Tax Reform: What’s the State To Do?

The General Assembly has entertained a long list of bills dealing with the impacts of federal tax reform on State and county coffers. The question still remains, however, which – if any – the two chambers will choose to move.

One bill has advanced through both the House and Senate: HB 365SB 184, “Income Tax – Personal Exemptions – Alteration.” The bill clarifies that state taxpayers can still take personal exemptions in Maryland, even if these exemptions are zeroed out at the federal level. According to the analysis by the Department of Legislative Services,  the bill is simply clarifying in nature, and does not have a meaningful fiscal impact on counties.

In addition,  SB 0318 – “Income Tax – Standard Deduction – Alteration” has moved out of the Senate Budget and Taxation Committee and onto the floor. As drafted, this would have increased the standard deductions in Maryland to an extent that would have essentially wiped out the entire windfall from tax reform for both the state and local governments. However, it was amended to simply cap the standard deductions at $2,500 instead of $2,000 for individual filers, and $5,000 instead of $4,000 for joint filers – a relatively small fiscal impact.

All of the other bills – which are listed below – have either been killed, or have received no action thus far.

Of course, there is still time – the crossover deadline isn’t until next Monday.

HB 99 / SB 134 – Small Business Relief Tax Credit
HB 587 / SB 194 – Calculation of Taxable Income – Itemized Deductions – Property Taxes
HB 588 – Income Tax – Rate Brackets, Personal Exemptions, and Standard Deduction – Cost-of-Living Adjustments
HB 589 / SB 191 – Income Tax – Itemized Deductions
HB 644 – State Income Tax – Subtraction Modification – Elementary and Secondary
Education Expenses
HB 697 – Individual Income Tax – Itemized Deductions on State Income Tax Return
HB 875 / SB 733 – Protecting Maryland Taxpayers Act of 2018
HB 906 – Income Tax – Itemized Deductions and Personal Exemptions
HB 1039 – Income Tax – Itemized Deductions on State Income Tax Return
HB 1146 – Income Tax – Rates and Itemized Deductions
HB 1190 – Income Tax – Standard Deduction – Alteration
HB 1336 – Income Tax – Calculation of Maryland Taxable Income – Itemized Deductions
HB 1710 – Income Tax — Addition and Subtraction Modifications — Alimony or Separate Maintenance Payments
SB 567 – Income Tax Rates – Reductions
SB 828 – Income Tax – Personal Exemptions – Inflation Adjustment
SB 830 – Income Tax – Standard Deduction – Inflation Adjustment