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Court to hear dispute over state tax collection

The U.S. Supreme Court
Bill Clark | CQ Roll Call | Getty Images
The U.S. Supreme Court

The Supreme Court is taking up a dispute over how a state may tax income its residents earn in another state.

The high court on Monday agreed to hear an appeal from Maryland officials who want to overturn a lower court ruling that found the state's tax law unconstitutional.

Read MoreThe best and worst US states for taxpayers

Maryland law allows residents to deduct income taxes paid to other states from their Maryland state tax. But it does not apply that deduction when it comes to local "piggyback taxes" the state collects for county and city governments.

Last year, the Maryland Court of Appeals said the tax violates the Constitution's Commerce Clause and discourages Maryland residents from earning money outside the state.

Read MoreHigh taxes chasing wealthy from New Jersey, report says

Maryland Attorney General Douglas Gansler says the state has authority to tax all income of its residents.

By The Associated Press

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