Carroll County Times
Carroll County Times Opinion

Editorial: Give Maryland retirees a break on taxes

Gov. Larry Hogan, in his State of the State address on Wednesday, touched on a number of issues, including several measures to provide tax relief to Marylanders.

The second-term Republican governor is proposing more than $500 million in targeted tax reductions over the next five years. Those reductions run the gamut from expanding tax credits to manufacturers, giving greater deductions on student loan interest, providing relief for law enforcement officers’ retirement benefits and others. But the proposal that may ring true with many Carroll County residents is a tax cut aimed at retiree income.


“Retirees who I meet all across the state say, ‘I love Maryland, and I don’t want to leave my kids and grandkids, but I can’t afford to stay here on a fixed income,’” Hogan said during his speech.

Carroll County skews a bit older than neighboring counties and others in Central Maryland, with a median age of 42.3 years, and approximately 47 percent of its population age 45 or older. Even those who are still a decade or so away from retirement might be thinking about long-term plans, which could include a move to a location they’ll be able to enjoy the money they’ve saved for the golden years without forking a significant portion over to the state government.


Right now, that place isn’t Maryland.

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With its roughly 6 million retirees, Maryland is ranked the eighth-worst state overall for taxes and third-worst for retirees, according to Kiplinger’s, a financial publication. It notes that while the state does not tax Social Security benefits, distributions from individual retirement accounts (IRAs) and 401(k) plans are fully taxable. Neighboring Pennsylvania fully exempts all income from Social Security and retirement accounts.

Maryland is also the only state with both estate and inheritance taxes, although the threshold for the estate tax is a lofty $5 million as of this year, and most beneficiaries are exempt from the inheritance tax.

“We have people that are leaving because they can live in Delaware, Florida, North Carolina or South Carolina and pay a whole lot less on their retirement benefits, so they leave and they’re separated from their grandchildren, their families,” said Del. April Rose, R-District 5.

According to IRS migration data, there are more people leaving Maryland than are coming in. From 2013-14 tax year to the 2015-16 tax year, 23,000 more people left Maryland than moved here, according to the IRS data, the most recent available.

Now, not all of those households were retirees, and a majority did move to neighboring Virginia, Pennsylvania and Delaware, which all have some advantages when it comes to retirees and taxes, but because of their proximity, could be attractive for a number of other reasons, too. But it’s also notable that states like Florida, Texas and North Carolina, places that all rank highly when it comes to taxes and retirement, also land in the top 10 places Marylanders are moving.

Hogan’s Retirement Tax Fairness Act of 2019 would extend state tax exemptions to additional retirement plans such as IRAs, Roth IRAs, and SEPs. The governor has previously campaigned on exempting 100 percent of retirement income from Maryland taxes, though he has recognized it’s a lofty goal.

Given the Maryland Democratic party’s response calling Hogan’s proposed cuts “irresponsible,” it’s unlikely this legislation will pass in the Democratic-controlled General Assembly this year, or any time soon, but perhaps it can again be a jumping-off point for state lawmakers to continue chipping away at taxes Maryland retirees pay, allowing them to stay — and spend — in the state they call home.