On May 22 Maryland Gov. Martin O’Malley signed into law a bill raising income taxes and tobacco taxes and ending certain business tax breaks. The bill increases tax rates for single filers making over $100,000 ($150,000 for a couple) with a new top rate of 5.75% on income over $250,000 ($300,000 for a couple). It also cuts the personal exemption for each member of families with income over these thresholds. We’ve been covering the Maryland budget story here and here. The bill also raises taxes on snuff and smokeless tobacco from 15% to 30% and the rate on ‘little’ cigars to 70%. Finally, the bill repeals telecommunication utilities’ corporate tax credits for property taxes and includes in taxable income some of the income from small business trusts. Maryland’s legislature went into a special session beginning May 14 when the regular session ended without passing a budget. Lawmakers were motivated by the prospect that the state would turn to a so-called doomsday budget, where the projected increase of the budget would be cut by $500 million. Nonetheless, under the doomsday scenario, Maryland’s budget would have increased by $700 million, or 2%, over last year. More on Maryland here. Single Filers Bracket Old Rate New Rate >$0 2% 2% >$1,000 3% 3% >$2,000 4% 4% >$3,000 4.75% 4.75% >$100,000 4.75% 5% >$125,000 4.75% 5.25% >$150,000 5% 5.5% >$250,000 5% 5.75% >$300,000 5.25% 5.75% >$500,000 5.5% 5.75% Married Filers & Head of Household Filers Bracket Old Rate New Rate >$0 2% 2% >$1,000 3% 3% >$2,000 4% 4% >$3,000 4.75% 4.75% >$150,000 4.75% 5% >$175,000 4.75% 5.25% >$200,000 5% 5.25% >$225,000 5% 5.5% >$300,000 5% 5.75% >$350,000 5.25% 5.75% >$500,000 5.5% 5.75%
