January 13, 2015


State & Local Taxes in 2015


Maryland Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Provides a partially refundable Earned Income Tax Credit (EITC) (28 percent refundable/50 percent nonrefundable)

• Provides a refundable property tax “circuit breaker” credit via the personal income tax

• Sales tax base excludes groceries

Regressive Features

• Fails to index income tax provisions to inflation

• Fails to use combined reporting as part of its corporate income tax

Tax Changes Enacted in 2013 & 2014

• Enacted gradual increase in refundable portion of earned income tax credit (EITC) from 25 to 28 percent

• Increased gasoline and diesel taxes and reformed both to grow alongside inflation and fuel prices

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Maryland has the 38th most unfair state and local tax system in the country. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Ap­pendix B for state-by-state rankings and more details).

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