Maryland is one of only three states in the country with a mandatory state registration program for non-credentialed paid tax preparers. If you prepare federal or Maryland individual income tax returns for Maryland residents and you are not a licensed CPA, Enrolled Agent, or attorney, you must register with the Maryland Board of Individual Tax Preparers (BITP) before accepting your first paid return. No other state east of the Mississippi imposes a comparable requirement at the same level of formality: a state-administered exam, a $100 registration fee, biennial renewal with 16 continuing education hours, and statutory penalties of up to $5,000 per violation for preparing without registration. This guide covers every requirement Maryland imposes, the state income tax structure preparers must master (including the mandatory county income tax that stacks on top of the state rate), OBBBA conformity, military client opportunities, and business formation for a Maryland tax practice.
Does Maryland Require Tax Preparers to Register?
Yes. Maryland Business Occupations and Professions Article, Title 21 states plainly: "An individual may not provide, attempt to provide, or offer to provide individual tax preparation services in the State unless registered by the Board." (Section 21-401.) This is not a voluntary program and it is not a soft recommendation. It is a statutory prohibition with enforcement authority.
Many people searching this topic use the phrase "Maryland tax preparer license." The official term is registration, not a license. The credential is issued by the Maryland Board of Individual Tax Preparers, administered within the Division of Occupational and Professional Licensing at the Maryland Department of Labor. When you see the search phrase "Maryland tax preparer license," it refers to this same BITP registration requirement.
Who Must Register
Any individual who prepares federal or Maryland individual income tax returns for Maryland residents, for compensation, must register before doing so. This includes preparers who work remotely and serve Maryland clients from another state. The requirement reaches you based on your clients' location, not just your own.
Exemptions: Who Does NOT Need to Register
The following professionals are exempt from BITP registration:
- Actively licensed Certified Public Accountants (CPAs) licensed by the Maryland Board of Public Accountancy
- IRS Enrolled Agents (EAs) -- credentialed by the IRS, subject to Circular 230
- Attorneys in good standing with the Maryland Bar, preparing returns for their own legal clients
- State, local, and federal government employees performing tax services as part of official duties
Exempt professionals do not need to separately satisfy BITP registration, exam, or CE requirements. Their underlying credential already exceeds the BITP standard.
Maryland BITP Registration Requirements
To register with the Board of Individual Tax Preparers, you must satisfy minimum eligibility requirements and qualify through one of three pathways.
Minimum Eligibility
- At least 18 years of age
- Valid high school diploma or GED equivalent
- Good character (no disqualifying conduct under Title 21)
- Active federal PTIN (IRS Preparer Tax Identification Number) -- required in addition to state registration; $18.75 annual renewal fee for 2026
Three Pathways to Qualify
Pathway 1: Pass the Maryland State Exam (Most Common)
The Maryland Individual Tax Preparers Examination is administered by PSI Services, LLC. Key details:
- Format: Open-book, 180 minutes
- Passing score: 70%
- Content: Based on Maryland Form 502 instructions, federal Form 1040 instructions, and supplementary IRS publications (Publication 523, Publication 974, Publication 3144)
- Exam fee: Approximately $65 to $78 (verify the current fee directly with PSI Services or by calling BITP at 410-230-6257 before advising candidates on the exact amount, as the figure varies across sources)
The Maryland Society of Accounting and Tax Professionals (MSATP) offers a free two-hour online exam prep course. PlatinumPro Studies offers a Maryland-specific exam prep course as well. Because the exam is open-book and based on specific published materials, thorough familiarity with the Form 502 instruction booklet is the most direct preparation strategy.
Pathway 2: 15-Year Experience Waiver
Experienced preparers who have been in the field for many years may qualify without sitting for the exam. Requirements:
- A minimum of 15 consecutive years of individual tax preparation experience
- An average of 50 or more returns prepared per year throughout that period
- At least 8 hours of continuing education completed in each of the preceding 3 years
Pathway 3: Legacy IRS RTRP Exam
Preparers who passed the IRS Registered Tax Return Preparer (RTRP) examination between January 1, 2010, and January 18, 2013 (before the IRS program was halted by litigation) may submit proof of that passing score in lieu of the Maryland exam. This pathway is available only to those grandfathered in. No new candidates qualify under this route.
