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Old 10-01-2009, 06:05 AM
 
Location: somewhere
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We are gov't employees who will most likely be relocating to the DC area. We are in Arlington, VA right now on a temporary assignment. We had only considered living in VA if we moved to the area but several of my husbands co-workers live in Maryland and have been talking to him about it. I have a few questions about taxes. I know we will pay fed income taxes on Maryland, but I also saw there is a county tax. How does one determine the county tax? Also, does Maryland have the luxury tax that VA has in regards to vehicles? Here in Va there seems to be 2 taxes when you go to the grocery store, one for 5% and the other is 2.5%, is it the same in Maryland. We will be renting for at the least for the first couple of years so at this point I am not to worried about property taxes. Any info would be appreciated. I have everything pretty much figured out if we lived in VA but not to sure of Maryland.

 
Old 10-01-2009, 06:16 AM
 
Location: Baltimore
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MD residents are subject to both a state and a local income tax, but usually they are combined and only one amount is withheld from your wages. You file one income tax return, and report both taxes on that return. Here is a link to the local tax rates:

Maryland Income Tax Information - Local Tax Rates

MD has a sales and use tax of 6%, but with the exception of Ocean City and Deep Creek Lake (the two resort areas), there is no additional local sales tax. There are exemptions for most groceries and medical supplies, many services, sales of real property...a number of other items.

There is a 6% tax on the sale of motor vehicles. Most refer to it as a sales tax, but in fact it's a motor vehicle titling tax and is handled by the MVA and not the Comptroller's Office. There is also a 6% tax on the sale of boats - handled by the Dept. of Natural Resources.

If you purchase real property, you will pay property taxes to the local jurisdiction. The rate varies by county. If you rent, the landlord pays the tax (it will just be part of your rental payment).

Unlike VA, there is no yearly personal property tax on cars or other items in MD.

There are alcohol and tobacco taxes that are imposed on the retailer, and will just be part of the price of these items. The same with gasoline or diesel.
 
Old 10-01-2009, 06:45 AM
 
Location: somewhere
4,264 posts, read 7,800,355 times
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Quote:
Originally Posted by janetvj View Post
MD residents are subject to both a state and a local income tax, but usually they are combined and only one amount is withheld from your wages. You file one income tax return, and report both taxes on that return. Here is a link to the local tax rates:

Maryland Income Tax Information - Local Tax Rates

MD has a sales and use tax of 6%, but with the exception of Ocean City and Deep Creek Lake (the two resort areas), there is no additional local sales tax. There are exemptions for most groceries and medical supplies, many services, sales of real property...a number of other items.

There is a 6% tax on the sale of motor vehicles. Most refer to it as a sales tax, but in fact it's a motor vehicle titling tax and is handled by the MVA and not the Comptroller's Office. There is also a 6% tax on the sale of boats - handled by the Dept. of Natural Resources.

If you purchase real property, you will pay property taxes to the local jurisdiction. The rate varies by county. If you rent, the landlord pays the tax (it will just be part of your rental payment).

Unlike VA, there is no yearly personal property tax on cars or other items in MD.

There are alcohol and tobacco taxes that are imposed on the retailer, and will just be part of the price of these items. The same with gasoline or diesel.
Thank you for you information. If we moved to MD we would have to register our vehicles, is that where the 6% titling tax would come into play? Do they base it on the bluebook value of the vehicle? Is there an inspection sticker for cars also like VA? We are from NM and have a pretty low price on our yearly car registrations and no car inspections.

Am I understanding you correctly in that there is no tax on groceries? In NM if we go to the grocery store we are only taxed on non-food items and if I am understanding your post correctly that is how it is in MD.
 
Old 10-01-2009, 07:07 AM
 
Location: Baltimore
1,802 posts, read 6,927,980 times
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Quote:
Originally Posted by ajzjmsmom View Post
Thank you for you information. If we moved to MD we would have to register our vehicles, is that where the 6% titling tax would come into play? Do they base it on the bluebook value of the vehicle? Is there an inspection sticker for cars also like VA? We are from NM and have a pretty low price on our yearly car registrations and no car inspections.

Am I understanding you correctly in that there is no tax on groceries? In NM if we go to the grocery store we are only taxed on non-food items and if I am understanding your post correctly that is how it is in MD.
This link should answer most of your questions about the titling tax on vehicles:

New to Maryland Titling and Registering Your Vehicle Information

MD does not require any yearly safety inspections after you have registered your car. But there is an emissions test that is required once every two years.

