Posted on 01/23/25
| News Source: FOX45
Annapolis, MD - Jan. 23, 2025 - Some Maryland lawmakers are seeking to make it easier for the state to tax the income of those living in Maryland on a limited basis.
A bill proposed by progressive lawmakers in both the Maryland House and Senate seeks to modify the residency classification of individuals who spend more than 90 days in Maryland annually. Current state law requires a person to reside in Maryland for at least six months to be considered a resident for income tax purposes.
Sen. James Rosapepe, D-Prince George’s and Anne Arundel Counties, told Spotlight on Maryland on Wednesday he believes now is the time to close what he feels are tax loopholes.
“Basically, we got people that have two or three homes in different states, and some of that is to try to avoid paying Maryland tax,” Sen. Rosapepe said. “[I]f they are here in Maryland for a bunch of the year, they’re still getting our services, folks that send their kids to the public schools, some of these people are not paying their fair share of taxes.”
Spotlight on Maryland asked how the bill may affect individuals temporarily living in the state to take care of a sick family member, manage a family emergency or on short-term work assignments that exceed 90 days but are less than 180 days.
It’s a good question, I don’t know how temporary residence plays out,” Sen. Rosapepe said. “I’ll talk to the comptroller’s office about that.”
“I do know that athletes who compete here will have to pay a share for the days that they are here playing,” Sen. Rosapepe added.
Del. Lorig Charkoudian, D-Montgomery County, is the bill’s sole sponsor in the House. Her office denied Spotlight on Maryland’s interview requests, but provided a comment from the legislator.
“As we face the current budget gap, we need to consider a range of options that close the gap and make our tax structure more fair,” Del. Charkoudian said. “This bill ensures that part-time residents who benefit from Maryland infrastructure and services also pay their fair share to make Maryland the great state that it is.”
The Department of Legislative Services’s fiscal note provided a limited snapshot of the bill’s potential impact.
“[D]ue to data limitations, and given the potentially wide-ranging effects of the bill’s change, the overall effect on state and local revenues is unclear at this time,” the bill’s fiscal note said.
The non-partisan evaluation added that the state comptroller’s office noted that changes to residency qualifications could make the tax modification “vulnerable to legal challenge.” The fiscal note adds that the tax change could have a regional impact by potentially altering reciprocal income tax agreements with Pennsylvania, Virginia, West Virginia and Washington, D.C.
Financial services and real estate expert Tyrone Keys told Spotlight on Maryland that this legislative proposal should alarm every Maryland resident.
It is only a tax grab; it’s very disingenuous,” Keys said. “Although you will have some very wealthy taxpayers ensnared in this, they have a lot more flexibility than someone who retired as a middle-class income earner who has to make that retirement dollar stretch.”
Although Keys was not present at the bill’s initial hearing on Wednesday in the Senate Budget and Taxation Committee, questioning lawmakers voiced similar concerns.
“When you designate the amount of months, I would suggest you consider the phenomena of the ‘snowbirds,’” Sen. Karen Lewis Young, D-Frederick County, said. “Those are people that might seriously consider changing their primary residency to a Florida because of a more positive tax environment.”
The U.S. Census’s American Community Survey found that between 2020 and 2022, Florida was the third-highest destination Marylanders were moving to from the state. Virginia and Pennsylvania were the first and second-highest states where exiting Marylanders established residency.
Keys told Spotlight on Maryland that this year’s legislative session seems to already be intensifying taxpayers' frustration with the state’s proposed revenue policy to close its projected $3 billion shortfall. He said final decisions may motivate voters to reevaluate their political loyalties.
“It [this bill] is a strange way to thank residents who chose to voluntarily spend some of their time here in the state of Maryland. It might work out to be diminishing returns,” Keys said. “Money flows where it is treated best.”
“Increasingly, we see that money is not treated well here in Maryland,” Keys added.