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Tweaks to Maryland’s law on personal income tax exemptions and other changes to counteract the new federal tax code will save residents nearly $3 billion in increased state taxes over the next five years, Gov. Larry Hogan (R) said.
The bills will deliver “relief to Maryland’s beleaguered, long-suffering taxpayers,” he said in a statement May 15 after signing the bills.
The bills were written in response to an analysis from the Maryland comptroller’s office on the impact of changes to state and local tax bills as a result of the 2017 federal tax act ( Pub. L. 115-97).
The comptroller’s office estimated that while 71 percent of Maryland taxpayers would pay less in federal taxes under the new rules, about 23 percent of Maryland taxpayers would see their state and local taxes increase without changes to the state’s tax laws.
S.B. 184, now Chapter 575, clarifies that despite changes in federal rules, Maryland taxpayers may take a personal exemption for state income tax purposes.
The state estimated that without the state personal exemption, about 92 percent of all returns in Maryland would see an increase in state taxes under the new federal rules.
The bill also requires the Board of Revenue Estimates to review and update its report on the impact of the federal tax law and submit an updated report to the governor and General Assembly by Dec. 15.
S.B. 318, now Chapter 577, would increase Maryland’s maximum standard deduction to $2,500 for single taxpayers and $5,000 for couples filing jointly.
The bill would take effect July 1 for tax years 2018-20.
S.B. 647, now Chapter 611, would expand the state’s earned income tax credit for individuals between the ages of 18 and 24 years old without qualifying children.
General fund revenue is expected to decrease by $7.5 million in fiscal year 2019 due to the expansion of the credit, according to a fiscal note accompanying the bill.
The bill will take effect July 1 and applies to tax year 2018 and beyond.
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