You are correct about the sales tax on groceries. There is no tax on canned goods, frozen foods, dairy products, meats, etc. But the tax does apply to prepared foods (sandwiches, hot foods, salad bar items, single servings of ice cream, etc.) and to non-food items, which include soft drinks, alcoholic beverages, candy, pet foods, bottled water, etc. as well as paper products and household items.
 
Old 10-01-2009, 07:30 AM
 
Location: somewhere
4,264 posts, read 7,800,355 times
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Quote:
Originally Posted by janetvj View Post
This link should answer most of your questions about the titling tax on vehicles:

New to Maryland Titling and Registering Your Vehicle Information

MD does not require any yearly safety inspections after you have registered your car. But there is an emissions test that is required once every two years.

You are correct about the sales tax on groceries. There is no tax on canned goods, frozen foods, dairy products, meats, etc. But the tax does apply to prepared foods (sandwiches, hot foods, salad bar items, single servings of ice cream, etc.) and to non-food items, which include soft drinks, alcoholic beverages, candy, pet foods, bottled water, etc. as well as paper products and household items.

Thank you very much for the information.
 
Old 10-01-2009, 08:42 AM
 
Location: North Beach, MD on the Chesapeake
30,888 posts, read 37,565,982 times
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You have to go through a one time vehicle safety inspection in MD to register an out of state car.
 
Old 10-02-2009, 10:40 AM
 
Location: Washington, DC area
10,590 posts, read 18,007,556 times
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janetvj, lot of great info you have posted here.

Maybe you can help me. I bought a car in Missouri this past spring, I paid nearly $38,000 and had to pay a sales tax on that purchase which included city, state etc.

When I register that car in MD, do I have to pay another 6% tax on the car? That would just suck big time. I read the webpage on the links you provided, but was not sure how it would apply to me. I don't know if Missouri has a tax. I just paid a sales tax on the purchase which goes to a mix of jurisdictions. I hope that tax I paid can apply to the MD tax. Would you know?
 
Old 10-02-2009, 03:36 PM
 
Location: Baltimore
1,802 posts, read 6,927,980 times
Reputation: 1897
Quote:
Originally Posted by kcmo View Post
janetvj, lot of great info you have posted here.

Maybe you can help me. I bought a car in Missouri this past spring, I paid nearly $38,000 and had to pay a sales tax on that purchase which included city, state etc.

When I register that car in MD, do I have to pay another 6% tax on the car? That would just suck big time. I read the webpage on the links you provided, but was not sure how it would apply to me. I don't know if Missouri has a tax. I just paid a sales tax on the purchase which goes to a mix of jurisdictions. I hope that tax I paid can apply to the MD tax. Would you know?
Wish I could say for sure, but before I retired I worked for the Comptroller's Office, and as I mentioned in an earlier post, the MVA titling tax is not really a sales tax and therefore is not handled by the Comptroller. But from what I can tell from the link to MVA, since you recently purchased your car, if your vehicle is less than 7 years old, and if you already paid a sales tax that was at least 6%, then you will only owe an additional $100 to MD.

If you paid less than 6%, you will pay the difference in rate based on the purchase price, with the minimum tax being $100.

If you paid no tax, then you will owe the full 6% of the original purchase price.

Again, I am only going by the information on the MVA website, as I have no personal experience with this. Maybe someone else will jump in with more information.
 
Old 10-04-2009, 05:28 PM
 
3,576 posts, read 5,805,956 times
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My biggest gripe about Maryland car registration (for non-used cars) is that they charge you the taxes based on the KBB (MSRP dealer retail pricing).

It's a complete joke.

When I registered my Infiniti in Maryland in 2005 they charge me the difference in sales taxes I paid in Virginia in 2002 (VA car sales tax was 3%) and Maryland Car Sales Tax was 5% in 2005. MD sales tax is now 6%.

So I pay the 2% sales tax difference as part of my car registration. I don't have a problem with that. But they based it on $20K (that's what the KBB said my 3 year old infiniti was worth). I knew I couldn't get more than 15K for the car. I told the DMV I'll just sign over the title to my car for 20K if they want to charge me taxes on it.

Maryland will tax you to death. I made a hugh mistake buying a home in MD. I thought personal income was 4.75% at the time (it's now 5.75%) but I didn't realize Howard County charged an additional 3.2% local income tax.

So I ended up paying 7.95% effective state and local personal income taxes.

Of course, MD raised their taxes last year so most people who living in Howard, Mont, PG, Baltimore County end up paying 8.95% effective personal income taxes.

It's horrible. I might as well live in California and pay 9.25% state income tax and have great weather in Los Angeles.

