Summary of Changes to Maryland Tax Laws in 2013 Legislative Session

md-gasGasoline: Start of phase in of 3% sales tax on the price of gasoline (starting with 1% on July 1st).  The phase in is over three years. The sales tax rate could be adjusted based on the passage of the Marketplace Equity Act by Congress, if not it will continue to increase to 5% by 2016. In addition to that, the gasoline excise tax will be indexed annually based on the CPI, starting with an increase of 3.5 cents per gallon on July 1st.

Joint or separate filing is mandated for Maryland same-sex married couples.

Out-of-state businesses would be exempted from Maryland taxes when performing disaster or emergency work in Maryland.

Payroll Services: Commission formed to study payroll services – (the Acupay problem)

Income tax subtraction modifications:

  • Expands subtraction for enhanced agricultural management equipment (see 10-208(d)).
  • Income from non-economic damages award in a discrimination finding is subtracted.
  • Added Civil Air Patrol to qualified for volunteer fire/rescue subtraction
  • Increases in the amount of land to 1,000 acres for qualified reforestation expense subtraction.

Income Tax Credits:

  • Credit for hiring employees with disabilities made permanent, adds qualified veteran to credit.
  • New credit for oyster credit recycling.
  • Credit for electric vehicle charging stations
  • Credit for wineries and vineyards equipment
  • Increases the total amount of R&D credit to $8 million and makes the credit refundable for “small businesses.”
  • Changes the definition of qualified investee business for biotech investment credit.
  • Increases the amount on which the credit for security clearance costs can be claimed (now up to 50% of $200,000), construction and equipment costs for security information facility (now up to 50% of $500,000).
  • New Cybersecurity investment incentive tax credit discussed in a prior SALT Shaker.

Sales Tax

  • Parent Teacher Associations are now exempt from charging sales tax on sales.
  • Corporate training centers are exempt from charging the hotel rental tax.
  • Short-term rental of motorcycles are now subject to the 11.5% rental sales tax.
  • New line on sales tax form for vendors who sell prepaid phone cards and burner phones for “911 fee.”

Personal Property Tax: Changes section 6-302 to say personal property tax rate “shall be NO MORE THAN 2.5 times” the real property tax rate, rather than “shall be 2.5 times”.

Recordation and transfer taxes: Adds limited liability company to exceptions to recordation and transfer taxes between related parties (corporation and LLC or two LLCs with same owner).  Changes loan amount before an IDOT becomes taxable from $1 million to $3 million, other IDOT clarifications.

The SALT Group at KatzAbosch is available to help minimize your state tax obligations.  Please contact us if you have questions regarding any SALT issues at 410-828-CPAS or email abareham@katzabosch.com

Prepared by Andy Bareham, Chair of the KatzAbosch SALT Group

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