Annapolis, MD- On Friday, Delegate Susan Krebs (R-Carroll) presentedHB 1358before the House Ways and Means Committee, legislation that wouldequalize the tax treatment for all retirees who must self-fund their own retirement compared to employees of large companies who are able to participate in their company’s plans.
Governor Larry Hogan announced on January 17, 2020; a more than $1 billion tax relief proposal to make it more affordable for retirees to stay in Maryland. This legislation, which would lower taxes for more than 230,000 Marylanders, is the biggest tax reduction in Maryland in more than two decades.
The federal government’s“Report on the Economic Well-Being of U.S. Households”finds nearly 40% of American households couldn’t afford a surprise $400 expense — which means tires, a medical emergency or even a minor home repair are out of reach.
A second study by theNational Institute on Retirement Security, says 70% of Americans feel the average worker can’t save enough for retirement.
Maryland is one of the highest-taxed states in the United States and one of the worst places to retire.“After living in Maryland for the past 54 years, we finally moved to Shippensburg, Pa last August because we could not use the pension exclusion for our pension income. Now all our retirement income is tax-free,”a former Marylander wrote to Delegate Krebs.
Small businesses are important to the local economy and provide opportunities for hard-working Marylanders – plumbers, electricians, daycare providers, nail salon operators, Realtors, farmers, hairdressers – who self-fund their own retirement and may not even realize that their retirement income will not be eligible for the deduction. Delegate Krebs wants to ensure that ALL Marylanders receive equal tax treatment.
Over the last five years, Governor Hogan has led a historic economic turnaround, with the state going from losing 100,000 jobs prior to taking office to gain 140,000 jobs. More businesses are open and more people are working than ever before in the history of the state. The governor has already delivered $1.25 billion in tax, toll, and fee relief for hardworking families, retirees, and small businesses.
Governor Larry Hogan is committed to making it more affordable for retirees to stay in Maryland by easing their tax burdens.“People who have been lifelong Marylanders and have contributed so much, and still have more to offer, are moving to other states for one reason – our state’s sky-high retirement taxes,”said Governor Hogan. By introducing this legislation, Delegate Krebs says,“we want to ensure that all retirees will receive tax relief on their pensions, no matter what the source.”
In addition to the announcement, the governor hasintroduced theHometown Heroes Act of 2020to exempt law enforcement, fire, rescue, corrections, and emergency response personnel from the state tax on all retirement income specific to their service in those professions.This is the fifth year that Governor Hogan has introduced legislation to eliminate state taxes on the retirement income of first responders. In 2017, the governor was proud toenactthe Hometown Heroes benefit so that first responders can exempt the first $15,000 of their retirement income from state taxes. This year, he is again pushing to fully exempt all retirement income for these occupations and to lower the age of eligibility from 55 to 50.