Facts & Figures Regarding Maryland’s Tax Rates

On February 29, 2016, the Tax Foundation released a new dataset called “Facts & Figures 2016: How Does Your State Compare?” The dataset is a one-stop-shop for much of the state-level data on tax rates and spending that the Tax Foundation collects and releases over the course of the year.

Here are some interesting facts about Maryland’s tax rates:

• Maryland ranks 7^th highest in the United States with a state and local tax burden of 10.9% of income. That means that the average Maryland resident pays $5,920 in state and local taxes each year. (See FSF President Randolph May’s January 2016 blog for more on this.)

• Maryland ranks 16^th highest in the U.S. with a 6% state sales tax rate. However, Maryland localities do not charge a sales tax, so combining state and local sales tax rates, Maryland ranks 37^th in the country.

• Although Maryland has a flat corporate income tax rate, it is one of the highest in the country at 8.25%. (Because some states apply a progressive corporate tax rate, there are no rankings for these.)

• Despite low gas prices recently, they could be lower. Maryland adds 32.60 cents in taxes and fees to every gallon purchased within the state. That is the 13^th highest amount in the U.S.

• Maryland imposes relatively high “sin” taxes, which are taxes on items that are considered more or less harmful. Maryland’s $2.00 excise tax rate per 20-pack of cigarettes is the 11^th highest in the country, while its $4.05 excise tax rate per gallon of spirits is 31^st highest in the country. Maryland’s wine tax rate is $1.35 per gallon, which ranks 12^th highest in the country, and its beer tax rate is 9^th in the country at $0.49 per gallon.

• Lastly, Maryland’s cell phone tax rate is a whopping 12.67%. This rate ranks Maryland 14^th highest in the U.S.

During the first year of his term, Governor Larry Hogan did a commendable job of beginning to address unnecessary barriers to economic growth in Maryland, including by reducing over 100 state fees which will save Marylanders an estimated $51 million over five years. Additionally, Governor Hogan’s proposed budget for fiscal year 2017 includes an estimated tax savings of $480 million over the next five years. However, there still is a lot of work to be done towards lowering tax rates, reducing regulatory barriers, and creating a more efficient state government.

Also, see the January 2016 Perspectives from FSF Scholars by FSF President Randolph May and me entitled “Achieving Efficient Government and Regulatory Reform in Maryland.”