, 2025 | Form 1 |
Understanding LLC Taxation Basics
How Maryland LLCs Are Taxed by Default
Your Maryland LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on their personal tax returns. This is called pass-through taxation.
Here’s how it works:
- Your LLC earns income from business activities
- The LLC itself files no tax return (unless you elect otherwise)
- Profits “pass through” to members based on ownership percentage
- Each member reports their share on their personal tax return
- Members pay tax at their individual income tax rates
What this means for you: Unlike corporations, your business profits are only taxed once — which typically saves you money.
Time-Saving Tip: If you’re uncertain about your LLC’s tax classification, a tax professional can review your LLC’s tax setup in 30 minutes and help you choose the most tax-efficient option.
Tax Classification Options
While pass-through taxation is the default, your Maryland LLC can choose two alternative tax treatments.
Default LLC Tax Status:
- Single-member LLC: Taxed as a sole proprietorship
- Multi-member LLC: Taxed as a partnership
Optional Tax Classifications:
- S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
- C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)
Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.
Federal Tax Obligations
Income Tax
As a Maryland LLC owner, you’ll report your share of business profits on your personal tax return using:
- Form 1040 + Schedule C (single-member LLCs)
- Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)
Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).
Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return — just like income from a job.
Self-Employment Tax
LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.
Key points:
- Applies to net earnings of $400 or more
- Calculated on Schedule SE
- You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income
What happens if I miss this payment? The Internal Revenue Service (IRS) charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.
Employment Taxes
If your LLC has employees, you must:
- Withhold federal income tax
- Pay and withhold FICA taxes (7.65% each for employer and employee)
- Pay federal unemployment tax (FUTA)
- File quarterly employment tax returns (Form 941)
- Provide Forms W-2 annually
Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)
Estimated Tax Payments
Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties — even if you pay in full later.
Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.
Key deadlines:
- April 15
- June 16
- September 15
- January 15
Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.
Maryland State Taxes
Maryland Income Tax
Maryland has a personal income tax rate of 2%-5.75% that applies to your LLC’s profits on your personal return.
Filing requirements:
- Use Maryland Form 502
- Due April 15, 2025
- Maryland follows taxable net income as a starting point
Maryland Corporate Income Tax
If your LLC has elected to be taxed as a c corp, it will be subject to 8.25% corporate income tax.
Filing requirements:
- Use Maryland Form 500
- Due April 15, 2025
Pass-Through Entity Income Tax
If your LLC has elected to be taxed as an s corp or partnership, you are subject to a 5.75% pass-through entity income tax.
Filing requirements:
- Use Maryland Form 510
- Due April 15, 2025
- Additional 2.25% tax applies to nonresident members
Sales and Use Tax
If your Maryland LLC sells physical products or certain services:
- Collect 6% sales tax on taxable sales
- Register for a sales and use tax license through the Comptroller of Maryland website
- File and pay collected taxes monthly, quarterly, or annually based on sales volume
- Due dates vary based on filing frequency
60-Second Check: Do I Need to Collect Sales Tax?
- Do you sell physical products in Maryland? → Yes, collect tax
- Do you sell digital products? → Yes, collect tax
- Do you provide services? → Most services are taxable (see exceptions below)
- Do you sell online to Maryland customers? → Yes, collect tax
Services typically exempt from sales tax include:
- Veterans services
- Economic development projects
- Nonprofit educational services
Products typically subject to sales tax include:
- Tangible personal property
- Prepared food
- Digital products
Payroll Taxes
If you have employees in Maryland, you will be responsible for two types of payroll taxes.
Unemployment Insurance (UI) Tax
- Register through the Maryland Department of Labor’s BEACON website
- Rate is 2.6% for new employers (0.3%-7.5% afterwards)
- Due quarterly
Withholding Tax
- Register and pay taxes through the Maryland Tax Connect
- Use the state’s Withholding Calculator to estimate how much to withhold
- Due monthly, quarterly, or annually (frequency determined by withholding amount)
Annual Statement Filing
While not a tax, your Maryland LLC must file an annual report:
- Due April 15 each year
- $300 filing fee
- Filed with online or by mail with the Maryland Department of Assessments & Taxation
- Late fees apply ($30-$500)
Calendar Alert: Set a reminder for March 15 to ensure you don’t miss this easy but required filing.
