Income Tax - Subtraction Modification for Military Retirement Income - Individuals Under the Age of 55
HB0857 would expand Maryland’s income tax subtraction modification for military retirement income by removing the current age-based distinction in the statute. Under existing law, the subtraction allows a larger exclusion for taxpayers age 55 and older and a smaller exclusion for those under 55. This bill would instead allow the first $20,000 of military retirement income to be subtracted from federal adjusted gross income for all eligible taxpayers, regardless of age, beginning with tax years after December 31, 2025.
The bill amends § 10-207(q) of the Tax-General Article, which governs subtraction modifications used to calculate Maryland adjusted gross income. It retains the statutory definitions of military retirement income, military service, and armed forces, but changes the amount of income eligible for subtraction. The bill takes effect July 1, 2026, and applies prospectively to future taxable years.
HB0857 would reduce Maryland taxable income for qualifying recipients of military retirement income, especially younger retirees under age 55 who currently receive a smaller subtraction. By standardizing the subtraction at $20,000 for all eligible taxpayers, the bill would broaden the tax benefit and likely reduce state income tax revenue to some extent. The change would affect the Maryland income tax calculation for military retirees and would amend the Tax-General Article, § 10-207(q), without altering the underlying definitions of military retirement income or military service.
Based on the bill text and available context, the measure appears generally favorable and supportive of military retirees. The bill is sponsored by a broad bipartisan group of delegates, which suggests cross-party interest in providing tax relief to veterans and service members. There is no recorded committee testimony or vote history in the provided materials, so the available context does not show organized opposition or formal debate outcomes.
The main policy issue is the age-based structure of the current subtraction modification. Supporters of HB0857 appear to favor equalizing the benefit for military retirees under 55 with those 55 and older, while any potential concern would likely center on the fiscal cost of expanding the subtraction and the resulting reduction in state revenue. Because no hearing transcript or votes are provided, no specific opponents or detailed objections are identified in the available record.