Continuing Education Requirements for Maryland Preparers
Upon each biennial renewal, every Maryland-registered preparer must complete 16 hours of continuing professional education (CPE) over the two-year renewal period. This is Maryland's own state-level CE requirement, separate from and in addition to any federal voluntary program.
CE Hour Breakdown
- 16 hours total required per two-year renewal period
- Minimum 4 hours must cover Maryland state tax law topics
- Of those 4 Maryland hours, up to 2 hours may be fulfilled through federal or state ethics coursework
Maryland CE vs. the IRS AFSP: Not the Same Thing
The IRS Annual Filing Season Program (AFSP) is a voluntary federal program that produces a Record of Completion and limited representation rights. It does NOT satisfy Maryland's registration CE requirement by itself, and completing Maryland's CE requirement does NOT automatically produce an AFSP Record of Completion. They are separate programs with different content requirements and different regulatory purposes.
A Maryland-registered preparer who also wants the AFSP Record of Completion must satisfy both programs independently. Many BITP-approved CE providers offer combined courses that satisfy both. Confirm with the provider before enrolling.
BITP-Approved CE Providers
The Board maintains a list of approved providers. Commonly approved sources include:
- Maryland Society of Accounting and Tax Professionals (MSATP)
- National Association of Tax Professionals (NATP) -- Annual Federal and State Tax Update
- PlatinumPro Studies (Maryland-specific online courses)
- WebCE (online)
- Montgomery College TAX 006 course
- Golden State Tax Training Institute
- Federal Direct Tax Services
- IRS-approved CE providers recognized by the Board
Verify that your chosen provider is on the current BITP-approved list before enrolling. The Board's CE page at labor.maryland.gov/license/taxprep is the authoritative source.
Maryland Tax Preparer Registration Fees
The full cost to get registered and start practicing in Maryland involves three components: the state exam, the initial registration, and the federal PTIN. All BITP fees are nonrefundable.
| Item | Amount | Notes |
|---|---|---|
| Maryland state exam (PSI Services) | Approx. $65 to $78 | Verify current fee at psiexams.com or call BITP: 410-230-6257 |
| Initial BITP registration | $100 | Nonrefundable; paid to Maryland Department of Labor |
| Biennial renewal | $100 | Every two years; requires 16 CE hours including 4 hours Maryland state law |
| Reinstatement (expired registration) | $120 | Applies if registration lapses and must be reinstated |
| Federal PTIN (annual, IRS) | $18.75 | 2026 rate; renew annually at irs.gov/ptin by December 31 |
The total first-year cost for a new preparer qualifying by exam runs approximately $183 to $198 (exam fee plus $100 registration plus $18.75 PTIN), depending on the exact current PSI exam fee. No surety bond is required under Maryland's BITP program.
Penalties for Preparing Without Registration
Maryland's enforcement authority is real and the penalties are not nominal.
Administrative Penalties (Board Enforcement)
Under Title 21, the Board may reprimand, suspend, or revoke a registration and may assess a fine of up to $5,000 per violation. Each unregistered return prepared counts as a separate violation. Maryland law also prohibits employers from knowingly hiring or retaining an unregistered preparer; the penalty applies to the employer as well.
Criminal Penalties
Under the Tax-General Article, a tax preparer who attempts to evade any Maryland tax faces misdemeanor prosecution: fines up to $10,000 and potential imprisonment up to five years.
BITP Contact Information
Maryland Board of Individual Tax Preparers, Maryland Department of Labor: 500 N. Calvert Street, 3rd Floor, Baltimore, MD 21202. Phone: 410-230-6257. Web: labor.maryland.gov/license/taxprep.
Maryland Individual Income Tax for TY2025
Maryland's income tax system is among the most complex for individual preparers to master. Every Maryland resident pays both a graduated state income tax and a mandatory county income tax, calculated on the same return (Form 502). Two new top state brackets took effect for tax years beginning after December 31, 2024, a capital gains surcharge was added for high earners, and itemized deductions now phase out at higher income levels. Get these details wrong and clients face unexpected balances due.
