General Assembly leadership has reached an agreement on how to return some of the State’s anticipated income tax revenue windfall resulting from federal tax reform to the taxpayers, reports The Baltimore Sun. The agreement would provide $100 million through a series of tax cuts and credits – and cost all counties a total of approximately $57 million in fiscal 2019.
According to The Sun, the plan includes passing:
- SB 318, Income Tax – Standard Deduction – Alteration – which increases standard deductions to $2,500 for single taxpayers and $5,000 for taxpayers filing jointly. This is estimated to cost the State $87 million in fiscal 2019, $61 million in fiscal 2020, and $31 million in fiscal 2021 – and counties $51 million in fiscal 2019, $36 million in fiscal 2020, and $18 million in fiscal 2021.
- SB 830, Income Tax – Standard Deduction – Inflation Adjustment, which indexes Maryland’s standard deductions to inflation. This makes county revenues decrease by $0.2 million in fiscal 2019 and by $10.4 million
in fiscal 2023.
- HB 296, which expands the existing State subtraction modification for “Hometown Heroes” to correctional officers, and costs about $0.9 million annually to counties;
- HB 327, which expands the existing military retirement income tax subtraction modification by exempting all military retirement income from state and local income taxes by 2022, costing counties $2.6 million in fiscal 2020 and $20.5 by fiscal 2023; and
- SB 647, “Earned Income Tax Credit – Individuals Without Qualifying Children – Repeal of Minimum Age Requirement” – which extends eligibility of the State and local earned income tax credits to individuals who do not have qualifying children and are under 24 years old. The fiscal note indicates that this costs counties $4.5 million in fiscal 2019 and $3.5 million in fiscal 2023 – presumably only to counties which offer a local earned income tax credit.
According to the article, the deal may also include a number of state tax credits, which have no fiscal impact for counties.