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Federal changes add millions to state tax bills, report finds

Rachel Baye

Maryland state income tax bills could grow by more than $400 million under the new federal tax law, according to an analysis Comptroller Peter Franchot released Thursday.

According to the report, between a quarter and a third of Maryland taxpayers could pay more state and local income taxes.

But at a press conference Thursday, Gov. Larry Hogan said he has a plan to prevent that.

“Under our proposed legislation, Marylanders will not pay one cent more in state taxes as a result of the actions at the federal level,” he said.

The biggest reason for the tax hike is the increase in the federal standard deduction. Maryland’s tax laws are structured so that taxpayers can either itemize their deductions on both their federal and state filings or not at all. Those lost deductions at the state level mean higher tax bills.

One of Hogan’s proposals would allow taxpayers to itemize on their state taxes while taking the standard deduction on their federal taxes.

Democratic legislative leaders proposed their own responses to the new federal law last week, but none of the bills they presented would address this particular issue. 

Rachel Baye is a senior reporter and editor in WYPR's newsroom. @RachelBaye
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