Earned Income Tax Credit - Individuals Without Qualifying Children - Eligibility
HB 542 expands Maryland’s earned income tax credit (EITC) for individuals without qualifying children. Under current law, these filers can claim a State EITC based on federal law, and the bill changes the income thresholds used to calculate the credit by substituting higher earned-income and phase-out amounts. It also removes a prior temporary cap and makes the credit formula more generous for childless workers by allowing the State credit to be calculated using $7,840 as the earned-income amount and $19,160 as the phase-out amount.
The bill further provides that, beginning with taxable years after December 31, 2025, those earned-income and phase-out amounts will be adjusted annually for inflation using a cost-of-living adjustment tied to the Internal Revenue Code. The bill takes effect July 1, 2026, and applies to taxable years beginning after December 31, 2025. It does not change the basic structure of the county EITC provisions, but it leaves existing county credit rules in place and continues to allow counties to adopt refundable county credits if they choose.
The bill’s main impact is on Maryland’s Tax-General Article, specifically § 10-704 governing the State and county earned income tax credits. It would broaden eligibility and increase the value of the State credit for workers without qualifying children, which could reduce State income tax liability and increase refunds for low- and moderate-income taxpayers in that group. Because the credit is refundable when it exceeds tax owed, the bill could also increase direct payments to eligible filers.
The overall sentiment reflected by the bill’s introduction is favorable toward tax relief for low-income workers, especially childless workers who often receive a smaller federal EITC than families with children. No committee testimony or recorded votes were provided, so there is no documented opposition or support from hearings in the materials supplied. Based on the text alone, the bill appears aimed at expanding a targeted anti-poverty tax benefit rather than restructuring the tax code broadly.
The main point of contention likely concerns fiscal cost and policy design: expanding and indexing the credit would increase State revenue losses, and some may question whether the benefit should be focused on individuals without qualifying children or whether the thresholds should be tied to inflation automatically. Another possible issue is administrative complexity from annual inflation adjustments and the interaction with federal EITC calculations, though the bill largely tracks federal concepts already used in Maryland law.
HB 542 amends Maryland Tax-General § 10-704 to expand the State earned income tax credit for individuals without qualifying children by increasing the earned-income and phase-out amounts used in the credit calculation and by requiring annual inflation adjustments beginning after 2025. It preserves the existing county EITC framework, including optional refundable county credits, but does not otherwise alter county tax credit authority. The bill would likely increase refundable credits and reduce State income tax collections for eligible low-income workers without qualifying children.
The bill appears generally supportive of expanding tax relief for low-income workers, particularly childless workers who are often eligible for a smaller credit under current law. No committee transcript or vote data were provided, so there is no recorded public debate in the supplied materials. On its face, the measure reflects a pro-expansion, anti-poverty tax policy approach.
The likely areas of contention are fiscal impact and policy targeting. Supporters would likely emphasize that the bill helps low-income workers without qualifying children and makes the credit more responsive to inflation, while critics may focus on the cost to the State treasury and whether the credit should be expanded in this way. Administrative issues could also arise from the new annual cost-of-living adjustments and the need to implement revised credit thresholds.