State Income Tax Brackets (TY2025)
Verify exact intermediate thresholds against the official TY2025 Form 502 instructions and the Maryland Comptroller's Tax Computation Worksheet before filing; the table below reflects the confirmed bracket structure for TY2025 with qualifying language noted for the brackets where source uncertainty exists.
| Taxable Income | Rate |
|---|---|
| $0 to $1,000 | 2.00% |
| $1,001 to $2,000 | 3.00% |
| $2,001 to $3,000 | 4.00% |
| $3,001 to $100,000 | 4.75% |
| $100,001 to $125,000 | 5.00% |
| $125,001 to $150,000 | 5.25% |
| $150,001 to $250,000 (verify against Form 502 instructions -- some sources indicate 5.75% begins at $150,001 without a 5.50% bracket) | 5.50% to 5.75% (see note) |
| $250,001 to $500,000 | 5.75% |
| $500,001 to $1,000,000 | 6.25% |
| Over $1,000,000 | 6.50% |
| Taxable Income | Rate |
|---|---|
| $0 to $1,000 | 2.00% |
| $1,001 to $2,000 | 3.00% |
| $2,001 to $3,000 | 4.00% |
| $3,001 to $150,000 | 4.75% |
| $150,001 to $175,000 | 5.00% |
| $175,001 to $225,000 | 5.25% |
| $225,001 to $300,000 | 5.75% |
| $300,001 to $600,000 | 5.75% |
| $600,001 to $1,200,000 | 6.25% |
| Over $1,200,000 | 6.50% |
Capital Gains Surcharge (New for TY2025)
Beginning Tax Year 2025, Maryland imposes a 2% surcharge on net capital gain income for taxpayers with federal AGI above $350,000. The surcharge stacks on top of ordinary Maryland income tax and the county tax. One important exclusion: gains from the sale of a primary residence where total gain is under $1,500,000 are exempt from the surcharge.
Example: A Montgomery County resident with $500,000 AGI and $80,000 in long-term capital gains (not from a primary residence) faces state tax at the applicable bracket rate, county tax at 3.20%, and the additional 2% capital gains surcharge on those gains.
Standard Deduction (TY2025)
Maryland simplified its standard deduction for 2025, eliminating the prior income-based phase-in formula:
- Single / Married Filing Separately / Dependent: $3,350
- Married Filing Jointly / Head of Household / Qualifying Surviving Spouse: $6,700
The old formula (15% of Maryland AGI, capped at $2,350 single / $4,700 MFJ) is gone for TY2025 forward. Future amounts are subject to cost-of-living adjustments.
Personal Exemptions and Phase-Out
The base exemption is $3,200 per exemption claimed. The exemption phases out based on AGI:
- Single / MFS at AGI $100,000 or under: full $3,200; $100,001 to $125,000: $1,600; $125,001 to $150,000: $800; above $150,000: $0
- MFJ / HoH at AGI $150,000 or under: full $3,200; $150,001 to $175,000: $1,600; $175,001 to $200,000: $800; above $200,000: $0
Additional exemptions are available for filers age 65 or older and for blindness.
Itemized Deduction Phase-Out (New for TY2025)
Beginning TY2025, taxpayers with federal AGI above $200,000 (single, MFJ, or HoH) or $100,000 (MFS) must reduce their allowable itemized deductions by 7.5% of the excess AGI over those thresholds.
Example: A single filer with $600,000 AGI has $400,000 of excess above $200,000. Required reduction: $400,000 x 7.5% = $30,000 reduction in itemized deductions. This is a meaningful hit for clients with significant itemized deductions.
Filing Deadline
Maryland individual income tax returns (Form 502 for full-year residents; Form 505 for nonresidents and part-year residents) are due April 15, consistent with the federal deadline. An automatic extension to October 15 is available for preparers who file the federal extension; however, any tax owed must still be paid by April 15 to avoid interest and penalties on the unpaid balance.
The Maryland County Income Tax: What Every Preparer Must Know
This is the most distinctive and often misunderstood aspect of Maryland returns. Every Maryland resident pays a mandatory county income tax in addition to the state income tax. Both are calculated on the same Form 502. There is no separate county return and no opt-out. The county is determined by where the taxpayer lived on December 31 of the tax year; a mid-year move does not split the county obligation.
