Maryland Releases Updated Employer Withholding Tax Percentage Method Tables

The Comptroller of Maryland, Revenue Administration Division has updated the Employer Withholding Tax Percentage Method Tables of calculation, which can be found on the Agency’s website located at http://business.marylandtaxes.com/taxinfo/withholding/2008ptables.asp. As noted on the Website, click on the jurisdiction where the employee lives to find the proper calculation (a complete list is provided below).  The updated Percentage Method Withholding Tables are in effect beginning January 1, 2008.

The Agency also revised the Form MW507, Employee’s Maryland Withholding Exemption Certificate, which can be found on the Agency’s website located at http://forms.marylandtaxes.com/08_forms/mw507.pdf.  As of January 1, 2008, employers should provide each employee with a copy of the revised Employee’s Maryland Withholding Exemption Certificate for wages paid on or after January 1, 2008.  Details of these changes and the impact of the amount of state income tax to be withheld are provided on the revised form.

Frequently Asked Questions

How do I know if I'm affected?

You may be affected if you currently withhold Maryland income taxes from employee’s wages or have a valid Maryland Registration Number.

When will these changes be available in QuickPayroll?

QuickPayroll has incorporated these changes in Payroll Update 20802, to be released on December 27, 2007.

What steps do I need to take next?

Provide a copy of Form MW507 to each employee that is subject to Maryland income tax withholding to complete.

For QuickPayroll

• Download Payroll Update 20802.
• On or after January 1, 2008, but prior to creating paychecks for 2008, for each employee subject to withholding for Maryland, the filing status must be reviewed for accuracy.
• Go to Employee List. After double clicking on an employee’s name, you will be prompted by a Warning message.  This warning slide provides information on which tax or taxes changes are needed and the necessary step to implement the change. Click OK.
• Click on the Payroll Info tab.
• Select the Taxes tab and then the State tab. 
• Verify that the number of allowances reflects the number entered on Form MW507, line 1.
• Select the filing status that the employee has indicated on Form MW507.  Filing statuses have been added for Maryland Resident Employees who work in Delaware. Select the appropriate status.
• Next, indicate whether the employee is subject to state withholding. 
• Finally, enter the rate (as a percentage) for the County of residence as indicated by the employee on Form MW507.  If the employee is a Maryland Resident who works in Delaware, select Delaware.  Then click OK twice.

Note:  The Warning message may appear in one of the following scenarios: 

• Your system date is in 2007, and you pay an employee with a check date in 2008; or
• Your system date is in 2008, and you click to review an employee’s record from the Employee List or pay an employee.

For your reference, here is a complete list of Counties in Maryland, including Nonresident and Delaware, and its associated rates.

• Allegany – 3.05%
• Anne Arundel – 2.60%
• Baltimore City – 3.05%
• Baltimore County – 2.85%
• Calvert – 2.80%
• Caroline – 2.65%
• Carroll – 3.05%
• Cecil – 2.80%
• Charles – 2.90%
• Dorchester 2.65%
• Frederick – 3.00%
• Garrett – 2.65%
• Harford – 3.10%
• Howard – 3.20%
• Kent – 2.85%
• Montgomery – 3.20%
• Prince George’s – 3.10%
• Queen Anne’s – 2.85%
• St. Mary’s – 3.00%
• Somerset – 3.15%
• Talbot – 2.25%
• Washington – 2.80%
• Wicomico – 3.10%
• Worcester – 1.25%
• Nonresidents – 1.25%
• Delaware – 3.00%