Maryland recently passed a tax break for Marylanders ages 62 and up. Seniors who earn up to $100,000 per year could receive up to $1,000 in tax cuts, or up to $1,750 for senior couples who earn no more than $150,000. People who owe no tax — or earn above the income limit — would not get a break.
In addition, the State has a Homeowner's Property Tax Credit Program. This allows credits against the homeowner's property tax bill if the property taxes exceed a fixed percentage of the person's gross income. In other words, it sets a limit on the amount of property taxes any homeowner must pay based upon his or her income.
How Is "Income" Defined for the Homeowner's Tax Credit Program?
For purposes of the tax credit program, it is emphasized that applicants must report total income, which means the combined gross income before any deductions are taken. Income information must be reported for the homeowner and spouse and all other occupants of the household unless they are dependents or they are paying rent or room and board. Income from all sources must be reported whether or not the monies received are included as income for Federal and State income tax purposes. Nontaxable retirement benefits such as Social Security and Railroad Retirement must be reported as income for the tax credit program. Generally, eligibility for the tax credit will be based upon all monies received in the applicant's household in a given year.
What Are The Other Requirements for the Homeowner's Tax Credit Program?
Before your eligibility according to income can be considered, you must meet four basic requirements
- You must own or have a legal interest in the property.
- The dwelling on which you are seeking the tax credit must be your principal residence where you live at least six months of the year, including July 1, unless you are a recent home purchaser or unless you are unable to do so because of your health or need of special care.
- Your net worth, not including the value of the property on which you are seeking the credit or any qualified retirement savings or Individual Retirement Accounts, must be less than $200,000.
- Your combined gross household income cannot exceed $60,000.
How Is The Credit Figured?
The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: 0% of the first $8,000 of the combined household income; 4% of the next $4,000 of income; 6.5% of the next $4,000 of income; and 9% of all income above $16,000.