2026 · Maryland
Maryland severance pay tax
Federal 22% plus Maryland's regular withholding. But that's withholding, not your tax. Here's the real number.
Counts toward the $184,500 Social Security cap.
Wages, new job, spouse, sets your real tax rate.
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Maryland layoff at a glance
| State tax on severance | Regular withholding tables |
| State income tax | Graduated, up to 6.5% |
| Unemployment weekly max | $430 for up to 26 weeks |
| Unemployment taxed by Maryland? | Yes |
How Maryland withholds on severance
Maryland has no single flat supplemental rate, severance is withheld using the regular tables, so the amount tracks your bracket. On top of that, the federal government withholds a flat 22% (37% over $1 million) and FICA, 6.2% Social Security up to the $184,500 wage base plus 1.45% Medicare.
Maryland taxes income on a graduated scale topping out at 6.5%, so a large severance can be pushed into that top rate. If you also claim unemployment, Maryland pays up to $430 a week for up to 26 weeks, and taxes it on the state return. That's the Maryland layoff picture in one place, the severance tax here, the unemployment on its own Maryland page.
Worked example: $40,000 severance in Maryland
A single filer, $40,000 severance paid separately, with $60,000 of other 2026 income:
| Federal withholding (22%) | −$8,800 |
| FICA (Social Security + Medicare) | −$3,060 |
| Maryland withholding | −$1,900 |
| Net check | $26,240 |
| What it actually costs in tax | $13,110 |
Over-withheld by about $650, expect roughly that back as a refund at filing. The withholding is a fixed rate; your actual tax is your marginal rate on the severance stacked on your other income.
Stacking Maryland unemployment on top
Maryland sizes your weekly check off your highest-earning quarter, up to $430 a week, mid-pack nationally (37th of 51). It adds $8 per dependent on top. Duration uniform 26.
| Weekly benefit range | $50 - $430 |
| How the amount is set | Off your highest-earning quarter |
| Maximum duration | 26 weeks (uniform 26) |
| Waiting week | No waiting week |
| Dependent allowance | $8 per dependent |
| Taxed by Maryland | Yes |
Stacked together, that $40,000 severance nets about $26,240 and Maryland's unemployment can add up to $11,180 over 26 weeks, about 9 months of a $4,000 budget before you need a paycheck. File through Maryland Department of Labor, Division of Unemployment Insurance; nail down the exact figure in the runway calculator.
Questions about Maryland severance tax
Is severance taxed higher in Maryland?
No. It's withheld at a flat 22% federally and by Maryland's regular tables, but it's taxed as ordinary income at your normal rates. You settle up at filing.
Does Maryland tax my severance?
Yes, Maryland taxes severance as wages. Maryland has no single flat supplemental rate, severance is withheld using the regular tables, so the amount tracks your bracket.
Will I get a refund or owe more?
It depends on your bracket. The flat 22% over-withholds for lower earners (refund) and under-withholds for those in the 32 to 37% brackets (set aside the difference). Enter your numbers above to see which way it goes for you.
Your Maryland layoff toolkit
- Maryland unemployment benefits weekly amount and duration
- Runway calculator how long your money lasts
- Maryland paycheck calculator take-home at your next job
- Maryland 1099 tax if you go freelance
An estimate for the 2026 tax year. State supplemental figures from the verified dataset, last verified 2026-07-24. Nothing you enter is stored. Not tax advice.