Pennsylvania vs. Maryland Real Estate: What Cross-State Buyers Need to Know

One of the most common questions I receive from clients is: “Should I buy in Pennsylvania or Maryland?” It’s a smart question. When you live near the border, you have unique opportunities—and unique complexities—that most homebuyers never encounter.

As someone licensed in both Pennsylvania and Maryland, I’ve helped families navigate the crucial differences between these two states. The right choice can save you thousands of dollars annually and significantly impact your quality of life in retirement or beyond. The wrong choice? Well, that’s what this guide is designed to help you avoid.

Let’s break down the key factors that should influence your decision.

The Tax Landscape: Where Your Money Goes Further

Income Tax: A Clear Distinction

Pennsylvania maintains a flat income tax rate of 3.07% for all residents regardless of income level, making it one of the simplest tax structures in the country. Maryland uses a graduated income tax system with rates ranging from 2% to 5.75%, plus local income taxes that vary by county.

What this means for you: If you’re a high-income earner, Pennsylvania’s flat rate could save you substantial money. However, if you’re in a lower income bracket, Maryland’s progressive structure might actually be more favorable.

Retirement Income: The Pennsylvania Advantage

Here’s where Pennsylvania shines for retirees. Pennsylvania does not tax Social Security benefits, pension income, or distributions from 401(k)s and IRAs. This makes it one of the most retirement-friendly states in the nation.

Maryland does not tax Social Security benefits, but does tax other retirement income, though military retirees can subtract up to $12,500 of their pension (or $20,000 if 55 and older).

Real-world impact: If you’re retiring with a pension of $50,000 annually, you could save $1,535-$2,875 per year by living in Pennsylvania versus Maryland, depending on your specific tax situation and county of residence.

Property Taxes: County-by-County Variations

Property taxes vary significantly by county in both states, making generalization difficult. However, understanding the structure is important.

Pennsylvania’s median property tax across all 67 counties is $2,656.87. In Maryland, property tax rates vary substantially by jurisdiction, with some counties having significantly higher effective rates.

Key consideration: Don’t just compare state averages—look at specific counties where you’re considering buying. Franklin County, PA and Washington County, MD have different tax structures that could significantly impact your annual costs.

Sales Tax: Small Differences, Real Impact

Pennsylvania has a 6% statewide sales tax, with two counties charging additional local sales taxes. Maryland’s sales tax is also 6%, but applies to different categories of goods and services.

What you should know: Both states have similar sales tax rates, so this likely won’t be a deciding factor for most buyers. However, if you make large purchases frequently, understanding what’s taxable in each state can help you plan major expenses strategically.

Cost of Living: Beyond the Tax Bill

Housing Costs

Housing prices vary dramatically by location within each state. Areas closer to major employment centers like Baltimore or Harrisburg command premium prices, while more rural areas offer affordability.

Border advantage: Living near the PA/MD border gives you flexibility. You might choose to live in a more affordable Pennsylvania community while accessing Maryland amenities, or vice versa.

Healthcare Access

Both states offer excellent healthcare options, but the specific facilities near you matter most.

Pennsylvania options: Chambersburg Hospital, WellSpan Health system, UPMC facilities

Maryland options: Meritus Medical Center in Hagerstown, access to Baltimore medical centers

Strategic consideration: If you have ongoing medical needs or anticipate requiring specialized care as you age, proximity to specific facilities should influence your location choice. Don’t just look at distance—consider which state your insurance networks favor.

Utilities and Home Maintenance

Energy costs can vary based on local utility providers rather than state lines. However, climate and home construction standards differ slightly between the states.

Research tip: Before making an offer, ask to see 12 months of utility bills. This gives you real data rather than estimates, especially important for older homes where efficiency varies.

Real Estate Market Dynamics

Market Conditions

Real estate markets operate locally, not just by state. However, understanding broader trends helps you time your purchase wisely.

Current considerations:

• Inventory levels in your target area
• Average days on market
• Price trends over the past 12-24 months
• New construction activity

These factors change regularly, which is why working with a local expert who monitors both Pennsylvania and Maryland markets provides valuable insight.

