As the 2024 tax year progresses, it's essential for Maryland residents to stay informed about the state's income tax regulations. Understanding these rules will help ensure that tax obligations are met accurately and efficiently, potentially reducing the amount of taxes owed. This article provides a comprehensive overview of Maryland's state income tax system, including the tax rates, brackets, filing requirements, and the key deductions and credits available to residents for the current tax year.
Maryland's state income tax system is progressive, meaning that tax rates increase as income levels rise. The state's tax system is regulated by the Maryland Department of Revenue and the Comptroller of Maryland, which enforces compliance and ensures that taxpayers meet their obligations. For the tax year 2024, several important updates and details have been provided by the state that residents should note.
Maryland imposes a state income tax that varies depending on the taxpayer’s income level and filing status. For the 2024 tax year, the tax brackets are structured as follows for single filers:
For married couples filing jointly, the brackets are adjusted accordingly, doubling the income range for most brackets. For example, couples filing jointly pay 5.75% on income exceeding $300,000.
In addition to state income taxes, Maryland residents are subject to local income taxes, which vary depending on the county of residence. The local tax rates range from 2.25% to 3.20%. Each county sets its rates, and taxpayers should use the rate applicable to their county of residence, not where they work or where their tax preparer is located.
Maryland residents are required to file a state income tax return if their gross income exceeds certain thresholds, which vary based on filing status, age and type of income. Non-residents who earn income from Maryland sources are also required to file. Typically, if a taxpayer must file a federal return, they will also need to file a Maryland state return.
For residents and part-year residents, income earned both within and outside of Maryland is subject to state taxes. Non-residents are taxed on income derived from Maryland sources, including wages, business income, and rental income from properties located in the state.
Maryland offers several deductions and credits that can significantly reduce tax liability. Some of the key deductions and credits include:
The filing deadline for Maryland state income taxes is April 15. Extensions may be requested using Form 502E, but any tax owed must be paid by the original filing deadline to avoid penalties. Maryland accepts electronic filing (e-filing) as well as paper returns, though e-filing is recommended for quicker processing and refunds.
Maryland's state income tax system is designed to work in conjunction with the federal income tax system. Taxpayers should be aware that while the state follows many of the same rules for deductions and exemptions as the federal system, there are differences. For example, Maryland does not allow a deduction for federal taxes paid, and the state requires the addback of certain itemized deductions that were allowed on the federal return.
Additionally, Maryland residents who pay income taxes to another state may be eligible for a credit on their Maryland state taxes. This is particularly relevant for residents who work in neighboring states like Virginia, Delaware or the District of Columbia.
Maryland taxpayers should ensure they are aware of the latest tax rates, filing requirements, and deadlines to meet their tax obligations and take advantage of available deductions and credits.
Watter CPA is equipped to provide expert guidance and services to assist clients with the complexities of state and federal taxes, ensuring compliance and optimizing tax outcomes.
