On January 19, Maryland Gov. Larry Hogan presented a $58.2 billion budget proposal based on an unprecedented level of surpluses and revenue growth for the state. The plan proposes generous tax breaks for retirees, expands relief programs, extends tax credits, and continues relief for businesses.
Here are the key provisions of the proposed plan:
Elimination of Retirement Tax
The plan includes a provision to gradually eliminate taxes on retirement income. The Retirement Tax Reduction Act would eliminate income taxes on pensions and retirement savings accounts. The gradual elimination will be phased in over six years, starting with 70,000 low-income seniors and then expand to all retirees.
Enhanced EITC Made Permanent
The proposed plan would also make permanent the enhanced earned income tax credit (EITC), allowing low-income workers to keep more of their pay. The EITC was enacted as part of the RELIEF Act of 2021 to temporarily increase to 100% the refundable credit for workers without a qualifying child and 45% for workers with qualifying children. The proposed Working Marylanders Tax Relief Act would make the enhanced EITC permanent.
Extended COVID Recovery Initiatives
The proposed Project Restore Act would extend and make permanent some of the state’s COVID economic recovery initiatives, including those that provide small businesses with financial assistance. It would also apply to commercial developers for the purpose of encouraging the revitalization of vacant retail and commercial space. The relief for businesses will also include sales tax rebates for eligible businesses.
Expand Manufacturing Incentives
The More Jobs for Marylanders program would be extended five more years through 2027. The program offers tax incentives to new and existing manufacturers to locate or expand within the state with a focus on creating new manufacturing jobs. The incentives also apply to non-manufacturers that locate or expand in Maryland Opportunity Zones.
Relief from Business Fees
The proposed budget plan also includes a provision to eliminate filings fees for businesses that follow the process for submitting their annual reports with the Maryland State Department of Assessments and Taxation. The provision would eliminate the annual $100 filing fee for family farms as well as the $300 fee for corporations, LLCs and other legal entities.
If you are interested in exploring how you or your business may be impacted by the new tax relief provisions, please reach out to your Glass Jacobson team.