Here’s How Tax-Friendly Maryland Is: Kiplinger

Maryland is labeled one of the not-tax-friendly states in the country thanks to local taxes on top of state and federal income taxes and is in a group of eight other states where residents face about the same tax burden.

The designation comes from Kiplinger’s tax map for 2019, which was updated in October. The map divides states up into five categories for taxes: most tax-friendly, tax-friendly, mixed, not tax-friendly and, finally, least tax-friendly.

According to the map, the most tax-friendly state in the country is Wyoming, where there is no state income tax and a 0 percent effective income tax rate. Two other states out West — Nevada and Alaska — along with Tennessee and Florida rounded out the top five spots for the most tax-friendly states.

"The Old Line State takes aim at income: Maryland’s 23 counties and Baltimore City have income taxes ranging from 1.75 percent to 3.20 percent of taxable income — on top of the state’s take," Kiplinger says. "Maryland’s real estate taxes are middle-of-the-road and sales tax a low 6 percent state levy."

Here’s what makes Maryland one of the not-tax-friendly states in the nation:

• Sales tax: 6% state levy. No local taxes.
• Effective tax rate: 7.06% for single filers, 7.21% for joint filers.
• Property taxes: In Maryland, residents pay an average of $1,125 in taxes per $100,000 of assessed home value.
• Vehicle taxes: Sales tax is collected.
• Inheritance and estate taxes: Maryland estate tax is imposed on estates exceeding $4 million. The Free State’s estate tax exemption will rise to $5 million in 2019 but won’t be indexed to inflation going forward. While Maryland has an inheritance tax (with a flat 10% rate), the list of heirs exempt from paying it is long.

See your state’s full tax profile.

Illinois topped Kiplinger’s list as the least tax-friendliest state in the nation. Along with Wisconsin, the tri-state area consisting of Connecticut, New York and New Jersey, made up the remainder of the top five least-friendliest states in the U.S.

Kiplinger used tax data from each state’s tax agency, the U.S. Census and other sources to compare each state’s tax burden. The tax-friendliness was calculated based on the sum of income, sales and property tax that a sample filer paid in each state. The full methodology and the profile of the sample filers are found on Kiplinger’s website.