Maryland · SEP-IRA Contribution Deduction
SEP-IRA Contribution Deduction in Maryland (2026)
Deduct contributions up to 25% of net self-employment income to a SEP-IRA retirement account. Maryland has a progressive income tax with a top rate of 6.5%, so a Maryland filer's combined marginal rate on the next dollar at $90,203 of income is about 26.75% (22% federal + 4.75% MD).
2026 savings example for Maryland
Planning estimate for a single filer earning $90,203 (Maryland median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; MD tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$1,338
Federal savings
$1,100
$11,015 → $9,915 · 22% bracket
MD state savings
$238
$4,073 → $3,836 · 4.75% marginal
Combined marginal rate
26.75%
≈ $268 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $69,000.
Federal × Maryland marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The MD column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | MD marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 4.75% | 14.75% | $148 |
| 12% | $28,500 - $66,500 | 4.75% | 16.75% | $168 |
| 22% | $66,500 - $121,800 | 4.75% | 26.75% | $268 |
| 24% | $121,800 - $217,875 | 5.5% | 29.5% | $295 |
| 32% | $217,875 - $272,325 | 5.5% | 37.5% | $375 |
| 35% | $272,325 - $656,700 | 5.75% | 40.75% | $408 |
| 37% | Over $656,700 | 6.25% | 43.25% | $433 |
Eligibility & forms
Self-employed or small business owners
- Self-employed or business owner
- Contribution by tax deadline
- Within contribution limits
Federal forms: Form 1040, Form 5498
Maryland filing notes
Total tax includes state and county. County tax adds significantly. Both estate and inheritance taxes apply. Low standard deduction makes itemizing worthwhile. Retirement income subtraction available for 65+.
Common mistakes: Exceeding 25% of net earnings; Missing contribution deadlines.
Frequently asked questions
How much can the SEP-IRA Contribution Deduction save a Maryland taxpayer in 2026?
In LevyIO's example, a single filer with $90,203 of income (the Maryland median household income in our state dataset) who removes $5,000 from taxable income saves about $1,100 in 2026 federal tax (22% marginal bracket) plus about $238 in Maryland tax (4.75% state marginal rate), roughly $1,338 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's MD bracket data, not a survey figure.
What is the Maryland income tax rate for 2026?
Maryland has a progressive income tax with a top rate of 6.5%. The MD standard deduction in LevyIO's dataset is $3,350 single / $6,700 married. 10 brackets from 2% to 6.5% (6.25% over $500k, 6.5% over $1M single). County taxes add 2.25-3.20%. Both estate AND inheritance tax. Low standard deduction.
Who qualifies for the SEP-IRA Contribution Deduction in Maryland?
Self-employed or small business owners. The federal rules are the same in every state; the requirements are: Self-employed or business owner; Contribution by tax deadline; Within contribution limits. Maryland filers should confirm on the MD return whether the state follows the federal treatment.
Which forms do I file to claim the SEP-IRA Contribution Deduction?
Federal: Form 1040, Form 5498. Maryland: check the Maryland Comptroller instructions for the matching state schedule. Common mistakes: Exceeding 25% of net earnings; Missing contribution deadlines.
SEP-IRA Contribution Deduction in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.