T-bills and savings bonds in Maryland: the tax-equivalent yield
Every Maryland resident pays two income taxes on bank interest, one to the state and one to the county or Baltimore City, and Treasury bill and savings bond interest is exempt from both.
A CD or savings account in Maryland must pay
4.877 %
to match 4.351 % from a T-bill or savings bond, which Maryland cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| Maryland marginal rate | 5.00 % |
| Local rate | 3.200 % |
| State and local tax saved per $10,000 a year | $35.68 |
Worked out by Radif Partners · How we calculate · schedule read on the Maryland revenue department site, tax year 2026
A single filer in Montgomery County, Baltimore City or most other Maryland jurisdictions with $110,000 of taxable income pays 5 % in state tax and 3.2 % in county tax on each extra dollar of CD interest, 8.2 % together, on top of a 24 % federal rate. T-bill and savings bond interest owes neither tax. The 26-week bill auctioned on October 13, 2026 yields 4.351 %; a bank deposit must pay 4.877 % to leave the same after tax. Held for a year, each $10,000 in bills saves $35.68 of Maryland state and local tax. County rates for 2026 run from 2.25 % in Worcester to 3.3 % in Dorchester and Kent, and the calculator above starts at the 3.2 % rate that most of the state pays; change it under the advanced options. The state brackets are those of the Comptroller's 2026 estimated tax worksheet, with the two top rates added in 2025.
State brackets: tiny at the bottom, new at the top
Maryland's schedule starts with three brackets only $1,000 wide each, then a long 4.75 % band. The 2025 legislative session (House Bill 352) added two rates for high incomes, 6.25 % and 6.5 %. Schedule I covers single filers; Schedule II covers married couples filing jointly, heads of household and qualifying surviving spouses.
| Rate | Schedule I (single), from | Schedule II (joint, head), from |
|---|---|---|
| 2 % | $0 | $0 |
| 3 % | $1,000 | $1,000 |
| 4 % | $2,000 | $2,000 |
| 4.75 % | $3,000 | $3,000 |
| 5 % | $100,000 | $150,000 |
| 5.25 % | $125,000 | $175,000 |
| 5.5 % | $150,000 | $225,000 |
| 5.75 % | $250,000 | $300,000 |
| 6.25 % | $500,000 | $600,000 |
| 6.5 % | $1,000,000 | $1,200,000 |
Maryland also has an additional tax on net capital gains once federal adjusted gross income is high. It is figured on gains only, so it plays no part in the choice between a CD and a T-bill.
The county tax is the second layer
Each county and Baltimore City sets its own local income tax, applied to Maryland taxable net income. Because it uses that state figure, the subtraction for U.S. obligations removes Treasury interest from the county base too. Anne Arundel and Frederick use graduated county rates; elsewhere the rate is flat.
| County | 2026 local rate |
|---|---|
| Worcester (lowest) | 2.25 % |
| Montgomery, Prince George’s, Baltimore County, Howard, Baltimore City and most others | 3.2 % |
| Dorchester and Kent (highest) | 3.3 % |
In Anne Arundel and Frederick the county rate depends on income, so enter the rate of the county bracket your taxable income falls in, as listed in the Comptroller's worksheet. Nonresidents who earn Maryland income pay a special nonresident tax instead of a county tax, a case this page does not cover.
The difference between the cheapest and the dearest county is 1.05 %. On $10,000 of CD interest at the bill's yield, that alone is $4.57 a year.
Ocean City against Chestertown
Move the single filer from the summary to Ocean City in Worcester County: the state takes 5 %, the county 2.25 %, and the break-even CD rate falls to 4.810 %. A married couple in Chestertown, Kent County, with $320,000 of joint taxable income pays 5.75 % to the state and 3.3 % to the county, with a 24 % federal rate. For them the CD must pay 4.939 %, and $10,000 in T-bills avoids $39.38 a year. Try your own county rate in the small calculator.
Your Maryland county rate and the T-bill
A CD or savings account in Maryland must pay
5.019 %
| Federal marginal rate (2026 brackets) | 32 % |
| Maryland marginal rate | 5.75 % |
| Local rate | 3.300 % |
| State and local tax saved per $10,000 a year | $39.38 |
Code ab on Form 502SU
Your federal adjusted gross income includes the interest, and the Maryland return takes it back out. Interest on U.S. government obligations comes out through Form 502SU, the subtractions schedule, under code ab, and the total goes to line 13 of Form 502. Interest on Ginnie Mae securities is excluded from that code. The 2025 resident booklet notes that the subtraction also reduces the base of the local tax. Next door, the District of Columbia has a single tax with no county layer; for the bank side of the comparison, see T-bills against CDs.