Maryland LLC Tax Filing: Rates & Forms (2026)
A Maryland LLC is a pass-through entity by default, so its profits are taxed on the members' Maryland returns at the state's 2% to 5.75% rates plus a county income tax, not on the LLC itself. Maryland has no LLC franchise tax. If the LLC sells taxable goods it collects 6% sales tax; if it elects corporate treatment it pays the 8.25% corporate rate. Every LLC also files the $300 SDAT Annual Report (Form 1) by April 15.
Quick Answer
- Default tax
- Pass-through - disregarded (single-member) or partnership (multi-member)
- State income tax
- 2% to 5.75% on members, plus county tax (2.25%-3.20%)
- Franchise tax
- None in Maryland
- Sales & use tax
- 6% - register with the Comptroller of Maryland
- Corporate election
- 8.25% Maryland corporate income tax if taxed as a C-corp
- Recurring filing
- $300 SDAT Annual Report (Form 1), due April 15
How a Maryland LLC Is Taxed by Default
Maryland does not impose its own entity-level income tax on an ordinary LLC. Instead, an LLC uses its federal tax classification, which flows through to Maryland. By default the IRS treats a single-member LLC as a disregarded entity (its income is reported on the owner's return) and a multi-member LLC as a partnership. In both cases the LLC's profit is not taxed at the company level; it "passes through" to the members, who report their shares on their personal Maryland income tax returns. This is the same pass-through treatment described in the national business tax overview and on what is an LLC.
Because the classification is federal, your Maryland obligations follow the federal choice you make (or accept by default). An LLC can keep the default pass-through treatment, or file an election to be taxed as an S corporation or C corporation. The rest of this page walks through each path, the Maryland taxes that apply on top of the federal return, and the deadlines and forms for a 2026 filing. It complements the Maryland formation guide and the Maryland Annual Report page.
Federal Classification and the Forms You File
Your federal return is the starting point. The table below maps each classification to the primary federal form, which then drives what you report to Maryland. A free federal EIN is issued by the IRS and is required for any multi-member LLC or any LLC with employees.
| Classification | Who it fits | Primary federal form |
|---|---|---|
| Disregarded entity | Single-member LLC (default) | Schedule C on Form 1040 |
| Partnership | Multi-member LLC (default) | Form 1065 + Schedule K-1 |
| S corporation | LLC that files Form 2553 | Form 1120-S + Schedule K-1 |
| C corporation | LLC that files Form 8832 | Form 1120 |
The classification also decides how profit reaches the owner. A disregarded or partnership LLC passes all net profit through, and the owner pays income tax and self-employment tax on it. An S-corporation LLC splits earnings between a reasonable salary (subject to payroll tax) and distributions (not subject to self-employment tax). See Form 1120 vs 1120-S vs 1065 for how these returns differ, and how to file business taxes for the overall process.
Maryland Personal Income Tax on Members
For a default pass-through LLC, the members pay Maryland tax on their share of the profit through their individual returns (residents generally file Form 502). Maryland's individual income tax is graduated, running from 2% on the first bracket up to 5.75% on higher taxable income, under Tax-General Article § 10-105.
Maryland is unusual in also imposing a county (local) income tax that is collected with the state tax on the same return. Under Tax-General Article § 10-106, each county and Baltimore City sets its own rate; those rates generally range from about 2.25% to a statutory cap of 3.20% of Maryland taxable income. The combined state-plus-local rate is what a Maryland member effectively pays on pass-through profit, which is why Maryland LLC owners should budget for both. Nonresident members are taxed on their Maryland-source income and may have tax paid on their behalf by the LLC, described next.
The Maryland Pass-Through Entity (PTE) Tax
Even though a pass-through LLC does not owe entity income tax on resident members' shares, Maryland requires the LLC to file a pass-through entity return, Form 510, and to pay Maryland income tax on the distributive shares of its nonresident members. This nonresident PTE tax is effectively a withholding mechanism so Maryland collects tax from out-of-state owners. The return is due the 15th day of the 4th month after the close of the tax year - April 15 for a calendar-year LLC.
Maryland also allows an elective entity-level tax. Under Tax-General Article § 10-102.1, a pass-through entity may elect to pay Maryland tax at the entity level on all members' shares (including residents) and files Form 511 to do so. Many multi-member LLCs use this "electing PTE" as a federal SALT-cap workaround, because the entity-level tax is deductible on the federal partnership return while members claim a Maryland credit. The election is a tax-planning decision with federal and state trade-offs; review it with a professional and see the national LLC vs S-corp tax comparison for how entity-level choices interact.
Electing S-Corp or C-Corp Treatment
An LLC can change how it is taxed without changing its legal form. Filing IRS Form 2553 makes the LLC an S corporation for tax purposes; the LLC then files Form 1120-S, pays owners a reasonable salary through payroll, and passes remaining profit through as distributions that are not subject to self-employment tax. Maryland follows the federal S election, so the S-corporation's income still passes through to members' Maryland returns, and the LLC files the Form 510 pass-through return.
Filing IRS Form 8832 instead makes the LLC a C corporation. A C-corporation LLC pays Maryland corporate income tax at 8.25% of Maryland taxable income under Tax-General Article § 10-105, on top of the 21% federal corporate rate, and profit distributed as dividends is taxed again to the owners. Most small Maryland LLCs keep pass-through treatment; the C-corporation path mainly suits businesses that reinvest profit or need corporate-level structure. Compare the options in LLC vs corporation and S-corp vs C-corp.
