Income Tax - Itemized Deductions - Charitable Donations
HB0033 would change Maryland’s itemized deduction limitation for higher-income taxpayers by excluding charitable contributions from the calculation of deductions subject to the state’s 7.5% reduction. Under current law, individuals who itemize and whose federal adjusted gross income exceeds a specified threshold have their Maryland itemized deductions reduced by 7.5% of the amount above the applicable income level. This bill amends Tax-General § 10-218 so that charitable contributions deductible under Internal Revenue Code § 170 are not counted as part of the itemized deductions subject to that limitation.
The bill applies only to individual taxpayers who itemize deductions on their federal return; it does not apply to fiduciaries. It preserves the existing income thresholds of $100,000 for married individuals filing separately and $200,000 for all other filers, but narrows the base to which the limitation applies by carving out charitable donations. The bill takes effect July 1, 2026, and applies to taxable years beginning after December 31, 2025.
HB0033 would amend Maryland income tax law in Tax-General § 10-218 by modifying how the state’s itemized deduction phase-down is calculated for higher-income taxpayers. Specifically, charitable contributions would be excluded from the itemized deductions that are reduced by the 7.5% limitation, which could increase the value of itemizing for affected taxpayers who make charitable gifts. The bill does not change the income thresholds triggering the limitation, and it leaves other itemized deduction reductions in place.
Based on the available context, the bill appears to be a targeted tax policy measure rather than a broadly controversial proposal. There are no recorded votes or committee transcript excerpts provided, so there is no direct evidence of support or opposition in the materials. The bill’s framing suggests a favorable view toward encouraging charitable giving while maintaining the existing limitation structure for other deductions.
The main point of contention is likely fiscal and policy-based: whether charitable contributions should be treated differently from other itemized deductions for higher-income taxpayers. Supporters would likely argue that excluding donations from the limitation promotes philanthropy and avoids penalizing charitable giving, while opponents may view the change as a tax preference that narrows the state tax base and benefits higher-income itemizers. No specific stakeholder positions are included in the provided record.