As a business owner in Maryland, it is important that you stay updated with the new changes in tax laws. Tax laws can affect your profitability, compliance, and financial health. Various changes can occur, starting from credits available to your business to your income tax obligations.
This blog will discuss the upcoming changes in Maryland’s tax laws and how they will affect accounting practices, tax preparation, and financial strategies. By understanding these changes, you can ensure compliance and optimize the tax benefits available to you.
Whether you are an individual, a business owner, or part of a non-profit organization, tax laws are complex for everyone. It becomes important to work with a professional from a reputed accounting firm in Hanover, MD.
What are the major changes to individual tax responsibilities?
There have been various changes to individual tax responsibilities. One of the major ones is income tax brackets and rates.
While there are no changes in the personal exemption amount, it is important to note that the personal exemption of $3,200 will decrease if your gross federal income is above $100,000 ($150,000 for joint taxpayers). Moreover, if it exceeds $150,000 ($200,000 for joint taxpayers), the exemption will completely phase out.
Furthermore, adjustments have been made to the standard deduction amounts as well. Single taxpayers can claim a maximum deduction of $2,550, while married people filing jointly can claim up to $5,150. These changes were made in 2023 and pertain to 2024, as no new changes have been introduced.
What are the changes affecting businesses?
Unlike in individual taxes, there have been some notable changes in tax laws for businesses.
One of the major changes is the change in tax rates in several Maryland counties. For example, for the 2024 tax year, Cecil County will decrease its local income tax rate to 2.75%. Furthermore, Frederick and Anne Arundel counties will also introduce new tax brackets based on filing status and taxable income.
Another major change is the reinstatement of the “Federal Security Clearance Costs”. This tax credit is particularly beneficial for small businesses in Maryland that have 500 or fewer employees. This credit subsidizes the costs of federal security clearances and provides a huge financial relief.
The “Food Donations by Qualified Farms” tax credit has also been extended indefinitely. This credit allows businesses to deduct 100% of the value of the fresh farm products they have donated. The percentage was previously only 50%, so it is a big one. The government has taken this step to encourage businesses to donate food.
Finally, House Bill 1074 has introduced a new tax credit for restaurant owners who purchase FDA-approved automated external defibrillators (AEDs). It is a non-refundable credit, and it aims to help restaurants earn $400,000 or more.
Do the changes have any implications for non-profits and charitable organizations?
The recent changes in Maryland’s tax laws will affect non-profits and charitable organizations as well, particularly in terms of tax exemptions, reporting requirements, and available credits.
Organizations that qualify as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. However, for the year 2024, they must have the right documentation. The need for proper maintenance of financial documents is even greater now due to a more strict process.
Further, the new local tax adjustments in counties like Anne Arundel and Frederick counties can affect non-profits and charitable organizations as well. Your organization could also benefit from the Food Donations by Qualified Farms tax credit with its 100% deductions.
Like individuals and businesses, it is essential for non-profits to also consult with financial experts to ensure compliance.
Protect your finances today!
The ever-changing tax landscape of Maryland makes it difficult to stay compliant with the rules. However, the consequences can be too damaging for your finances, especially if you own a business. Hire an accountant to protect your finances today!
