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learn-build-service-prod merged 3 commits into from
Feb 25, 2026
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Auto Publish – main to live - 2026-02-25 13:00 UTC #870

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Revise tax update details and add Maryland changes
theley502 Feb 10, 2026
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Update US19JanTaxR1.md
theley502 Feb 12, 2026
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Merge pull request #869 from theley502/patch-549527
jswymer Feb 25, 2026
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69 changes: 67 additions & 2 deletions dynamics-gp/payroll/US19JanTaxR1.md
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Expand Up @@ -6,7 +6,7 @@ author: theley502
ms.topic: article
ms.reviewer: jswymer
ms.author: theley
ms.date: 1/28/2026
ms.date: 2/12/2026
---
# U.S. 2026 Payroll Tax Update

Expand All @@ -16,7 +16,7 @@ This tax update applies to:

This article provides guidance for how to install the 2026 U.S. Payroll Tax Update for Microsoft Dynamics GP and describes changes.

This is the second tax update for 2026 and replaces all previous tax updates. It includes State tax table changes that take effect January 1, 2026.
This is the third tax update for 2026 and replaces all previous tax updates. It includes State tax table changes that take effect January 1, 2026.

This document assumes that you are familiar with the Microsoft Dynamics GP U.S. Payroll module.

Expand All @@ -28,6 +28,71 @@ Check out these blogs for documentation on how you calculate payroll taxes in Mi

[Tips to install the U.S. Payroll Tax Update](https://community.dynamics.com/blogs/post/?postid=dbc1295b-297f-4441-aa2f-7c2502bffc97)

## Changes in February Round 3 update (Target Release 2/27/2026)

- Maryland

### Withholding changes for Maryland

For each Filing Status of Maryland:
The state of Maryland changed its payroll tax standard deduction from a percentage-based calculation to a flat amount of $3,400 for all filing status.

For Filing Status of ALGENY (Allegany).
Withholding rates for taxpayer:

| If Over | But Not Over | Tax Amount | Tax Rate | On Excess Over |
|-------------|------------------|----------------|--------------|--------------------|
| 0 | 5,000 | 0 | 0% | 0 |
| 5,000 | 100,000 | 0 | 7.95% | 5,000 |
| 100,000 | 125,000 | 7,950 | 8.20% | 100,000 |
| 125,000 | 150,000 | 10,000 | 8.45% | 125,000 |
| 150,000 | 250,000 | 12,112.50 | 8.70% | 150,000 |
| 250,000 | 500,000 | 20,812.50 | 8.95% | 250,000 |
| 500,000 | 1,000,000 | 43,187.50 | 9.45% | 500,000 |
| 1,000,000 | And over | 90,437.50 | 9.70% | 1,000,000 |

For Filing Status of ALMAR (Allegany)
Withholding rates for taxpayer:

| If Over | But Not Over | Tax Amount | Tax Rate | On Excess Over |
|-------------|------------------|----------------|--------------|--------------------|
| 0 | 5,000 | 0 | 0% | 0 |
| 5,000 | 150,000 | 0 | 7.95% | 5,000 |
| 150,000 | 175,000 | 11,925 | 8.20% | 150,000 |
| 175,000 | 225,000 | 13,975 | 8.45% | 175,000 |
| 225,000 | 300,000 | 18,200 | 8.70% | 225,000 |
| 300,000 | 600,000 | 24,725 | 8.95% | 300,000 |
| 600,000 | 1,200,000 | 51,575 | 9.45% | 600,000 |
| 1,200,000 | And over | 108,275 | 9.70% | 1,200,000 |

For Filing Status of KENT
Withholding rates for taxpayer:

| If Over | But Not Over | Tax Amount | Tax Rate | On Excess Over |
|-------------|------------------|----------------|--------------|--------------------|
| 0 | 5,000 | 0 | 0% | 0 |
| 5,000 | 100,000 | 0 | 8.05% | 5,000 |
| 100,000 | 125,000 | 8,050 | 8.30% | 100,000 |
| 125,000 | 150,000 | 10,125 | 8.55% | 125,000 |
| 150,000 | 250,000 | 12,262.50 | 8.80% | 150,000 |
| 250,000 | 500,000 | 21,062.50 | 9.05% | 250,000 |
| 500,000 | 1,000,000 | 43,687.50 | 9.55% | 500,000 |
| 1,000,000 | And over | 91,437.50 | 9.80% | 1,000,000 |

For Filing Status of KNMAR
Withholding rates for taxpayer:

| If Over | But Not Over | Tax Amount | Tax Rate | On Excess Over |
|-------------|------------------|----------------|--------------|--------------------|
| 0 | 5,000 | 0 | 0% | 0 |
| 5,000 | 150,000 | 0 | 8.05% | 5,000 |
| 150,000 | 175,000 | 12,075 | 8.30% | 150,000 |
| 175,000 | 225,000 | 14,150 | 8.55% | 175,000 |
| 225,000 | 300,000 | 18,425 | 8.80% | 225,000 |
| 300,000 | 600,000 | 25,025 | 9.05% | 300,000 |
| 600,000 | 1,200,000 | 52,175 | 9.55% | 600,000 |
| 1,200,000 | And over | 109,475 | 9.80% | 1,200,000 |

## Changes in January Round 2 update (Released 1/22/2026)

- Arkansas
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