Nonresidents who earn Maryland income pay a 2.25% nonresident local rate (added as a "nonresident tax" on Form 505). This applies uniformly regardless of the county where the income was earned.
2025 County Income Tax Rates
| County | Rate (2025) |
|---|---|
| Allegany | 3.03% |
| Anne Arundel | Graduated 2.70% to 3.20% (tiered by income and filing status) |
| Baltimore City | 3.20% |
| Baltimore County | 3.20% |
| Calvert | 3.20% |
| Caroline | 3.20% |
| Carroll | 3.03% |
| Cecil | 2.74% |
| Charles | 3.03% |
| Dorchester | 3.30% (increased from 3.20% retroactively for 2025) |
| Frederick | Graduated 2.25% to 3.20% (tiered by income and filing status) |
| Garrett | 2.65% |
| Harford | 3.06% |
| Howard | 3.20% |
| Kent | 3.20% |
| Montgomery | 3.20% |
| Prince George's | 3.20% |
| Queen Anne's | 3.20% |
| St. Mary's | 3.20% |
| Somerset | 3.20% |
| Talbot | 2.40% |
| Washington | 2.95% |
| Wicomico | 3.20% |
| Worcester | 2.25% (lowest in state) |
| Nonresident (earning Maryland-source income) | 2.25% |
Combined State-Plus-County Rate: What High Earners Face
For a high earner in Montgomery County or Prince George's County, the combined top Maryland income tax rate for TY2025 is approximately 9.70% (6.50% state plus 3.20% county), before the capital gains surcharge. In Dorchester County, that combined rate reaches approximately 9.80% (6.50% plus 3.30%). These are among the highest combined state-local income tax rates in the country, and they affect a significant portion of the Maryland workforce given the high-income DC suburb population.
For Anne Arundel and Frederick counties, use the graduated withholding tables from the Maryland Comptroller rather than a single flat rate; those counties use tiered structures where the exact rate depends on income level and filing status.
Federal Conformity and OBBBA: Critical for TY2025
Maryland uses static conformity to the Internal Revenue Code, conforming as of a fixed date that is updated only by express legislative action. Under Maryland's automatic decoupling mechanism, any federal amendment that would impact Maryland income tax revenue by more than $5 million is NOT automatically adopted; it requires specific Maryland General Assembly action. As of the date of this guide, Maryland's primary IRC conformity date is approximately December 31, 2024 (verify the exact date against the Maryland Comptroller's current official guidance, as the 2025 legislative session may have updated this).
OBBBA Tips and Overtime Deductions: No Maryland Benefit
As of the date of this guide, Maryland has not enacted legislation to adopt the OBBBA qualified tips deduction (IRC Section 224) or the overtime deduction (IRC Section 225) for state purposes.
The mechanism matters here. Both the tips and overtime deductions are below-the-line federal deductions that reduce federal taxable income but do NOT reduce federal AGI. Maryland starts its computation from federal AGI, so these deductions never flow through to the Maryland return regardless of conformity. Maryland residents who claim the tips or overtime deduction on their federal return receive no corresponding Maryland state tax benefit.
OBBBA Bonus Depreciation (Qualified Production Property): Add-Back Required
Maryland decouples from the OBBBA's special depreciation allowance for qualified production property. Taxpayers who claim this depreciation deduction on their federal return must add it back when calculating Maryland taxable income.
QBI Deduction (Section 199A)
Maryland does not allow the federal 20% QBI deduction. Like the tips and overtime deductions, the QBI deduction is a below-the-line federal deduction that does not reduce federal AGI, so it does not affect Maryland taxable income. No change from OBBBA on this point.
Practical Guidance for Preparers
Maryland is a state where you cannot assume a federal deduction flows through to the state return. Always manually reconcile the federal and Maryland returns. Clients with tips income, overtime pay, federal contractor business income, or capital gains from production property need explicit communication that their Maryland bill will be higher than their federal treatment suggests.
