Pennsylvania’s flat 3.07% income tax is dramatically lower than Maryland’s combined state and local rate of up to 8.95%. A $100,000 earner outside Philadelphia saves $5,881 per year by living in Pennsylvania. Maryland also levies an estate tax on estates above $5 million, while Pennsylvania instead charges an inheritance tax (4.5% to children, 12% to siblings, 15% to others). Property taxes slightly favour Maryland (1.09% vs PA’s 1.49%), partially offsetting the income tax gap for homeowners.

By Daniel, Founder of CountryTaxCalc

Daniel has spent 5+ years researching tax systems across 95+ countries and all US states to make tax comparison accessible to everyone. For corrections, contact us.

Last Updated: April 2026

The Big Picture

🦀 Maryland

2-5.75%

Plus County/City Tax

State 2-5.75% + local 2.25-3.2% = combined up to 8.95% in Baltimore City

🔔 Pennsylvania

3.07%

Flat Rate (Outside Philly)

Flat 3.07% statewide; Philadelphia residents add 3.75% wage tax on top

Typical Annual Savings

At $100,000 income:

$5,881

That is $490/month back in your pocket!

Tax Savings by Income Level

IncomeMD TaxPA TaxSavings10-Year
$50,000 $4,355$1,535$2,820$28,200
$75,000 $6,653$2,303$4,350$43,500
$100,000 $8,951$3,070$5,881$58,810
$150,000 $13,546$4,605$8,941$89,410
$250,000 $22,736$7,675$15,061$150,610
$500,000 $45,961$15,350$30,611$306,110

Maryland Pros and Cons

✅ Pros

  • No inheritance tax — Maryland uses an estate tax only above $5M
  • Lower average property tax rate (1.09% vs PA’s 1.49%)
  • Strong DC-area job market with federal government premium salaries
  • Excellent public schools ranked among top nationally

❌ Cons

  • High combined income tax up to 8.95% (state 5.75% + county 3.2%)
  • Mandatory county/city income tax on top of state rate — unique in the US
  • Estate tax on estates above $5M (no portability, cliff effect)
  • Very high cost of living in DC suburbs (among most expensive in USA)

Pennsylvania Pros and Cons

✅ Pros

  • Low flat 3.07% income tax rate — no bracket creep
  • Higher earners save $15K-$31K per year vs Maryland
  • No estate tax — estates pass to heirs free of state estate tax
  • Lower property taxes outside Philadelphia suburbs

❌ Cons

  • Inheritance tax of 4.5% (children), 12% (siblings), 15% (others) — unlike most states
  • Philadelphia city residents face additional 3.75% wage tax (total ~6.82%)
  • Higher average property tax rate (1.49% vs MD’s 1.09%)
  • No deductions or exemptions on PA flat rate — tax applies from first dollar
💡

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Frequently Asked Questions

Q: How much do I save on income tax moving from Maryland to Pennsylvania?

At $100,000 income, you save approximately $5,881 per year ($490/month) by living in Pennsylvania outside Philadelphia. Maryland charges up to 5.75% state + ~3.2% county = ~8.95% combined. Pennsylvania charges a flat 3.07%. Over 10 years that’s $58,810 in savings on income tax alone.

Q: Does Pennsylvania have an estate tax or inheritance tax?

Pennsylvania does not have an estate tax, but it does levy an inheritance tax. Transfers to children and grandchildren are taxed at 4.5%, siblings at 12%, and all other beneficiaries at 15%. Spouses and charities are exempt. Maryland, by contrast, has a state estate tax on estates above $5 million (rates up to 16%) but no inheritance tax.

Q: Is Pennsylvania income tax cheaper if I live in Philadelphia?

No. Philadelphia residents pay the state’s 3.07% flat income tax plus Philadelphia’s city wage tax of 3.75% (residents), for a combined rate of about 6.82%. That still beats Maryland’s top combined rate of 8.95%, but the advantage narrows significantly compared to living elsewhere in Pennsylvania.

Q: Which state has lower property taxes — Maryland or Pennsylvania?

Maryland has a lower average effective property tax rate at 1.09% compared to Pennsylvania’s 1.49%. On a $400,000 home, Maryland costs about $4,360/year in property tax vs Pennsylvania’s $5,960/year. This partially offsets Pennsylvania’s income tax advantage for homeowners, but the income tax savings still dominate for most earners.

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