The 2022 Maryland Individual Income Tax Instructions explained Form 502 line 17b this way:
Certain items of federal itemized deductions are not eligible for State purposes and must be subtracted from line 17a. State and local income taxes used as a deduction for federal purposes must be entered on line 17b (there are certain limitations on the deduction amount of state and local tax. For more information, visit www.marylandtaxes.gov). Also, any amounts deducted as contributions of Preservation or Conservation Easements for which a credit is claimed must be added to line 17b.
This is saying that If you used itemized deductions on your Federal return and part of your deductions were from state and local income taxes (which is the total of state and local income tax plus real estate tax plus personal property tax -- Schedule A line 5d), then an adjustment must be made on the Maryland return because state and local income taxes are not a deduction for Maryland purposes.
Additionally, this category of deduction is limited to $10,000 on the Federal return for a Married Filing Joint filing status. Therefore, line 17b takes the maximum of $10,000 that was deducted from the Federal return and subtracts the real estate tax amount and any personal property tax amounts. The leftover portion of the $10,000 is attributed to state and local income tax. That leftover amount is reported on line 17b and subtracted from the itemized deduction allowed on the Maryland return.
If you are using one of the CD/downloaded versions of TurboTax, click Forms in the upper right corner of the screen and highlight Maryland Form 502 to see the detailed calculation in the Itemized Deduction Smart Worksheet just above line 17b.
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