It is no secret that the Tax Cuts and Jobs Act (TCJA) is extensive, and, at times, complex. If you are a Maryland resident and curious how this new legislation will impact the way you report your taxes in 2018, we may be able to help. This past week the Office of the Comptroller of Maryland presented their 60-Day Report on the estimated impact of TCJA on Maryland residents and the state’s revenue.
Check out the article here: Maryland Comptroller 60-Day Report
The report presents factors that are expected to change how Maryland taxpayers report their taxes, including:
- Standard Federal Deduction. More Maryland taxpayers are expected to opt for the standard federal deduction, which has increased to $12,000 from $6,350 for single filers and to $24,000 from $12,700 for joint filers.
- Itemized Deduction Cap. A major impact to Maryland income tax revenue comes from the new $10,000 limitation on State and local tax for federal itemized deductions. This will shift many taxpayers into the substantially increased federal standard deduction.
- Charitable Contributions. As Maryland taxpayers shift to the federal standard deduction, they lose the preferential tax treatment of charitable contributions, which essentially acted as a federal match of a taxpayer’s contribution amount at the taxpayer’s highest tax rate.
- Business Restructure. Because of the reduction in the corporate income tax rates to 21 percent and the elimination of the minimum corporate income tax, Maryland businesses may find it beneficial to restructure as a C-corporation.
Understandably, there is still a considerable level of uncertainty regarding the regulations that will be established by the U.S. Department of the Treasury and IRS to ensure clarity of the law. Our professionals are working tirelessly to bring our clients and colleagues the most timely and relevant information regarding this monumental piece of legislation. For more information, please contact one of our tax professionals at firstname.lastname@example.org.
You may view and download the full 60-day report here: The 60-Day Report: Effects of Federal Tax Law Revisions on the State of Maryland.