Income Tax - Subtraction Modification for Military Retirement Income (Keep Our Heroes Home Act)
Summary
HB60 would expand Maryland’s income tax subtraction modification for military retirement income. Under current law, the subtraction is limited based on age and allows the first $12,500 of qualifying military retirement income for individuals under 55 and the first $20,000 for individuals 55 and older. The bill removes the age-based structure and replaces it with a larger, uniform exclusion for all eligible recipients.
For taxable years beginning after December 31, 2024 but before January 1, 2026, the bill would allow the first $25,000 of military retirement income to be subtracted from Maryland adjusted gross income. For taxable years beginning after December 31, 2025, that subtraction would increase to the first $40,000. The bill defines military retirement income broadly to include retirement income and death benefits received as a result of military service, and it applies to several categories of service, including active duty, reserve service, the Maryland National Guard, and certain federal uniformed services.
Impact
HB60 would amend Section 10-207(q) of the Tax-General Article, increasing the amount of military retirement income that Maryland residents may exclude from state taxable income. The practical effect would be to reduce state income tax liability for eligible military retirees and survivors receiving qualifying death benefits, while increasing the revenue cost to the state. It would also eliminate the current age-based distinction in the subtraction modification and create a phased increase in the exclusion amount beginning in tax year 2025.
Sentiment
The bill’s title and structure suggest a supportive posture toward military retirees, emphasizing retention of veterans in Maryland. No committee transcripts or recorded votes were provided, so there is no documented floor or committee debate to indicate broader legislative sentiment. Based on the bill text alone, the measure appears designed as a tax benefit for service members and veterans and is framed positively as a retention and recognition policy.
Contention
The main policy issue is fiscal: expanding the subtraction modification would lower state income tax collections, which may raise concerns about budget impact and tax fairness relative to other taxpayers. Another point of contention is the size and timing of the increase, especially the jump from $25,000 to $40,000 after 2025 and the removal of the current age-based eligibility structure. No specific objections or supporters are recorded in the provided materials, so any contention is inferred from the bill’s tax expenditure effects rather than from documented debate.