2018 Legislative Update

After Congress passed the Tax Cut and Jobs Act of 2017 the Comptroller’s Office came up with estimates of substantial revenue increases for Maryland as the loss of deductions on the Federal return carried over to State return. The Comptroller’s office estimated that 71% of Maryland taxpayers will be unaffected, 6% will pay less taxes, and 23% will pay more Maryland taxes because of the change in taxes at the Federal level. The increase in revenue allowed for increase of some spending programs, but there were not many changes that affect taxpayers. There were over 3,000 bills filed for the 2018 session. Here is a brief summary of some of the bills that could affect Marylanders.

Income Tax

SB0318 Income Tax – Standard Deduction – Alteration and Cost–of–Living Adjustments – Raises the Individual Standard Deduction up to $2,250 and Married Couple Standard Deduction up to $4,500.
SB0996 Income Tax – Subtraction Modification – Military Retirement Income – Allows for a $15,000 subtraction of military retirement pay by retired members of the armed forces who are 55 years of age or older. In the case of a retired correctional officer, or law enforcement officer, or fire, rescue, or emergency services personnel the $15,000 subtraction applies to those 65 years of age or totally disabled.

Estate Tax

HB0308/ SB0646 Maryland Estate Tax – The Maryland estate tax (MET) will remain decoupled from the Federal estate tax (FET) exclusion amount. Beginning 01 January 2019, the MET exclusion amount will be $5 million, plus any Maryland deceased spousal unused exclusion amount (“DSUEA”). The Maryland DSUEA is the amount of the Maryland exclusion amount in effect at the date of death of the first spouse, minus the taxable estate of the first spouse. Portability is available if the first spouse dies before 2019 or the estate of the first spouse contained no property with a Maryland taxable situs, and the portability election was made on the FET return of the first spouse; and if the first spouse dies dying after 2018 with Maryland taxable situs property, the election is made on a timely filed MET return. The $5 million exclusion amount is not indexed for inflation.

ABLE Accounts

HB0782 / SB0550 Maryland Achieving a Better Life Experience (ABLE) Program – Death of a Designated Beneficiary. Permit transfers of funds from traditional 529 plans to ABLE accounts; provide that, upon the death of an ABLE beneficiary, the funds may be transferred to the estate of the beneficiary to an ABLE account for another eligible beneficiary; and that unless otherwise required by federal law, the State is prohibited from seeking medical assistance reimbursement from an ABLE account.

Elder Abuse Prevention

HB1506 Office of the Attorney General – Securities Commissioner – Asset Recovery for Exploited Seniors Corporations and Associations Article 11-209 Authorizes the Securities Commissioner of the Division of Securities of the Office of the Attorney General to bring a civil action for damages against a person who commits financial elder abuse per Criminal Law Article 8-801, and to recover costs for the Attorney General.

Some of the bills that did not pass included an increase for the assets included for the elective share of the surviving spouse, lectronic wills, and bills to allow for increased deductions on the Maryland tax return.