You may find a little surprise in your first paycheck next month. Take-home pay will be a bit smaller for some Maryland residents, thanks to income tax changes that kick in July 1.
Baltimore County residents will be paying higher local income taxes, as will people living in Allegany, Montgomery, Prince George's and Talbot counties.
And certain Marylanders with six-figure salaries, regardless of where they live, will start paying higher state income taxes.
The General Assembly approved the income tax changes in April to help replenish state and local government budgets zapped by the recession and declining revenues.
After cutting aid to local governments, legislators gave counties and Baltimore the power to raise their share of the income tax above the longtime maximum of 50 percent of a person's state tax liability.
Baltimore County chose a 55 percent rate, as did Allegany and Montgomery. Prince George's and Talbot counties set a 60 percent rate, the new maximum.
In Baltimore County, residents with adjusted gross incomes of $20,000 to $25,000 will pay an average of $38 more in local income taxes for 1992.
Residents with adjusted gross incomes of $60,000 to $75,000 will cough up an average of $123 more. Those two income categories contained the largest number of filers in 1990.
The higher tax is retroactive to January, so taxpayers will have to make up the money that wasn't withheld for the first six months of this year.
Residents could have their employer withhold a few extra dollars a week, particularly if they usually owe money to the state come April.
0 For example, suppose a taxpayer falls within the $60,000-to- $75,000 category and expects to owe $123 in additional Baltimore County income taxes. Half of that -- $61.50 -- will be automatically withheld from his pay from July through December. The taxpayer could ask his employer to withhold the rest during that time as well.
Or, if he usually gets a refund, he can do nothing -- except kiss $61.50 of that refund goodbye.
"If you got a substantial refund -- $370 or more -- in the spring, you're probably OK because you're over-withheld," said Marvin A. Bond, spokesman for Comptroller Louis L. Goldstein, whose office collects income taxes for the state and local governments.
"If you owed money, as 25 percent of the taxpayers do, or if you only got a refund of $50 or $100, you might want to look at doing additional withholding," he said.
Mr. Bond recommended that employees call their payroll office or accountant for advice on what, if any, changes to make.
While the local taxes affect residents of all income levels, the legislature targeted wealthier Marylanders for higher state income taxes.
Lawmakers added a new 6 percent state tax bracket for singles and married couples who file separately who have more than $100,000 in taxable income. The bracket also applies to married couples filing jointly, heads of households and qualified widows or widowers with taxable incomes above $150,000. The 6 percent bracket applies only to the portion of income exceeding $100,000 and $150,000, respectively.
The higher tax will be automatically withheld from paychecks from July through December. However, it also is retroactive to January, so high-income Marylanders may want to ask their employers to increase their withholding.
Indeed, employers may be fielding a number of phone calls next month.
The new local income tax rates can cause problems for small employers, who may not know in which counties their workers live.
"The usual Maryland employer is not used to giving us that information," said Timothy J. Reardon, director of Autopay Plus at Automatic Data Processing, a Towson firm that processes payrolls for thousands of companies in Maryland and surrounding states. "We're leaving it up to the employers to decide how they want to deal with it . . ." he said.
ADP is suggesting to its clients that they enclose notices with employee paychecks explaining the tax change and asking workers to tell them if they're affected.
If a company should happen not to raise the withholding for an affected employee, Mr. Reardon said, the consequences would not be severe. "It's not like a person is going to owe hundreds or thousands of dollars at the end of the year," he said.
Higher taxes effective July 1
* Individuals who make more than $100,000 and couples who earn more than $150,000 will pay higher income taxes for 1992. Raises $62 million for the state and $30 million for local governments.
* Office managers must pay a 5 percent sales tax on commercial and industrial cleaning services. Raises $18 million.
* Higher local income tax rates take effect in Allegany, Baltimore, Montgomery, Prince George's and Talbot counties. Revenues vary by locality. Raises $25 million in Baltimore County.
* Businesses begin filing monthly sales and use tax returns on the 15th of the month, rather than the 21st. Raises $1 million.
* Penalty for paying taxes with a bad check increases from $10 to $30. Raises $200,000.
* Vendors who bid on state contracts for $10,000 or more must certify that they have a valid Maryland sales and use tax license. Bidders also must certify they've paid all applicable state taxes. Raises $2 million.