A Maryland tax law that effectively double-taxes residents for income earned in other states is unconstitutional, a divided Supreme Court ruled Monday.
The 5-4 ruling is expected to have significant implications for more than 5,000 taxing jurisdictions across the country, including the states of New York, Pennsylvania and Indiana, and the cities of Detroit, St. Louis and Kansas City.
That’s because all of these jurisdictions have tax regimes that are similar to the one the high court majority struck down.
Maryland allows residents to deduct income taxes paid to other states from their state tax, but it doesn’t apply that deduction to a local tax it collects on behalf of some cities and towns. State officials argued the distinction was necessary to ensure that residents pay their fair share for local government services and schools.