Maryland Sales and Use Tax
Sales tax is separate from income tax and applies to any LLC that sells taxable goods or certain services in Maryland. Maryland's sales and use tax rate is 6%. To collect it, the LLC registers with the Comptroller of Maryland through the Combined Registration Application and receives a sales and use tax license, which is free. The LLC then files sales tax returns and remits the tax on the schedule the Comptroller assigns - typically monthly, quarterly, or annually depending on volume.
Sales tax is trust-fund money: it belongs to the state, not the business, so keep collected tax separate and file on time. If your LLC also has employees, the same Comptroller registration covers employer withholding of Maryland income tax from wages. For how the sales tax license connects to local licensing, see business licenses in Maryland; sales tax is not covered by the SDAT Annual Report and is an independent filing stream.
Self-Employment Tax and Estimated Payments
Members of a default (disregarded or partnership) Maryland LLC are self-employed for federal purposes, so their share of profit is subject to self-employment tax of 15.3% (12.4% Social Security up to the annual wage base, plus 2.9% Medicare) in addition to income tax. This is a federal tax, not a Maryland tax, but it is a large part of a Maryland owner's total burden. Estimate it with the self-employment tax calculator and read self-employment tax for the mechanics.
Because no employer withholds tax from pass-through profit, Maryland LLC members generally must make quarterly estimated payments to both the IRS and the Comptroller of Maryland to avoid underpayment penalties. See quarterly estimated taxes and when business taxes are due to plan the four annual due dates. An S-corporation election shifts part of this to payroll withholding on the owner's salary.
Key Maryland Tax Deadlines and Forms
The table summarizes the filings a typical Maryland LLC juggles in a calendar year. Confirm current forms and dates with the Comptroller of Maryland and SDAT before filing, because schedules can shift.
| Obligation | Form | Agency | Timing (calendar year) |
|---|---|---|---|
| SDAT Annual Report ($300) | Form 1 | Maryland SDAT | April 15 |
| Pass-through entity return | Form 510 (or 511 electing) | Comptroller | 15th day of 4th month |
| Member individual income tax | Form 502 (residents) | Comptroller | April 15 |
| Partnership return | IRS Form 1065 | IRS | March 15 |
| S-corporation return | IRS Form 1120-S | IRS | March 15 |
| Sales & use tax | Comptroller return | Comptroller | Monthly / quarterly / annual |
Keep the three streams mentally separate: the SDAT Annual Report keeps the entity in good standing, income tax (federal and Maryland) is filed on the classification's forms, and sales and withholding tax apply only if you sell taxable items or pay wages. Being current on one does not satisfy the others.
Frequently Asked Questions
How is a Maryland LLC taxed?
By default it is pass-through: a single-member LLC is disregarded and a multi-member LLC is a partnership, so profit is taxed on the members' Maryland returns at 2%-5.75% plus county tax. The LLC can instead elect S-corp or C-corp treatment with the IRS.
Does a Maryland LLC pay a franchise tax?
No. Maryland has no LLC franchise tax and no flat entity income tax on a pass-through LLC. The recurring state charge is the $300 SDAT Annual Report (Form 1), plus sales tax and local personal property tax if they apply.
What is the Maryland pass-through entity tax?
A pass-through LLC files Form 510 and must pay Maryland tax on nonresident members' shares. It may also elect on Form 511 to pay entity-level tax on resident members too, a common SALT-cap workaround.
What is the Maryland sales tax rate?
6%. An LLC selling taxable goods or services registers for a free sales and use tax license with the Comptroller of Maryland, collects the 6%, and files returns on the assigned schedule.
When are Maryland LLC taxes due?
Individual income tax and the Form 510/511 pass-through return are due the 15th day of the fourth month (generally April 15), the same day as the $300 SDAT Annual Report. IRS partnership and S-corp returns are due March 15.
Should my Maryland LLC elect S-corp status?
An S election can cut self-employment tax once profit is high enough for a reasonable salary plus payroll costs, but it adds payroll and a Form 1120-S filing. Model the numbers or ask a tax professional.
Related
- Business tax basics (cluster hub)
- How to form an LLC in Maryland
- Maryland LLC Annual Report and taxes
- Maryland operating agreement
- Maryland resident agent requirements
- Maryland LLC cost and filing fees
- Business licenses in Maryland
- How to dissolve an LLC in Maryland
- LLC vs S-corp tax
Sources
- Maryland General Assembly - Tax-General § 10-105, State income tax rates (2%-5.75% individual; 8.25% corporate).
- Maryland General Assembly - Tax-General § 10-106, County income tax (local rate authority and cap).
- Maryland General Assembly - Tax-General § 10-102.1, Pass-through entity tax election (Form 511 electing PTE).
- Comptroller of Maryland - Business Licenses and Registration (6% sales and use tax; Combined Registration Application; employer withholding).
- Maryland SDAT - Form 1, Annual Report and Business Personal Property Return (PDF) ($300 LLC fee; April 15).
- Maryland SDAT - Maryland Business Services (Charter Division).
- IRS - Limited Liability Company (LLC) (default classification).
- IRS - Single Member Limited Liability Companies (disregarded entity).
- IRS - About Form 1065 (partnership return).
- IRS - About Schedule C (Form 1040) (sole proprietor / disregarded LLC).
- IRS - About Form 1120-S (S-corporation return).
- IRS - About Form 2553 (S-corporation election).
- IRS - Self-Employment Tax (15.3% rate).
- IRS - Get an Employer Identification Number (free EIN).
- Legal Information Institute (Cornell) - 26 CFR § 301.7701-3 (entity classification election).
LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Tax laws, rates, and deadlines change; verify current requirements with the Comptroller of Maryland, the Maryland State Department of Assessments and Taxation, and the IRS before filing.