Property Appreciation

Historical appreciation rates differ between regions, but past performance doesn’t guarantee future results. However, understanding what drives value in each area helps you make informed decisions.

Value drivers to consider:

• School district quality and rankings
• Proximity to employment centers
• Community amenities and development
• Infrastructure improvements
• Demographic trends

Legal and Regulatory Differences

Home Buying Process

Both states require similar documentation and follow comparable closing procedures, but some differences exist:

Pennsylvania specifics:

• Requires municipal lien certificates
• Use of title insurance is standard
• Transfer taxes vary by municipality

Maryland specifics:

• Requires specific property condition disclosures
• Different settlement cost structures
• State-specific transfer taxes

Why this matters: Understanding these differences helps you budget accurately for closing costs and avoid surprises during the transaction.

Homeowners Associations and Zoning

Both states have diverse zoning regulations and HOA structures. However, enforcement and requirements can differ:

Research requirements:

• Local zoning ordinances
• HOA bylaws and fee structures
• Property use restrictions
• Future development plans in the area

Insurance Considerations

Homeowners Insurance

Insurance costs vary based on location, home characteristics, and coverage levels. Factors affecting your rates include:

• Proximity to fire stations
• Local building codes and enforcement
• Weather-related risk factors
• Home age and construction type

Cost comparison strategy: Get quotes for specific properties you’re considering in both states. Sometimes the difference in insurance costs alone can offset other financial advantages.

Other Insurance Types

Consider how your location affects:

• Auto insurance rates (vary by state and county)
• Umbrella policy costs
• Flood insurance requirements (if applicable)

Schools and Community Resources

For Families with Children

School district quality often drives real estate decisions for families. Both Pennsylvania and Maryland have excellent and struggling districts—location matters more than state.

Research approach:

• Review school ratings and test scores
• Visit schools personally when possible
• Talk to current parents in the district
• Consider extracurricular offerings
• Evaluate class sizes and teacher-to-student ratios

For Retirees and Empty Nesters

If schools aren’t a priority, focus on:

• Senior center programs and activities
• Library and cultural resources
• Parks and recreation facilities
• Volunteer opportunities
• Community social groups

Making Your Decision: A Strategic Framework

Step 1: Define Your Priorities

What matters most to you?

• Tax minimization
• Healthcare access
• Community amenities
• Family proximity
• Future appreciation potential

Rank these factors to guide your search.

Step 2: Run the Numbers

Create a comprehensive comparison including:

• Property taxes (actual rates for specific properties)
• Income tax impact based on your situation
• Insurance costs (get real quotes)
• Commuting costs if applicable
• Utility estimates

Step 3: Consider Non-Financial Factors

Numbers don’t tell the whole story. Also evaluate:

• How each community feels to you
• Lifestyle fit with your values and interests
• Proximity to friends and family
• Climate and environmental preferences
• Long-term community development plans

Step 4: Think Long-Term

Don’t just consider your current situation—think ahead:

• How will your income change in retirement?
• Will your housing needs evolve?
• Are you likely to age in place or move again?
• How might tax laws change (though we can’t predict this)?

Common Cross-State Buyer Mistakes to Avoid

Mistake #1: Focusing Only on Purchase Price

A home that costs $50,000 less but has $3,000 higher annual property taxes will cost you more over a 10-year period. Always calculate total cost of ownership.

Mistake #2: Ignoring Your Specific Tax Situation

General state tax comparisons don’t tell your personal story. Your income sources, retirement accounts, and overall financial picture determine which state actually saves you money.

Mistake #3: Underestimating Community Fit

The most tax-advantageous location won’t make you happy if you don’t feel connected to the community. Quality of life matters.

Mistake #4: Not Working with a Cross-State Expert

Real estate professionals who only work in one state can’t provide the comparative analysis you need. Border-area expertise makes a significant difference.

