Income Tax - Senior Tax Credit - Refundability
HB0745 would make Maryland’s existing senior income tax credit refundable for eligible taxpayers age 65 and older. Under current law, qualifying seniors may claim a credit against State income tax based on income and filing status, but any amount above their tax liability cannot be used. This bill changes that rule so that if the credit exceeds the taxpayer’s State income tax, the excess would be paid out as a refund rather than lost.
The bill keeps the current eligibility structure and credit amounts, including the $1,000 credit for single eligible taxpayers with federal adjusted gross income up to $100,000 and the larger credit for certain joint filers, surviving spouses, and heads of household with income up to $150,000. It also preserves the existing fiscal safeguard that reduces the credit in years when the State’s revenue forecast weakens significantly, but only for higher-income recipients within the specified ranges. The bill would apply beginning with taxable years after December 31, 2025, and take effect July 1, 2026.
HB0745 amends § 10-754 of the Tax-General Article to convert the senior tax credit from a nonrefundable credit into a refundable one. The practical effect is that eligible Maryland residents age 65 and older could receive a refund even if their State income tax liability is smaller than the credit amount, increasing the value of the credit for low-tax or no-tax seniors. The bill does not change the age threshold, income limits, or base credit amounts, but it would increase State revenue costs because more taxpayers could receive payments beyond their tax liability.
The available record shows the bill was introduced with bipartisan sponsorship and referred to the House Ways and Means Committee, with a hearing scheduled, but no recorded votes or committee testimony were provided. Based on the bill’s purpose and sponsorship, the measure appears to be framed as tax relief for seniors and likely intended to be broadly supportive of older residents. There is no direct evidence in the provided materials of organized opposition or support, though the refundable feature suggests fiscal concerns may be a likely focus in committee discussion.
The main policy issue is the shift from a nonrefundable to a refundable credit. Supporters would likely emphasize that seniors with limited income or low tax liability should still benefit fully from the credit, while critics may question the added cost to the State and whether refundability expands the program beyond its original tax-relief purpose. Another likely point of discussion is the bill’s existing revenue-triggered reduction formula, which partially limits the credit in weaker fiscal years; that safeguard may be viewed as important by budget-minded legislators, but possibly insufficient by those seeking a stronger or more predictable benefit for seniors.