Summary of 2006 Tax Legislation for Individuals
The following is a brief summary of Maryland tax legislation affecting individual taxpayers that was passed during the 2006 session of the General Assembly and signed into law by Governor Robert L. Ehrlich, Jr. For more detailed information, see Summary of 2006 Tax Legislation.
INCOME TAX
Military Retirement Income - Senate Bill 22 (Chapter 226, Acts of 2006) Senate Bill 22 provides a $5,000 subtraction modification for military retirement income and eliminates the former requirement that the individual had to be at least 55 years old and an enlisted member of the military at the time of retirement. Effective July 1, 2006.
Extended Payment Deadline for Electronic Filers - Senate Bill 93 (Chapter 36, Acts of 2006) Senate Bill 93 allows individuals to pay their Maryland income taxes by April 30 if they file electronically by April 15. Effective July 1, 2006.
Offset of Refunds and Payments for Federal Nontax Liabilities - House Bill 448 (Chapter 577, Acts of 2006) House Bill 448 provides that the Comptroller may withhold any refund and vendor payment scheduled to be issued to an individual if the person has a nontax liability with the federal government. Effective July 1, 2006.
Interest Rate for Refunds - House Bill 859 (Chapter 587, Acts of 2006) House Bill 859 provides that the Comptroller shall set the annual interest rate on refunds at 13 percent or three percentage points above the average prime rate, whichever is greater. Effective July 1, 2006.
U.S. Government Employees' Foreign Earned Income - House Bill 994 (Chapter 368, Acts of 2006) House Bill 994 provides a new subtraction modification of up to $3,500 for the foreign earned income of U.S. government employees that is included in their federal adjusted gross income. The benefit applies only to tax years 2007, 2008 and 2009. Effective July 1, 2006.
SALES AND USE TAX
Veterans Organizations - Senate Bill 227 (Chapter 217, Acts of 2006) and House Bill 308 (Chapter 218, Acts of 2006) This legislation provides the sales and use tax does not apply to a sale to a bona fide nationally organized and recognized organization of U.S. armed forces veterans, if the organization is qualified as tax exempt by IRS. The Act became effective July 1, 2006 and will expire on June 30, 2009.
Bulk Vending Machines - House Bill 951 (Chapter 197, Acts of 2006) House Bill 951 provides that the sales and use tax does not apply to a sale of tangible personal property through a bulk vending machine for a taxable price of 75 cents or less. Effective July 1, 2006.
Religious and Nonprofit Organizations - House Bill 1624 (Chapter 210, Acts of 2006) House Bill 1624 provides that the sales and use tax does not apply to part of the sale price in a sale by a bona fide church, religious organization, or other nonprofit organization exempt from taxation under IRS guidelines if the sale is made at an auction sale, and the proceeds of the sale are used to carry on the exempt purposes of the church or organization. Effective July 1, 2006.
ESTATE TAX
Maryland Estate Tax - Senate Bill 2 (Chapter 225, Acts of 2006) Senate Bill 2 provides for several changes affecting the meaning of estates; tangible personal property; filing responsibilities; filing extensions; payment due dates; alternative payment schedules; tax calculation and other aspects of Maryland estate tax law. The legislation also establishes new provisions affecting alternate valuation dates and marital deduction qualified terminable interest property. Effective July 1, 2006.
ALCOHOL and TOBACCO TAX
Removal of Partially Consumed Bottle of Wine from Licensed Premises - Senate Bill 280 (Chapter 127, Acts of 2006) - Senate Bill 280 allows a person to leave a restaurant with a partially consumed bottle of wine that was purchased with a meal. The partially consumed bottle of wine must have the cork or cap replaced by the license holder or their employee, and will be considered an "open container" for purposes of transporting it in a vehicle. Effective July 1, 2006.
U.S. Military Identification Card as Proof of Age - House Bill 752 (Chapter 471, Acts of 2006) - House Bill 752 adds a United States military identification card to the forms of identification that an alcoholic beverages licensee or their employee can accept as proof of a person's age for the purpose of purchasing alcoholic beverages. Effective October 1, 2006.
