Business tax tip #30
A Brief Look at Maryland Taxes
Income tax
Effective January 1, 2008, Maryland imposes a graduated personal income tax beginning at 2 percent on the first $1,000 of taxable income and increasing up to a maximum of 5.5 percent on incomes in excess of $500,000. Nonresidents, who must calculate their tax using a special formula, are subject to the income tax rate as well as a special nonresident tax rate of 1.25 percent.
The personal exemption amount is $3,200 for taxpayers with a federal adjusted gross income of up to $100,000 (up to $150,000 if filing jointly). For taxpayers with higher incomes, the exemption is limited and set at a sliding scale from $2,400 to $600.
Baltimore City and the 23 counties levy a local income tax that is calculated as a percentage of Maryland taxable income at rates which may range from 1 percent to 3.2 percent.
The local income tax is withheld and collected on the same form as the Maryland income tax. Maryland income tax returns are due on April 15. Individuals whose income is not subject to employer withholding, or who have not had enough tax withheld, may be required to file quarterly estimated tax payments.
Employers who make payments to resident or nonresident individuals of salaries, wages or other compensation for personal services must withhold the income tax as prescribed in published charts and tables.
The corporate income tax rate is 8.25 percent, based on federal taxable income after state modifications.
Contact:
Revenue Administration Division
110 Carroll Street
Annapolis, MD 21411-0001
410-260-7980 (information)
410-260-7951 (tax forms), or
1-800-MD TAXES
E-mail: taxhelp@comp.state.md.us
Utility surcharges
A utility surcharge is collected from electric companies generating electricity in Maryland for deposit in the Environmental Trust Fund, and from telephone companies doing business in Maryland for deposit in the 911 Emergency Telephone System and Telephone Access of Maryland Funds.
Contact:
Revenue Administration Division
Revenue Accounting
110 Carroll Street
Annapolis, MD 21411-0001
410-260-7782 or 1-800-MD TAXES
E-mail: taxhelp@comp.state.md.us
Motor fuel tax
The Maryland motor fuel tax rates are currently 23½ cents per gallon of gasoline and clean-burning fuels, and up to 24¼ cents per gallon of diesel fuel and certain other special fuels. There are other requirements for motor carriers, trucking companies and fuel distributors.
Contact:
MATT Regulatory Division
Motor-fuel Taxes
P.O. Box 1751
Annapolis, MD 21404-1751
410-260-7215 or 1-888-784-0142
E-mail: mft@comp.state.md.us
Alcohol and tobacco taxes
The Maryland excise tax rates on alcoholic beverages are $1.50 per gallon of distilled spirits, 40 cents per gallon of wine, and 9 cents per gallon of beer. The tobacco tax rate is $2.00 per pack of 20 cigarettes.
There is also a tax of 15 percent of the wholesale cost of other tobacco products (cigars, pipe tobacco, etc.).
Contact:
MATT Regulatory Division
Alcohol and Tobacco Taxes
P.O. Box 2999
Annapolis, MD 21404-2999
410-260-7314 or 1-888-784-0145
E-mail: att@comp.state.md.us
Sales and use tax
The general Maryland sales and use tax rate is 6 percent. Special rates of 8 percent and 11½ percent are imposed on certain rentals of passenger cars, trucks and recreational vehicles. Most sales of food by substantial grocery or market businesses are not subject to tax. Other exemptions include medicine, energy for residential use, manufacturing machinery and equipment, and certain agricultural equipment and supplies.
Sales tax returns are due the 20th day of the month following the month or other reporting period in which the taxable sales were made.
Contact:
Revenue Administration Division
Taxpayer Service Section
301 West Preston Street
Baltimore, MD 21201-2383
410-767-1300 or 1-800-492-1751
E-mail: sut@comp.state.md.us
Admissions and amusement tax
The admissions and amusement tax is a local tax collected by the Comptroller's Office for Maryland's counties, Baltimore City and other incorporated cities and towns. The tax is imposed on a variety of activities, and is set by the localities at rates varying from one-half of 1 percent to 10 percent of the admissions or amusement receipts. Effective January 3, 2008, a new admissions and amusement tax of 20 percent rate is imposed on the net receipts from the operation of an electronic bingo machine permitted under a commercial bingo license or electronic tip jar, less the amount of money winnings or prizes paid out to players.