Special Maryland Tax Features
Social Security: Fully Excluded
Maryland does not tax Social Security benefits or railroad retirement benefits. Any amount of Social Security income that is federally taxable under the provisional income formula may be fully subtracted on Form 502 (Line 11). There is no age requirement, no income cap, and no disability test for this subtraction. A high-earning retiree with $100,000 in Social Security income who would owe federal tax on up to 85% of that amount still owes nothing on it at the Maryland level.
Important interaction: Maryland's pension exclusion (the retirement income exclusion available to filers age 65 and older) is reduced dollar-for-dollar by Social Security and railroad retirement benefits received. The maximum pension exclusion is indexed to the maximum annual Social Security benefit (approximately $41,200 for 2025). High Social Security income can effectively eliminate the pension exclusion. Structure the analysis correctly: these two benefits cannot both be claimed at full value simultaneously.
Military Retirement Income Deduction
Maryland allows a subtraction modification for military retirement income received from service in the U.S. Armed Forces, including the Maryland National Guard, Public Health Service commissioned corps, NOAA, and the Coast and Geodetic Survey.
For TY2025, the Maryland military retirement deduction is approximately $20,000 for taxpayers age 55 and older, and approximately $12,500 for those under age 55. Verify the final enacted amounts against the TY2025 Form 502 instructions before filing: legislation (HB 800/SB 99 in the 2025 session, HB 857 in the 2026 session) was pending during 2025 that would increase these limits, and the enacted figures may differ from the amounts shown here.
Maryland Earned Income Tax Credit
Maryland's EITC is 50% of the federal EITC for filers with qualifying children. For workers without a qualifying child, Maryland allows up to 100% of the federal childless worker credit. The Maryland EITC is fully refundable and can generate a refund even when no Maryland income tax is owed. Montgomery County also administers a local "Cashback" program with additional EITC outreach and resources for qualifying county residents.
Property Tax Credits
Maryland administers two significant property tax relief programs that affect many clients:
- Homeowners' Property Tax Credit (circuit-breaker): Provides a credit against property tax when the bill exceeds a percentage of household gross income. Application deadline: September 1 annually. Administered by the Maryland State Department of Assessments and Taxation (SDAT).
- Renters' Property Tax Credit: Up to $1,000/year for renters who meet income and net worth limits (gross household income under $60,000; net worth under $200,000 excluding home and retirement savings). Must have lived at the Maryland rental address at least six months during the calendar year. Application deadline: October 1 annually.
- Homestead Property Tax Credit: Limits annual increases in taxable assessment for a principal residence to 10% or less per year (set by each county). Applies automatically once an initial application is filed.
Both the Homeowners' and Renters' credits require proactive applications with firm annual deadlines. Alert eligible clients early in the year so they do not miss the September 1 or October 1 cutoffs.
Military Clients in Maryland: A Major Practice Niche
Maryland hosts more than 11 military installations, many of them among the largest in the country. The combination of federal workforce, active duty personnel, and civilian contractors creates one of the highest-density military tax client markets in the nation.
| Installation | Location | Key Notes |
|---|---|---|
| Fort George G. Meade | Anne Arundel County | 54,000+ employees; NSA, U.S. Cyber Command; largest employer in Maryland |
| Joint Base Andrews | Prince George's County | 20,000 jobs; $4 billion economic impact; Air Force One base |
| Aberdeen Proving Ground | Harford County | 21,000 jobs; Army research command; $3 billion economic impact |
| U.S. Naval Academy | Annapolis (Anne Arundel) | Midshipmen, faculty, civilian staff; Navy officer commissioning |
| NAS Patuxent River | St. Mary's County | Naval Air Warfare Center; test pilots; Lockheed and Boeing contractors |
| NSA Bethesda / Walter Reed | Montgomery County | Walter Reed National Military Medical Center; medical and research staff |
Key Military Tax Issues for Maryland Preparers
- BAH and BAS exclusion: Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) are excluded from Maryland taxable income, consistent with federal treatment.
- Military retirement income deduction: Up to $20,000 (age 55+) or $12,500 (under 55) subtracted from Maryland income (verify final enacted amounts for TY2025 -- see Section 9).
