Governor Hogan and Democratic lawmakers reach $1.9 billion deal slashing some income, sales and business taxes – Baltimore Sun

Republican Gov. Larry Hogan and leading Democrats in the Maryland General Assembly have agreed to a tax cut package that will lower state income tax for most retirees, exempt many products from childcare and medical products from the state sales tax and create a new business tax credit. who hire Marylanders from groups who often have difficulty finding employment.

The deal, which is expected to cost the state $1.86 billion over the next five years, combines a pension tax cut proposal the incumbent governor has been pushing for years with tax cuts more modest measures that Democratic lawmakers have advanced this spring as a way to help working families.

Retirees age 65 or older in Maryland who bring in less than $100,000 in income — or $150,000 for couples — won’t have to pay state taxes on the money. The tax cut for retirees is by far the costliest part of the deal with an estimated price tag of $1.55 billion over the next five years. Hogan originally proposed getting rid of state income taxes altogether for retirees.

In a joint press release announcing the tax cut deal, Hogan, Democratic House Speaker Adrienne A. Jones and Democratic Senate Speaker Bill Ferguson said the tax cuts for retirees would mean that ” 80% of Maryland retirees will receive substantial relief or pay no state income tax. at all.”

The sales tax relief would eliminate the 6% state sales and use tax on items such as diapers, bottles, infant car seats, some thermometers and blood pressure monitors. This is expected to cost the state $115.6 million in lost revenue over the next five years.

Many other similar products, such as baby oil, baby powder and disposable medical supplies, are already exempt from the tax.

The proposed Work Opportunity Tax Credit would create a state program to mirror the existing federal program of the same name. The credits, expected to cost Maryland $195 million over the next five years, will provide tax relief to businesses that hire people who might otherwise have difficulty finding work, including military veterans, long-term unemployed , people with criminal records or residents. popular neighborhoods.

Tax credits and sales tax cuts, approved by leading House Democrats in February, are already making their way through the General Assembly and looked set to pass during the 90-day legislative session in course, which ends April 11. The bill to scrap income tax for retirees appeared stalled before Jones and Ferguson gave a slimmed-down version of their approval as part of Monday’s announcement.

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