Income Tax - Subtraction Modification - Donations to Food Banks and Other Charitable Entities
HB0903 creates a temporary Maryland income tax subtraction modification for certain donations of food or cash specifically designated to buy food that are made to qualifying charitable entities. The bill defines eligible recipients to include food banks, homeless shelters, domestic violence shelters, religious organizations, and other charitable organizations that register with the Comptroller as distributors of food provided at no charge to people in need. For individual taxpayers, the subtraction is limited to up to $1,000 in donations made during the taxable year, and taxpayers must document the recipient, the value of the donation, and any other information the Comptroller requires.
The bill also makes a conforming change for corporate income tax law so that corporations may benefit from the same subtraction through the corporate modification provisions. In addition, it directs the Comptroller to adopt regulations governing registration and administration of qualified charitable entities. The tax benefit would apply to taxable years beginning after December 31, 2025, and before January 1, 2029, and the bill sunsets on June 30, 2029. The Comptroller must report to the General Assembly by January 1, 2029, on whether the incentive increased donations and whether the subtraction contributed to any increase.
HB0903 would amend Maryland’s Tax-General Article by adding a new subtraction modification for individuals under § 10-208(dd) and by updating § 10-308(b) so corporations can also claim the related subtraction through Maryland modified income rules. It would create new administrative duties for the Comptroller, including rulemaking and a registration process for qualified charitable entities, and would require taxpayers to maintain proof of donation value and recipient identity. The bill would temporarily reduce taxable income for eligible donors while potentially increasing food donations to qualifying nonprofits and local government food providers.
The bill’s structure suggests generally favorable sentiment toward encouraging charitable food donations through the tax code, with a focus on supporting food banks and similar organizations that serve people in need. Because the bill was only at hearing stage in the House and no votes or transcript excerpts are provided, there is no recorded committee opposition or support in the supplied materials. The temporary nature of the benefit and the required Comptroller report indicate an interest in testing the policy and measuring its effectiveness before any extension.
The main points of potential contention are the use of a tax subtraction to incentivize charitable giving, the $1,000 cap on deductible donations, and the administrative burden of verifying donations and registering eligible entities with the Comptroller. Questions may also arise over which organizations qualify, since the bill includes food banks, shelters, religious organizations, and other charities only if they are registered as food distributors providing food at no charge. Another possible issue is whether the temporary tax expenditure will meaningfully increase donations enough to justify the revenue impact and compliance requirements.