Recent changes to tax law at the Federal level

Recent changes in Federal tax law have made the situation worse

  • The maximum, combined amount of state and local property, income, and sales taxes that can be deducted is $10,000. In the past, these taxes have generally been fully tax deductible.
  • A substantial increase in the standard deduction: $12,000 for single taxpayers and $24,000 for married taxpayers. This means that most taxpayers will be better off taking the standard deduction on their Federal tax return and, unless they have very substantial charitable and other allowed deductions, their state and local property, income, and sales taxes will yield no tax benefit on their Federal income taxes.
  • Thus, many Maryland tax payers counted on receiving a substantial benefit (break) on the Maryland income taxes that they have paid, i.e., via a deduction on their Federal income taxes. However, this benefit has now been eliminated.
  • And, if you take the automatic standard deduction on your Federal tax return, you will not be able to itemize your deductions on your Maryland tax return. This represents a de facto tax increase by the State of Maryland and has been accomplished without the State legislature passing any legislation.

See Maryland Tax Info for the details.

Summary

  • Maryland is a high tax state.
  • Nine states have no income tax.
  • Nine other states exempt the total amount of civil service annuities.
  • Five additional states exempt certain Federal civil service annuities from taxation.
  • Seniors receive a relatively minor tax break in Maryland.
  • Recent changes in Federal tax law have made the tax situation worse for Maryland seniors.

The bottom line: Maryland taxation is unfair to seniors

What can you do about this?

Updated: 2018-10-03