What Does Federal Tax Reform Mean for Marylanders?
So what exactly does the GOP’s Tax Cuts and Jobs Act of 2017 mean for Marylanders?
“It’s complicated,” according to Maryland Comptroller Peter Franchot.
“This tax law is the biggest change to the nation’s economy in my lifetime,” he said. “We know it’s a significant tax cut for most Maryland taxpayers.”
Franchot said the new tax law will put more money in consumers’ pockets and predicts strong, economic growth across the country.
The federal law, however, doesn’t take into account the state taxes in Maryland and more than 20 percent of taxpayers could see an increase in state taxes, Franchot said.
An analysis prepared by the Maryland Bureau of Revenue Estimates found that Marylanders will see their federal taxes decrease by $2.8 billion. State and local taxes, however, will increase by about $572 million in fiscal 2019, which starts July 1, if legislators don’t take action.
This increase results from the loss or reduction of several longstanding federal deductions and exemptions, including state and local tax, or SALT, deductions; certain deductions for mortgage rates and home equity lines of credit; and charitable contributions.
Based on Franchot’s findings in the report, Gov. Larry Hogan announced a plan to protect Marylanders from the federal policy changes in a new bill he introduced titled, “Protecting Maryland Taxpayers Act of 2018.”
The legislation does two things, according to Hogan.
First, it makes permanent a provision in Maryland law that prevents changes in the federal tax code from affecting Maryland state and local taxes. Secondly, if a person chooses to take the standard deduction at the federal level, they would still be able to itemize and take that deduction at the state level.
“Doing this will make it possible for Marylanders to get the lower federal rate and get the benefit of no increase in their Maryland taxes,” Hogan said. “Let me be very clear, under our proposed legislation, Marylanders will not pay one cent more in state taxes as a result of the actions at the federal level.”
Hogan said the legislation ensures that money will remain in the pockets of Maryland families and small business owners.
Protecting Maryland Taxpayers – January 25, 2018 https://t.co/UaB7Ix8GtA
— Larry Hogan (@LarryHogan) January 25, 2018
Proud of my Bureau of Revenue Estimates team for this nonpartisan, comprehensive analysis of how the federal tax legislation will impact Marylanders. Read the report here: https://t.co/0iGEfgs1AW. pic.twitter.com/si8mVJDJcT
— Peter Franchot (@peterfranchot) January 25, 2018
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