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Maryland 2025: Is FreeTaxUSA Applying the New Itemized Deduction Phaseout?

Max703

I’m seeing a discrepancy between my 2025 Maryland state return on FreeTaxUSA and the Maryland iFile system, and it seems tied to the new Maryland itemized deduction phaseout.

Maryland passed a 2025 law that reduces itemized deductions by 7.5% of federal AGI over $200,000 or $100,000 dollars if married filing separately, applied on Form 502 Line 17c. On my Maryland iFile return, the state is clearly applying this phaseout and my Maryland tax due is higher, while FreeTaxUSA both show a lower Maryland tax amount, suggesting the phaseout may not be fully applied in the software.

Has anyone else run into this with their 2025 Maryland return on FreeTaxUSA? Can anyone from FreeTaxUSA confirm whether the 2025 Maryland itemized deduction phaseout on Form 502 Line 17c is currently implemented in the state module?

I want to be sure I’m filing with the correct Maryland amount due and not underpaying because of a software issue.

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Comments

Max703

I think I found my error - I was calculating line 17b incorrectly.

Taylor

Hello Max703,

Thank you for reaching out about this Maryland itemized deduction phaseout. I can confirm our software is accounting for this phaseout on line 17c and then entering the deduction amount on line 17.

Please reach out to our Support Team inside your account with any further concerns.