- SCRA protections: Under the Servicemembers Civil Relief Act, active duty military members who are not Maryland domiciliaries are not required to pay Maryland income tax on their military pay. Nonresident military spouses may also qualify for income tax relief under MSRRA (Military Spouse Residency Relief Act) if they share the servicemember's domicile state.
- TSP contributions: Thrift Savings Plan contributions are pre-tax at the federal level and flow through to Maryland as a subtraction; no separate Maryland treatment adjustment required.
- Survivor Benefit Plan (SBP) premiums: SBP premiums paid by a retired servicemember are deductible on the federal return and flow through to Maryland.
- Security clearance and federal contractor 1099s: Contractors working near NSA/Fort Meade and Joint Base Andrews frequently have complex income profiles with consulting income, relocation allowances, and multi-state return issues.
High-Value Client Markets in Maryland
DC Suburbs: Montgomery and Prince George's Counties
These two counties represent the dominant high-volume market for Maryland tax preparation. Montgomery County is the most populous county in Maryland (approximately one million residents) and one of the highest-income counties in the nation. It is home to the NIH (National Institutes of Health) in Bethesda, NIST, the Nuclear Regulatory Commission, FDA headquarters, NOAA, and a massive federal contractor base. Prince George's County hosts Joint Base Andrews, NASA Goddard Space Flight Center, the University of Maryland, and major federal agencies.
Both counties carry a 3.20% county income tax rate and a large population of high earners affected by the new top brackets (6.25% and 6.50%), the capital gains surcharge, and the itemized deduction phase-out. Federal employees (civil service pay, FERS retirement, TSP), military members, and government contractors are common client profiles, all with return complexity that justifies a professional preparer.
Baltimore Metro: Financial Services, Medical, and University Sector
Baltimore City and Baltimore County both carry a 3.20% county rate. Major employers include Johns Hopkins University and Johns Hopkins Medicine (the largest private employer in Maryland, with over 45,000 employees), T. Rowe Price, Franklin Templeton (formerly Legg Mason), Under Armour, and McCormick and Company. The financial services and investment management workforce at T. Rowe Price and Franklin Templeton produces sophisticated clients: deferred compensation, RSUs and ISOs, equity compensation across multiple tax years, and charitable giving strategies. Academic and medical staff at Johns Hopkins bring fellowship income, research grants, 403(b) plans, and international assignment complexity.
Eastern Shore: Agriculture and Fishing
The Eastern Shore counties have lower county rates (Talbot at 2.40%, Worcester at 2.25%, Garrett at 2.65%) but a distinct client niche: agricultural income, Schedule F preparation, farm equipment depreciation (Section 179, bonus depreciation reconciliation with Maryland), crop insurance, and commercial fishing income. Watermen's businesses with boat depreciation and crew wages represent a specialized sub-niche. Seasonal income patterns create quarterly estimated tax complexity that a knowledgeable preparer can manage as an ongoing advisory service.
Starting a Tax Preparation Business in Maryland
LLC Formation Costs
Maryland is more expensive for LLC formation and annual maintenance than most states. LLC registration goes through the Maryland State Department of Assessments and Taxation (SDAT).
- Articles of Organization filing fee: $100 (online or mail)
- Annual Report fee: $300 per year, due April 15 each year for all Maryland LLCs. This is one of the highest annual LLC fees in the country and is a recurring cost to budget.
- Electronic payment surcharge: 3% surcharge or $3 eCheck fee on electronic filings
The $300 annual report fee applies to all Maryland LLCs. Maryland's 2022 legislation eliminated annual fees for some entity types, but LLCs were not included. Budget for this cost as a firm fixed annual overhead item.
Pass-Through Entity Tax Election
Maryland offers an elective pass-through entity (PTE) tax regime (Form 510/511) as a workaround for the federal $10,000 SALT deduction cap. The PTE election is available to partnerships, S corporations, and LLCs taxed as partnerships or S corps.