Local Tax Considerations
Local Income Taxes
Maryland allows counties and Baltimore City to impose local income taxes, creating a significant compliance burden for many LLC owners.
Localities with income taxes include:
- Baltimore City (3.2%)
- Carroll County (3.03%)
- Cecil County (2.74%)
- Washington County (2.95%)
- 20 other Maryland localities
Filing requirements:
- Reported on line 28 of Form 502 (individual income tax return)
- Due April 15, 2025
Property Taxes
If your LLC owns property in Maryland, you may be subject to two types of property taxes: real property tax and/or business personal property tax:
- Rates vary by locality
- Assessed annually
- May qualify for various exemptions based on business type
- Filed and paid at local tax offices
Tax Calendar and Filing Tips
Key Deadlines for Maryland LLCs
January:
- January 15: Final estimated tax payment for previous year
- January 31: Issue W-2s/1099s to employees/contractors
- January 31: Fourth quarter payroll tax payment due (state and federal)
April:
- April 15: Personal, corporate, or pass-through entity tax returns due
- April 15: Federal income and self-employment tax returns due
- April 15: First quarter estimated tax payment due
- April 15: Local income tax due
- April 15: Maryland annual report due
- April 30: First quarter payroll tax payment due (state and federal)
May:
- May 15: Corporate income tax return due (C corps only)
June:
- June 16: Second quarter estimated tax due
July:
- July 31: Second quarter payroll tax payment due (state and federal)
September:
- September 15: Third quarter estimated tax payment due
October:
- October 31: Third quarter payroll tax payment due (state and federal)
Record-Keeping Checklist
Keep these records for at least 7 years:
- Business income records (invoices, receipts)
- Expense receipts and documentation
- Bank and credit card statements
- Asset purchase and improvement records
- Vehicle mileage logs
- Home office documentation
- Payroll records
- Previous tax returns
Tax Strategies for Maryland LLCs
S Corporation Election Benefits
Converting your LLC to an S corp for tax purposes can help you save on self-employment taxes. To do this, you must:
- File Form 2553 with the IRS
- Pay yourself a “reasonable salary” subject to employment taxes
- Take any remaining profits as distributions exempt from self-employment tax
Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.
Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.
Business Expense Deductions
Common deductions Maryland LLC owners often overlook include:
- Home office deductions
- Business mileage (70¢ per mile for 2025)
- Health insurance premiums
- Retirement plan contributions
- Professional development expenses
- Business meals (50% deductible)
Forms and Resources
Federal Tax Forms
- Schedule C: Profit or Loss From Business (sole proprietors)
- Form 1065: U.S. Return of Partnership Income
- Schedule K-1: Partner’s Share of Income, Deductions, Credits
- Form 1120-S: U.S. Income Tax Return for an S Corporation
- Form 2553: Election by a Small Business Corporation (S Corp)
- Form 8832: Entity Classification Election
Maryland Tax Forms
- Form 502: Maryland Individual Income Tax Return
- Form 500: Maryland Corporate Income Tax Return
- Form 1: Maryland Annual Report
Helpful Resources
- Maryland Comptroller Service Portal
- Comptroller of Maryland
- Internal Revenue Service
- Maryland Tax Connect
Maryland LLC Taxes FAQs
Regardless of its location, an LLC is a pass-through entity by default, which means it passes any profits and losses to the members, who report them on their personal tax returns. However, an LLC can also elect to be taxed as a corporation.
Maryland business taxes vary based on the type of business and income. LLCs taxed as C corporations pay an income tax rate of 8.25%, while LLCs taxed by default (i.e., as pass-through entities) are subject to individual income taxes. There are state and local sales taxes and other industry-specific business taxes as well.
Typically, LLCs don’t pay taxes directly under the Internal Revenue Code; instead, profits and losses pass through to members who report them on personal tax returns. However, LLCs can choose to be taxed as corporations, altering their tax obligations.
For more information, see our LLC Taxes guide.
An LLC in Maryland is classified as a business structure that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. This classification allows LLC owners or members to benefit from limited personal liability while enjoying flexibility in management and tax advantages.
Get started on how to start an LLC in Maryland with our guide.
Need Professional Help? While this guide covers the essentials, tax laws are complex and constantly changing. Schedule a free consultation with 1-800Accountant to ensure your Maryland LLC remains fully compliant while minimizing your tax burden.