High-earners in Maryland will feel a financial pinch as employers start withholding more money from paychecks to accommodate the higher income tax rates approved by the General Assembly in May and signed into law by Gov.Martin O'Malley.
The tax increase is one of hundreds of new laws taking effect with the July 1 start of the state's fiscal year.
Several major environmental changes are in store, including a doubling of the "flush fee," curbs on developments that use septic systems and a requirement that the state's largest communities impose fees to clean up polluted storm-water runoff.
To the delight of health advocates, the tax on mini-cigars popular with young people will more than quadruple, from 15 percent to 70 percent, making it 10th-highest in the country, according to anti-smoking advocates.
Laws governing ground rents, which have been the subject of controversy and legal battles for years, were clarified. And farmers won a long-sought estate tax change aimed at keeping more farms family-owned.
Here is a look at some of the new laws:
Tax increase: The new rates affect individuals making more than $100,000 and families making more than $150,000. The measure, projected to raise $250 million, lifts rates on about 14 percent of Marylanders by one-quarter to three-quarters of a percentage point, while also phasing out personal exemptions.
The change is retroactive to January, meaning that some people accustomed to getting a tax refund will owe taxes next year. The comptroller's office is waiving fines if filers miscalculated estimated taxes owed, though that may be small consolation to those accustomed to getting money back.
John "Skip" Sullivan, a certified public accountant in Columbia, predicted that "procrastinators" who tend to file near the April 15 deadline will get a shock when they realize how much they owe. "The warning should go out to them," he said.
Flush fee: At least some Marylanders will start paying more on their utility bills, as the state's so-called flush fee doubles from $2.50 a month to $5.
O'Malley pushed for the increase as a cornerstone of Maryland's effort to restore the Chesapeake Bay. The change will raise about $50 million more annually and keep the state on track to finish upgrading its largest sewage treatment plants by 2017, as required under a "pollution diet" imposed by the Environmental Protection Agency.
"It will help the state meet its EPA-mandated pollution target," said Samantha Kappalman, spokeswoman for the Maryland Department of the Environment.
Septic fee: Households on septic systems also will see the amount they must pay double, from $30 a year to $60, with the fee typically wrapped into annual property tax bills. The money will be used to replace failing septic systems and to pay farmers to plant pollution-absorbing cover crops in the fall.
Another law, which curbs large-scale development on septic systems in rural areas, likely won't be felt for months or years. O'Malley made the law a priority for cleaning up the bay, because septic systems pollute more than households on sewers. Local governments have until the end of the year to adopt the law's guidelines targeting growth in existing communities, and projects already in the works are grandfathered for up to four years.
Storm-water pollution: Baltimore City and the state's nine largest counties — including Anne Arundel, Baltimore, Harford and Howard — will have to levy fees on residents for controlling storm-water pollution, a growing source of the bay's water-quality woes. Local governments have until next year to set the fees; the Baltimore City Council voted this week to ask city voters in the fall to approve the creation of a storm-water utility for the purposes of raising the needed funds.
Ground rent: Property owners won't be able to collect ground rent payments, sue for past-due amounts or file a lien against a home if they don't register properties with the state. The new law ends the legal limbo created by an appeals court ruling on an earlier registration law. Ground rent gives owners of the leases an interest in the land under tens of thousands of homes, mostly in Baltimore. Homeowners must pay the ground rent, typically a modest amount that can be less than $25 a year.
A Baltimore Sun investigation that showed some homeowners were being evicted over small unpaid ground rent bills prompted legislative overhauls in 2007.
Farm estate taxes: Farms worth less than $5 million can now be passed from one generation to the next without triggering estate taxes, as long as the land remains agricultural for at least 10 years. The cutoff had been $1 million. The law also cuts Maryland's estate tax rate to 5 percent from 16 percent for farms valued at more than $5 million.
Baltimore Sun reporter Erin Cox contributed to this article.
New laws take effect July 1
Income tax increase
Doubling of "flush fee"
Ground rent changes