Special Considerations for Different Buyer Types

First-Time Buyers

Pennsylvania offers:

• First-time homebuyer programs through PHFA
• Various down payment assistance options

Maryland offers:

• Maryland Mortgage Program benefits
• County-specific first-time buyer incentives

Research which state’s programs better match your situation.

Retirees and Downsizers

Pennsylvania’s retirement income tax exemptions make it particularly attractive for retirees seeking to maximize their retirement income. However, Maryland’s proximity to major medical centers and certain amenities might outweigh tax savings depending on your priorities.

Military Families

Both states offer benefits for military members, but specifics differ. Maryland provides specific military pension exclusions, while Pennsylvania’s broader retirement income exemptions may be more beneficial depending on your total retirement income.

Remote Workers

If you’re not tied to a specific employment location, you have maximum flexibility. Consider:

• Internet infrastructure quality
• Coworking spaces and coffee shops
• Community of other remote workers
• Lifestyle amenities that support work-life balance

The Value of Local, Dual-State Expertise

Understanding these differences intellectually is one thing—knowing how they apply to your specific situation is another. Market conditions change, tax laws evolve, and personal circumstances vary.

Working with a real estate professional who is licensed in both Pennsylvania and Maryland and actively works in the border region provides several advantages:

Comparative market analysis: Understanding pricing trends and value in both states helps you negotiate effectively and avoid overpaying.

Tax planning insight: While I’m not a tax advisor (and you should always consult with a tax professional for specific advice), I can help you understand how state differences might affect your overall housing costs.

Community knowledge: Knowing the character, amenities, and future development of communities on both sides of the border helps you find the right fit.

Network access: Relationships with lenders, inspectors, and other professionals who work across state lines streamline your transaction.

Negotiation expertise: Understanding what buyers typically expect in each state helps position your offers competitively.

Your Next Steps

If you’re considering a cross-state purchase, here’s how to move forward:

1. Assess your priorities: Make a list of what matters most to you—financial, lifestyle, and practical considerations.
2. Calculate your specific tax impact: Use online calculators or consult with a tax professional to understand how each state would affect your personal tax situation.
3. Research specific communities: Don’t just compare states—compare actual towns and neighborhoods where you might want to live.
4. Get pre-approved: Understanding your budget helps narrow your search and makes you a more competitive buyer.
5. Tour both states: Spend time in communities you’re considering. Visit at different times and days to get a real feel for each area.
6. Consult with a cross-state real estate expert: Professional guidance helps you avoid costly mistakes and find opportunities you might miss on your own.

Making the Right Choice for Your Future

Choosing between Pennsylvania and Maryland isn’t about which state is objectively “better”—it’s about which state better serves your unique needs, goals, and circumstances. The border region offers incredible flexibility, but navigating the options requires knowledge and strategic thinking.

The good news? You don’t have to figure this out alone. As someone who lives and works in this unique cross-state market, I understand the nuances that make the difference between a good decision and a great one.

Ready to Explore Your Cross-State Options?

Whether you’re leaning toward Pennsylvania, Maryland, or still weighing your options, I’m here to provide the insight and guidance you need. Let’s discuss your specific situation and create a strategy that helps you find the right home in the right state for your future.

Contact Alan Fishman, Your Transition Specialist:

📱 Cell: 301.518.8390 (Call or text anytime)
📧 Email: alan.fishman@cbrealty.com
🏢 Office: 717.762.7111
📍 Address: 1814 E. Main St., Waynesboro, PA 17268
🌐 Website: fishmanfindshomes.com

Licensed in Pennsylvania and Maryland

Let’s schedule a consultation to discuss your cross-state home buying goals. Together, we’ll analyze your options and find the perfect location for your next chapter.

Alan Fishman specializes in helping buyers and sellers navigate the unique opportunities of the Pennsylvania-Maryland border region. His dual-state licensing and local expertise provide clients with comprehensive market knowledge and strategic guidance for making informed real estate decisions.

Disclaimer: This article provides general information about tax and real estate differences between Pennsylvania and Maryland. Tax laws change regularly, and individual circumstances vary significantly. Always consult with qualified tax and legal professionals before making financial decisions based on tax considerations.