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August 29, 2018
2018-1716

Maryland standard deduction increased, percentage method withholding instructions revised

The Comptroller of Maryland recently released revised percentage method withholding instructions that reflect the change to the maximum personal income tax standard deduction provided for under recently enacted SB 318 (Chapter 577).

The percentage method and wage-bracket withholding tables and rates (including the supplemental withholding rate) did not change. (Maryland employer withholding guide.)

For the purpose of the percentage method withholding calculation, the Maryland standard deduction amounts are now a minimum of $1,500 (unchanged) and a maximum of $2,250 (up from $2,000) per individual.

The value of the standard deduction is equal to 15% of Maryland adjusted gross income, subject to minimum and maximum values. SB 318 alters the value of the standard deduction in tax year 2018 by increasing its maximum value to $2,250 for all single taxpayers and $4,500 for all taxpayers filing jointly.

The law indexes the minimum and maximum values of the standard deduction beginning with tax year 2019.

Other legislation affects the state's personal exemption and earned income tax credit

Other recently enacted legislation (SB 184/Chapter 575) retains the maximum Maryland personal exemption for calendar year 2018 at $3,200. According to the law's analysis, if the state personal exemption had been repealed, about 92% of all taxable returns would have an increase in their gross tax liability for 2018.

SB 647 (Chapter 611) expands the state's earned income tax credit eligibility for individuals without children beginning calendar year 2018.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Advisory Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Debbie Spyker (deborah.spyker@ey.com)

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