- Election mechanics: Made with the first filing of the tax year; irrevocable once made
- PTE tax rate: Approximately 8.75% for TY2025 (reflects the new 6.50% top state rate plus the 2.25% minimum local rate); verify the current officially confirmed rate before advising clients, as this increased from the prior 8.25% rate when the new brackets took effect
- Credit: Members receive a corresponding refundable Maryland state and county income tax credit for their share of PTE tax paid
- Expanded base for TY2026 and forward: Beginning for tax years after December 31, 2025, resident owners may be subject to PTET on their full distributive share of entity income from all sources, not just Maryland-source income
For Maryland business owners with significant state tax liability, the PTE election is a meaningful planning tool. It requires careful analysis of the credit mechanics against each member's individual tax situation.
Sales Tax on Tax Preparation Services
Maryland does NOT apply its 6% sales and use tax to tax preparation services. Professional services are not among the enumerated taxable services under Maryland law. Maryland has no local sales taxes; the state rate of 6% is the only sales tax rate in Maryland. A new 3% tax on certain information technology services (specific NAICS code activities) took effect July 1, 2025, but this applies to IT and data processing services, not to individual professional tax preparation.
Frequently Asked Questions
Does Maryland require a tax preparer license?
Maryland does not use the term "license" for this credential. The official term is registration. But yes: Maryland requires every non-credentialed paid tax preparer to register with the Maryland Board of Individual Tax Preparers (BITP) before preparing any return for compensation. The initial registration fee is $100. CPAs, Enrolled Agents, and attorneys are exempt. Preparing without registration can result in administrative penalties of up to $5,000 per violation.
What are the Maryland BITP registration requirements?
To register with the BITP, you must be at least 18 years old with a high school diploma or GED, hold an active federal PTIN, and qualify through one of three pathways: (1) pass the Maryland state exam (PSI Services, open-book, 70% passing score); (2) document 15 consecutive years preparing 50 or more returns per year with 8 CE hours per year in the preceding 3 years; or (3) have passed the legacy IRS RTRP exam before January 2013. The initial registration fee is $100. Renewal is $100 every two years, requiring 16 CE hours including at least 4 hours of Maryland state tax law.
Does Maryland conform to the OBBBA tips and overtime deductions?
As of the date of this guide, Maryland has not enacted legislation to adopt the OBBBA qualified tips deduction (IRC Section 224) or the overtime deduction (IRC Section 225) for state purposes. Both are below-the-line federal deductions that do not reduce federal AGI, so they do not flow through to Maryland's return regardless. Maryland residents who claim these deductions federally receive no corresponding Maryland tax benefit.
Is Social Security taxable in Maryland?
No. Maryland does not tax Social Security benefits or railroad retirement benefits. Any amount of Social Security income that is federally taxable may be fully subtracted on Form 502 (Line 11). There is no age requirement, no income cap, and no disability test for this subtraction. Note that the Maryland pension exclusion for filers age 65 and older is reduced dollar-for-dollar by Social Security benefits received, so the two benefits interact and should be analyzed together.
What is the Maryland county income tax?
Every Maryland resident pays a mandatory county income tax on top of the state income tax, calculated on the same Form 502. Rates range from 2.25% (Worcester County, lowest) to 3.30% (Dorchester County, highest). Most high-population counties (including Montgomery, Prince George's, Baltimore City, Baltimore County, Howard, and Calvert) are at 3.20%. Anne Arundel and Frederick use graduated rate tables. The county is determined by where the taxpayer lived on December 31. Nonresidents earning Maryland income pay a flat 2.25% nonresident local rate on Form 505.
What is the PTIN fee for 2026?
The 2026 PTIN renewal fee is $18.75, paid at irs.gov/ptin. Renewal is required annually by December 31 and takes approximately 15 minutes online. The PTIN is required in addition to Maryland BITP registration; they are separate requirements administered by different agencies.
What is the Maryland capital gains surcharge?
Beginning Tax Year 2025, Maryland imposes a 2% surcharge on net capital gain income for taxpayers with federal AGI over $350,000. This surcharge is in addition to ordinary state and county income tax on those gains. Gains from the sale of a primary residence where total gain is under $1,500,000 are excluded from the surcharge.
For 2025 returns, verify how this state responds to the One Big Beautiful Bill Act provisions before filing. The state OBBBA conformity practitioner guide covers the conformity analysis workflow for tip and overtime income add-backs, bonus depreciation decoupling, and QBI adjustments in major nonconforming states.