Maryland vs Virginia Taxes

For the most boring topic in the world – taxes, let’s try to make this fun.

Let’s do a case study. Mercina and Leia each got jobs in the DC Metro area and they are trying to decide whether to move to Maryland or Virginia.

Leia’s salary is $90,000 because during her interview, she said the following:

1. Putting on a shirt is the least favorite part of my day.
2. Your brain is so small.
3. My butt crack should be in a museum
4. Everyone’s teeth here are on the outside of their mouth.

Mercina’s salary is $200,000 because she didn’t talk back during her interview.

Annie and Ziggy are job-sharing since they each sleep about 18 hours a day. They are making a combined $275,000. Good job Annie and Ziggy! You always were my favorite children.

Maryland & Virginia: Income Taxes

All information here comes from MarylandTaxes.gov.

Maryland:

For incomes of $3000 to $100,000, you will pay a nominal fee of $90, plus 4.75% of excess over $3000.

Once you pass $100,000, you move to a different schedule, where the fixed fee rises sharply as does the tax rate.  https://www.marylandtaxes.gov/forms/current_forms/Md_Tax_Computation.pdf

You get a slight break if you’re filing as head of household or married, the spread in the income gap gets larger, fees are higher but the percentage increases are not as much. Let’s take a look.

Leia, making $90,000, would pay $4222.50 whether she was married or single.

Mercina, making $200,000 would pay $10,010 if single and $9634.50 if married / head of household.

Annie and Ziggy, making $275,000, will pay $14,197.50 if they file as single and $13,697 if filing married / head of household.

One extra surprise, the counties in Maryland also levy income taxes. Montgomery County and Prince George’s County both assess 3.2% of your taxable income. Let’s take a look now at what happens.

Leia’s total taxes on $90,000 salary are $7102.50.

Mercina’s total taxes on $200,000 are just over $16,000.

Annie and Ziggy have to pay nearly $23,000 to Maryland on their salary of $275,000.

Virginia:

Virginia’s tax tables are nothing like Maryland. Anyone making $18,000 or $180,000 pay the same. Anything over $17,000 is taxed the same amount of $720 flat plus 5.75% of anything in excess of $17,000.

And, done! Aside from a few towns in the Commonwealth, the counties charge no income tax. Virginia is set up so that the county governments have very little taxing authority.

Counties in Virginia collect revenue from homeowners for real estate assessments as well as on personal property tax. Personal what? Let’s keep going.

Maryland & Virginia: Property Taxes

Maryland has 23 counties and 156 incorporated cities which each issue property tax assessments. Because I’m a metro DC Realtor I’m going to only cover Montgomery and Prince George’s Counties.

In Montgomery County there is a county tax of .6940 a state tax of .1120 per mil of assessed value and .28 utility tax. There are additional taxes in each of the Chevy Chase villages, Chevy Chase View, the Cities of Rockville, Gaithersburg, Takoma Park and 9 Towns. Why? Because the towns offer city or town services like trash pickup. If you’re outside the city or town limits, you get county services.

On a house assessed at $750,000 you will pay around $8100 in taxes if you’re in an unincorporated area and $9000 if you’re in a city/town with its own municipal tax.

In Virginia, property taxes vary by county and city. Unlike in Maryland where a city can lie within a county, Virginia has a different set up. Cities stand alone. They are not part of a county.

Arlington is $1.03 per $100 of assessed value and the assessed values run pretty close to market value.

So your home assessed at $750,000 will have property taxes over $7725 per year.

In Alexandria (the city) you will be assessed $1.13 per $1000 of assessed value.

So that home assessed at $750,000 will now cost over $8475 per year.

Maryland & Virginia: Other Taxes

Virginia has a personal property tax on vehicles, trailers, RV’s and boats which may equalize if you have a lot of vehicles. In Arlington it’s now $5.00 per $100 of assessed value. What’s the personal property tax cover? Vehicles, boats, trailers, mobile homes and airplanes. How do they assess a value? They check the NADA Used Car Guide for the clean trade-in value for the year. Does Maryland have that? They do not – at least not for individuals.  MD personal property tax is on Business-owned furniture, fixtures etc.

Right now, for Leia with her $90,000, it looks better to live in Virginia where she will pay $2000 a year less in income taxes. But what if she has a car? And what if her car is assessed at $35,000? She will pay $1445.50 a year in taxes on her vehicle. It goes down as the vehicle depreciates. But as we know, cars have not been depreciating much since Covid. My 2016 mom car was $40,000 new and assessed at $25,000 now, and that would be $1250 a year in car taxes. Except we have my husband and an additional travel vehicle, and suddenly that income tax savings isn’t looking so great.

Conclusion

Property taxes are a wash. There is no way to compare and say that Maryland or Virginia is better because they are so similar. The difference lies in the income tax which is much higher in Maryland than Virginia, and the possibly offsetting personal property tax in Virginia. If you have several vehicles, an RV or a plane, well, Maryland might be looking pretty darn good. If you’ve got no cars and take public transportation, you can enjoy that savings by living in Virginia!