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Maryland Personal Income Tax Laws

Ah, taxes. You thought it was only the feds who take their cut? Nope, the state of Maryland wants its share too. Sure, nobody enjoys paying income taxes, even if we know it’s going to a good cause. If that's not enough, we hear all the time about those states that don’t have income taxes and wonder why Maryland can’t do the same. But what are the actual laws covering our hard-earned pennies? Here is a brief summary of Maryland personal income tax laws.

Income Tax Laws in Maryland

Most states, including Maryland, levy a personal income tax on residents in addition to federal income taxes. Maryland personal income tax law requires individuals, estates, and trusts within the state to pay between 1 and 5 percent on all taxable net income. Certain corporations, partnerships, and trusts may have to pay additional taxes on their income. The basics of Maryland personal income tax law are summarized in the following table.

Code Section Tax-Gen. Art. 10-102, et seq.
Who is Required to File Residents and nonresidents on taxable net income. Partnerships are not taxed.
Rate First $1,000, 2%; Second $1,000, 3%; Third $1,000, 4%; Over $3,000, 5%
Federal Income Tax Deductible No
Federal Income Used as Basis Yes

As noted in the chart, Maryland state taxes coexist with federal tax laws. Under basic tax law, both the state and federal government are allowed to tax both unearned and earned income. Earned income includes salary, wages, tips, commissions, bonuses, unemployment benefits, and sick pay. Unearned income includes interest, dividends, profits from asset sales, business and farm income, rent income, royalties, gambling winnings, and alimony. Federal taxes are handled by the Internal Revenue Service (IRS) and are subject to the Internal Revenue Code (IRC). Many IRS forms and publications are available online.

Although a lot of state income tax codes are similar to the federal code, there can be important distinctions in each state that are important to understand before paying your taxes. Most states offer taxpayer assistance programs for those who need help filing their state and federal income tax returns, and many states provide their state tax forms online.

Getting Help with Maryland Personal Income Tax Laws

Tax issues can be the most complicated area of the law. For more introductory information on this topic you can visit FindLaw's extensive tax law section. If you would like legal assistance with a tax issue, you can contact a Maryland tax attorney in your area to discuss your case.

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