Maryland · LLC tax election
Maryland LLC: S corp or C corp?
Maryland's flat 8.25% corporate rate is the number to weigh against your own Maryland income tax return.
See Maryland at a glanceShort answer
Maryland's corporate rate is a flat 8.25% of Maryland taxable income. An S corporation files Form 510 and generally pays no Maryland corporate tax, but it must pay 6.50% plus 2.25% on nonresident members' share of Maryland income. Your own Maryland return then taxes what passes through.
Last checked .Maryland at a glance
| Question | Maryland |
|---|---|
| S election recognized? | Yes, Maryland follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | Only on nonresident members' shares: 6.50% plus a 2.25% nonresident tax, or 8.25% for nonresident entity members.3 |
| C corp rate and minimum | 8.25% flat4 |
| Entity tax on a default LLC | None for an LLC taxed as a partnership; its income is taxed to the members.5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about Maryland?
Maryland is simple at the corporate level. The statute sets one rate for corporations, 8.25% of Maryland taxable income, with no brackets. A C corporation pays that, then you pay again on dividends. An S corporation files Form 510 as a pass-through entity and its income is taxed on the owners' Maryland returns instead. The wrinkle is nonresident owners: the entity pays 6.50% plus a special nonresident tax of 2.25% on a nonresident member's share of Maryland income, and 8.25% for nonresident entity members. If every owner lives in Maryland, that wrinkle does not apply.
Does Maryland recognize a federal S corp election?
Maryland follows the federal S election. An S corporation files Form 510, the pass-through entity return, every year, even with no income, and there is no separate state election. Its income is taxed to the owners, not the company, except income federal law taxes at the corporate level, such as built-in gains, which also bears Maryland corporation tax. If you have nonresident members the entity pays 6.50% plus 2.25% on their share of Maryland income, and 8.25% for nonresident entity members.
Does my LLC need a separate Maryland election or form?
Maryland has no separate S election; every pass-through entity, including an S corporation, files Form 510 each year even if it has no income.2
What does Maryland tax an S corp or LLC at the entity level?
- A Maryland S corporation pays tax on behalf of nonresident members: 6.50% plus a special nonresident tax of 2.25% of their share of Maryland income, and 8.25% for nonresident entity members.3
- Maryland's income tax does not apply to an LLC taxed as a partnership; its income is taxed to the members, though the pass-through entity nonresident tax rules can apply.5
Is a Maryland LLC taxed as a C corp ever better?
A Maryland C corporation pays a flat 8.25% of Maryland taxable income. There is no bracket structure and no minimum tax in the statute we checked. Bills in the 2026 session would lower the rate; the statute we loaded still reads 8.25%. Dividends you take out are taxed again on your personal Maryland return.
Run your Maryland numbers
In Maryland the case for an S election is the 8.25% corporate rate: it is the layer you skip when profit passes through to you. The saving depends on your personal Maryland bracket. If you have nonresident owners, the entity-level 6.50% plus 2.25% on their share takes part of that back.
Result
How much would a Maryland LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + Maryland LLC tax $0 | $21,194self-employment tax $21,194 + Maryland LLC tax $0 |
| S corp | $9,344payroll tax $7,344 + Maryland S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + Maryland S corp tax $0 + $2,000 payroll and prep |
| C corp | $18,150payroll tax $7,344 + Maryland tax $2,640 + federal $6,166 + $2,000 payroll and prep | $32,280payroll tax $13,770 + Maryland tax $4,950 + federal $11,560 + $2,000 payroll and prep |
Assumes a 60% salary8 and a single filer. Income tax is left out. C corp dividends are taxed again.
When is the Form 2553 deadline for a Maryland LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on Maryland: How to start a Maryland LLC · How to start a Maryland corporation · Maryland LLC cost · Maryland annual report · Annual report late fees by state
File the S-Corp Election for your Maryland LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
What is the Maryland corporate income tax rate?
8.25% of Maryland taxable income. The statute sets a single flat rate for a corporation, with no brackets.
What form does a Maryland S corporation file?
Form 510, the pass-through entity return. Every Maryland pass-through entity must file it each year, even with no income. There is no separate Maryland S election form.
Does Maryland tax S corporation income at the company level?
Generally no; income passes to the owners' Maryland returns. The exceptions are income federal law taxes at the corporate level, such as built-in gains, and the pass-through tax on nonresident members: 6.50% plus 2.25% of their share of Maryland income.
Does Maryland tax an LLC separately from its owners?
Not on income, if the LLC is taxed as a partnership; the statute says the income tax does not apply to it and the members are taxed. Pass-through nonresident tax rules can still apply.
Sources 9 links, checked Nov 6, 2026
- Maryland follows the federal S election: an S corporation files Form 510 as a pass-through entity, and owes Maryland corporation tax only on income federal law taxes at the corporate level, such as excess net passive income or built-in gains. marylandcomptroller.gov, checked Nov 6, 2026
- Maryland has no separate S election; every pass-through entity, including an S corporation, files Form 510 each year even if it has no income. marylandcomptroller.gov, checked Nov 6, 2026
- A Maryland S corporation pays tax on behalf of nonresident members: 6.50% plus a special nonresident tax of 2.25% of their share of Maryland income, and 8.25% for nonresident entity members. marylandcomptroller.gov, checked Nov 6, 2026
- Maryland taxes a C corporation at a flat 8.25% of Maryland taxable income. mgaleg.maryland.gov, checked Nov 6, 2026
- Maryland's income tax does not apply to an LLC taxed as a partnership; its income is taxed to the members, though the pass-through entity nonresident tax rules can apply. mgaleg.maryland.gov, checked Nov 6, 2026
- Maryland taxes individual income, so pass-through profit lands on the owner's Maryland return. mgaleg.maryland.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.