Contact:
Revenue Administration Division
Taxpayer Service Section
301 West Preston Street
Baltimore, MD 21201-2383
410-767-1300 or 1-800-492-1751
E-mail: taxhelp@comp.state.md.us
Tire recycling fee
Tire wholesalers or tire retailers who buy tires from out-of-state sources must register and pay the tire recycling fee.
Contact:
Revenue Administration Division
Taxpayer Service Section
301 West Preston Street
Baltimore, MD 21201-2383
410-767-1300 or 1-800-492-1751
E-mail: taxhelp@comp.state.md.us
Death taxes
Estate tax: The estate tax is calculated by deducting the amount of the inheritance tax paid to the Register of Wills from the maximum allowable credit for state death taxes on the federal estate tax return, without reduction by any Act of Congress enacted on or after January 1, 2001. If the inheritance tax exceeds the credit, no Maryland estate tax is due. The Maryland estate tax return is due nine months from the date of the decedent's death.
Contact:
Revenue Administration Division
Estate Tax Section
P.O. Box 828
Annapolis, MD 21404-0828
410-260-7850 or 1-800-MD TAXES
Inheritance tax: The Register of Wills in each county collects the inheritance tax. The inheritance tax is imposed at the rate of 10 percent on the clear value of property that passes from a decedent to some beneficiaries. The tax is imposed on property that passes under a will, the intestate laws of succession, a trust, deed, joint ownership, or otherwise.
For decedents who died on or after July 1, 2000, property passing from a decedent to any of the following is not subject to inheritance tax: child or other lineal descendent, spouse of a child or other lineal descendent, spouse, parent or grandparent, or a sibling of the decedent. Property passing to charity continues to be exempt from the inheritance tax. For information regarding the taxation of property received by these individuals, contact the Register of Wills in the county where the decedent was domiciled.
Unclaimed property
Businesses are required to report unclaimed property covered under Commercial Law Article, Title 17, sections 301-326. If an account at a business has no activity for three years, the property is considered unclaimed and must be reported to the Comptroller's Unclaimed Property Unit. Travelers checks must be reported after 15 years.
Insurance companies are required to report by April 30 for the period ending December 31. All other businesses must file by October 31 for the period ending June 30.
Contact:
Compliance Division
Unclaimed Property Unit
Room 310, 301 W. Preston St.
Baltimore, MD 21201-2383
410-767-1700 or 1-800-782-7383
E-mail: UPHOLDER@comp.state.md.us
Other agencies' taxes and fees
Unemployment Insurance: Department of Labor, Licensing & Regulation, Unemployment Insurance Division, Room 414, 1100 N. Eutaw St., Baltimore, MD 21201. Toll-free 1-800-492-5524.
Injured Workers' Insurance Fund: Workers' Compensation Commission, 8722 Loch Raven Blvd., Towson, MD 21226. 410-494-2000 or 1-800-264-IWIF.
New Corporations: Department of Assessments & Taxation, 301 W. Preston St., Baltimore, MD 21201. 410-767-1340.
Personal Property Tax on Businesses: Department of Assessments & Taxation, 301 W. Preston St., Baltimore, MD 21201-2395. 410-767-1170 (corporations, limited partnerships, LLCs and LLPs) or 410-767-4991 (sole proprietorships and general partnerships).
Franchise and Public Utilities Taxes: Department of Assessments & Taxation, Corporate Assessments Division, Room 511, 300 W. Preston St., Baltimore, MD 21201-2395. 410-767-1940.
Insurance Company Premium Tax: Maryland Insurance Administration, 525 St. Paul Place, Baltimore, MD 21202-2272. 410-468-2124.
Local Business Licenses: Contact your local Clerk of the Circuit Court.
Local Real Property Tax Rates: Contact your local Department of Assessments & Taxation office.
Local Recordation Taxes, Property Transfer Taxes: Contact your local Clerk of the Circuit Court.
Motor Vehicle Titling Tax and License Fees: Motor Vehicle Administration, 6601 Ritchie Highway N.E., Glen Burnie, MD 21062. Toll-free in Maryland 1-800-950-1682.
Boat Titling Tax, Hunting and Fishing Licenses and Fees: Department of Natural Resources, Tawes State Office Building, 580 Taylor Ave., Annapolis, MD 21401. 410-260-8367.
Maryland does not levy a personal property tax on individuals, nor are there any separate school taxes.
