Updated October 4, 2026. Quick answer: Yes, and with an extra tax at higher incomes. Maryland taxes capital gains as income at its state rates, 2.00% to 6.50%, plus a local income tax. Form 502CG says Chapter 604 of the Acts of 2025 “imposes a 2% tax on certain capital gain income” for individuals with “a federal adjusted gross income of more than $350,000”.
Selling your home? How the state taxes the profit, from its own tax documents: Does Maryland tax the profit from selling your home?.
The same question for dividends and interest: does Maryland tax dividends and interest.
How Maryland treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Taxed as income at the graduated state rates, plus local tax, plus an additional 2% tax on certain capital gain income above $350,000 of federal adjusted gross income |
| State rates, 2025 Schedule I | 2.00%, 3.00%, 4.00%, 4.75%, 5.00%, 5.25%, 5.50%, 5.75%, 6.25% and 6.50%; the 6.50% rate applies to income over $1,000,000 |
| Local tax | Counties and Baltimore City levy an income tax; the 2025 local rate chart prints rates from 2.25% to 3.30% (printed as .0225 to .0330) |
| Not in the 2% tax | Net gain on a primary residence unless the sale totals $1,500,000 or more, retirement-plan assets, and other items listed on Form 502CG |
A $50,000 long-term gain
The state tax on a $50,000 gain depends on the bracket it lands in. Taxed wholly at 2.00% it would add $1,000; taxed wholly at 6.50%, $3,250, before local tax.
If your federal adjusted gross income is over $350,000 and the whole gain counts as taxable capital gain income, the additional tax is $50,000 x 2% = $1,000. Form 502CG decides which gains count.
What changes in 2026
The 2% additional tax is on the 2025 form; the documents read print no 2026 rate or form.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Maryland taxes pensions, how Maryland taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- 2025 Maryland Form 502CG Capital Gain Income: https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/forms/2025/502cg.pdf
- 2025 State & Local Tax Forms & Instructions (Resident Booklet): https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/resident-booklet.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.