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Maryland State Income Tax Increase

Posted By Jim On 05/22/2012 @ 2:15 pm In Taxes | 14 Comments

I don’t usually write about specific state by state tax issues but since I live in Maryland, I hope you’ll indulge me a little as I chew through the recent news that the Maryland Assembly approved a budget bill [3] that would raise $260+ million in income taxes. This isn’t a soak the rich type of proposal, which the millionaire’s tax [4] seemed to be, but one borne out of a need to raise more funds for education and other “positive” things.

We’ll take a look at the income tax situation as it stands now and what will be changing once the bill is signed. Please let me know if I get anything wrong and I’ll fix it as soon as possible. If you just want to know the difference, basically if you make more than $100,000 (or are married filing jointly and make more than $150,000), your tax liability will go up.

2011 Maryland State Income Tax Brackets

Maryland has a lot of income tax brackets. There are six Federal income tax brackets [5], Maryland has seven. Seeing how they’re set up now will help you, and me, understand how the brackets are changing.

Single, married filing separately, dependent taxpayers or fiduciaries share one grouping, listed only as “single” below. Taxpayers with joint returns, head of household, and qualifying widows/widowers share another group, listed only as “married filing jointly.”

Tax Bracket Single Married Filing Jointly
2% Bracket $0 – $1,000 $0 – $1,000
3% Bracket $1,000 – $2,000 $1,000 – $2,000
4% Bracket $2,000 – $3,000 $2,000 – $3,000
4.75% Bracket $3,000 – $150,000 $3,000 – $200,000
5% Bracket $150,000 – $300,000 $200,000 – $350,000
5.25% Bracket $300,000 – $500,000 $350,000 – $500,000
5.75% Bracket $500,000+ $500,000+

These are just the brackets, don’t use them to figure out taxes because there are a lot of rules regarding exemptions and the like.

Approved Changes for 2012

The 4.75% bracket is wide, spanning $3,000 to $150,000 and the new changes would break that up and expand it upward. Single filers making between $100,001 and $125,000 (joint filers $150,001 and $175,000) would see a 25 basis point increase in their taxes, from 4.75% to 5%. Single filers making $125,001 and $150,000 (joint filers $175,001 and $225,000) would see a 50 basis point increase, from 4.75% to 5.25%.

Expansion of 4.75% bracket:

Tax Bracket Single Married Filing Jointly
4.75% Bracket $3,000 – $100,000 $3,000 – $150,000
5% Bracket $100,000 – $125,000 $150,000 – $175,000
5.25% Bracket $125,000 – $150,000 $175,000 – $225,000

That also pushes into the higher brackets, which also get an increase in taxes. Single filers who make between $150,001 and $250,000 (joint filers earning between $225,001 and $250,000) would see a 50 basis point increase, from 5% to 5.5%. Finally Anyone making more than $250,000 a year would pay 5.75%, which decreases that bracket from the current one of $500,000.

Here’s what the Maryland brackets would look like for 2013 if approved as described:

Tax Bracket Single Married Filing Jointly
2% Bracket $0 – $1,000 $0 – $1,000
3% Bracket $1,000 – $2,000 $1,000 – $2,000
4% Bracket $2,000 – $3,000 $2,000 – $3,000
4.75% Bracket $3,000 – $100,000 $3,000 – $150,000
5% Bracket $100,000 – $125,000 $150,000 – $175,000
5.25% Bracket $125,000 – $150,000 $175,000 – $225,000
5.5% Bracket $150,000 – $250,000 $225,000 – $250,000
5.75% Bracket $250,000+ $250,000+

In addition to adjustments to the brackets, your exemptions will be reduced if you earn more than $100,000 ($150,000 for joint filers) and completely eliminated if you earned more than $200,000.

If you live in a state and would like to see a similar wrap up of your state’s income taxes, let me know in the comments and I’ll be happy to oblige.


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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/maryland-state-income-tax-increase.html

[3] Maryland Assembly approved a budget bill: http://www.washingtonpost.com/local/md-politics/2012/05/16/gIQAfPutUU_story.html

[4] millionaire’s tax: http://www.taxfoundation.org/publications/show/28221.html

[5] Federal income tax brackets: http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html

Thank you for reading!