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O’Malley Shows Us His Shiny New Tax Brackets

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Much thanks to Steve for this article, where Gov. O’Malley actually details the new tax brackets under his proposal. The current state income tax is 4.75% per person, to give you a point of reference, and so the new tax brackets would make it more of a progressive (more you earn, the more you pay) similar to the federal income tax. The brackets are:

Married (Dual Income):

Income Tax Rate
$0 – $2,000 2%
$2,000 – $4,000 3%
$4,000 – $22,500 4%
$22,500 – $200,000 4.75%
$200,000 – $500,000 6%
$500,000+ 6.5%
Single:

Income Tax Rate
$0 – $1,000 2%
$1,000 – $2,000 3%
$3,000 – $15,000 4%
$15,000 – $150,000 4.75%
$150,000 – $500,000 6%
$500,000+ 6.5%

Marriage penalty, a feature seen with the federal income tax, now gets to be introduced with the state if this get passed. The marriage penalty is the fact that you have to pay more tax as a married couple than if you were two single filers, something that I think makes absolutely no sense (it only makes sense to the people writing the checks drawing from the account our extra taxes go into).

Breakeven point at $165,000 for singles, $218,000 for married. Under the new plan, you would pay approximately $7,832.50 in taxes under the new plan and $7,837.50 under the existing tax structure as a Single. For all you married folks out there, at $218,000 combined income you’d be paying $10,351.25 under the new scheme and $10,355 under the existing tax structure. Those over the breakeven point will pay more and those underneath it would be paying less in terms of taxes. (please check my math!)

One of the other proposals that seems to bother people a lot is the introduction of slot machines. I don’t see the harm in that, especially all the revenue it would generate, but I haven’t looked into it in great detail. Ultimately, it’s just opening up a new revenue stream that the state can then spend irresponsibly.

What do you all think of this? Bear in mind that in Maryland we also have county taxes and those are around 3%, so before anyone claims we have low taxes, take those into account too.

{ 6 comments, please add your thoughts now! }

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6 Responses to “O’Malley Shows Us His Shiny New Tax Brackets”

  1. jim says:

    None of the above yet, these are just proposals at this point.

  2. Mrs. Micah says:

    When do these go into effect? This coming year or retroactively for this past one?

  3. dong says:

    I think marriage and taxes is complicated. Not sure why someone should get a break either way, but given that alot of times one member of the marriage doesn’t work or makes a lot less, bot married people end up benefiting from tax perspective by being married. Given that I’m not married I’m not sure what the tax laws, but I thought you could file separately if it was to your advantage…

  4. jim says:

    Married filing separately destroys the phaseouts for a lot of the other tax benefits available…

  5. O’Malley was smart that he gave the lower tax brackets a tax break…taxing the rich is always a good populist theme. However, he is still proposing a 20% increase in the sales tax, 10 cent a gallon gas tax, and a massive cigarette tax – all regressive taxes. The bottom line is if you live in Maryland you need to expect higher taxes.

    Or, you could contact your state representative and demand they look to cut spending to cover the shortfall. They won’t find enough to cut, but if the reps feel a lot of pressure to cut they may find more than if we sit silently by without a word.

  6. Kevin says:

    Wow! I’m glad I live in a state with mainly a sales tax. I get taxed on items I consume and am not penalized for making money.


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