I just do not understand how the state of MD can say they are going broke when they raised both the sales tax and personal income taxes. Their property taxes are roughly 1 percent of your home's value. So while it's not as high as Texas (2%) or FL (1.6%), it's still not cheap. Oh, Maryland cheats also, they only reasses property values every 3 years. So most of homeowners property taxes are still increasing and there a little law in most county constitution that says they must maintain the same revenue each year so property taxes aren't going down any time soon. It's just a poorly managed state these days. It's much better when they have a Republican Governor with a state Democratic Congress. At least they can keep each other in check. But with a Democratic governor with a Democratic Congress, it spells increases in taxes and wasteful government spending.

One more thing, AMT (aka alternative min. tax). If you are a Maryland resident making more than 130K, with 2 kids and own a home and pay property taxes, it's almost a 90 percent chance you will get hit with this tax. That means you won't get to write off state income taxes and won't get to write off property taxes and your personal exemptions get eliminated.

Last edited by aneftp; 10-04-2009 at 05:36 PM..
 
Old 10-04-2009, 05:51 PM
 
Location: North Beach, MD on the Chesapeake
30,888 posts, read 37,565,982 times
Reputation: 38648
Quote:
Originally Posted by aneftp View Post
My biggest gripe about Maryland car registration (for non-used cars) is that they charge you the taxes based on the KBB (MSRP dealer retail pricing).

It's a complete joke.

When I registered my Infiniti in Maryland in 2005 they charge me the difference in sales taxes I paid in Virginia in 2002 (VA car sales tax was 3%) and Maryland Car Sales Tax was 5% in 2005. MD sales tax is now 6%.

So I pay the 2% sales tax difference as part of my car registration. I don't have a problem with that. But they based it on $20K (that's what the KBB said my 3 year old infiniti was worth). I knew I couldn't get more than 15K for the car. I told the DMV I'll just sign over the title to my car for 20K if they want to charge me taxes on it.

Maryland will tax you to death. I made a hugh mistake buying a home in MD. I thought personal income was 4.75% at the time (it's now 5.75%) but I didn't realize Howard County charged an additional 3.2% local income tax.

So I ended up paying 7.95% effective state and local personal income taxes.

Of course, MD raised their taxes last year so most people who living in Howard, Mont, PG, Baltimore County end up paying 8.95% effective personal income taxes.

It's horrible. I might as well live in California and pay 9.25% state income tax and have great weather in Los Angeles.

I just do not understand how the state of MD can say they are going broke when they raised both the sales tax and personal income taxes. Their property taxes are roughly 1 percent of your home's value. So while it's not as high as Texas (2%) or FL (1.6%), it's still not cheap. Oh, Maryland cheats also, they only reasses property values every 3 years. So most of homeowners property taxes are still increasing and there a little law in most county constitution that says they must maintain the same revenue each year so property taxes aren't going down any time soon. It's just a poorly managed state these days. It's much better when they have a Republican Governor with a state Democratic Congress. At least they can keep each other in check. But with a Democratic governor with a Democratic Congress, it spells increases in taxes and wasteful government spending.

Of one more thing, AMT (aka alternative min. tax). If you are a Maryland resident making more than 130K, with 2 kids and own a home and pay property taxes, it's almost a 90 percent chance you will get hit with this tax. That means you won't get to write off state income taxes and won't get to write off property taxes and your personal exemptions get eliminated.
A couple of things which I've bolded:
1) that's called the "Piggy Back Tax" and all the Counties levy it. Most are at 50% of your State Income Tax although a couple are higher and a couple are lower. The MD Income Tax itself is a sliding rate-the more you make the higher the percentage.

2) there is no law that the same property tax revenue be maintained. What happens is that property is re-assessed every 3 years with it going up a bit each year for taxing purposes although the Homestead Credit limits the increase to no more than 10% on owner occupied homes. What I think you mean is the Constant Yield Rate. The MD Department of Assessments and Taxation notifies jurisdictions what the assessments are and the local property tax rate to maintain the same dollar amount of taxes this year as last year. Most jurisdictions can't maintain that, prices for things like gas, electric, and insurance increase for governments too, so the jurisdiction has to have a public hearing to have a tax rate higher than the Constant Yield. What is a State law for revenues is on the school money side-it's called "Maintenance of Effort" and it says that the school system must spend the same per student, adjusted for inflation, as it did last year. It really hurts systems that are growing rapidly. School Boards in MD are not independent taxing authorities but get their money from the County government which then has no oversight on how it is spent.


If you're paying AMT at $130K you need a different tax preparer.
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