I am not sure what 5.4% represents but let's assume that this is 5.4% of the dividend reported in the 1099 DIV that is interest and capital gain. Now if your dividend income is $1000. then $54 would be interest and capital gain from USG. This is the amount that will be subtracted from Maryland income in your state return.
Please read this post reported by CherylW for further clarification.
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