President Donald Trump has signed into law a $1.5 trillion tax overhaul package. Trump touted the size of the tax cut, declaring to reporters in the Oval Office before he signed it Friday that "the numbers will speak."
The federal tax changes for 2018 eliminate the personal exemption. That is a loss on the federal return of $4,050 per exemption. Many middle class taxpayers will no longer be able to itemize on the federal return due to doubling the standard deduction for a married couple to about $24,000. Another reason for the inability to itemize is that home equity loan interest will no longer be deductible , and the deduction for real estate taxes plus Maryland income taxes paid is capped at $10,000.
If you do not itemize on the Federal return you cannot itemize on the Maryland return. Unless changed that means many married taxpayers with under $24,000 in itemized deductions will be left with a mere $4,000 standard deduction for Maryland. In addition, if you cannot claim an exemption on your federal return you cannot claim an exemption on your Maryland return. This is a loss of $3,200 per exemption.
Marylanders will be looking to see that Maryland tax rules will be changed timely and fairly so that we pay no more taxes then we currently are paying. Otherwise, folks may wish to vote with their feet and move to a state that has no income tax or a lower tax.