EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0404*
SENATE BILL 404
Q3 2lr0145
CF HB 422
By: The President (By Request – Administration) and Senators Bailey, Carozza,
Cassilly, Eckardt, Edwards, Gallion, Hershey, Jennings, Ready, Salling,
Simonaire, and West
Introduced and read first time: January 24, 2022
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
Working Marylanders Tax Relief Act of 2022 2
FOR the purpose of altering, beginning with a certain taxable year, the percentage of the 3
federal earned income tax credit used for determining the amount that an individual 4
may claim as a refund under the Maryland earned income tax credit under certain 5
circumstances; and generally relating to the Maryland earned income tax credit. 6
BY repealing and reenacting, with amendments, 7
Article – Tax – General 8
Section 10–704 9
Annotated Code of Maryland 10
(2016 Replacement Volume and 2021 Supplement) 11
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 12
That the Laws of Maryland read as follows: 13
Article – Tax – General 14
10–704. 15
(a) In this section, “taxpayer” means: 16
(1) an individual filing an income tax return; or 17
(2) a married couple filing a joint income tax return. 18
(b) (1) A resident who is a taxpayer may claim a credit against the State 19
income tax for a taxable year in the amount determined under subsection (c) of this section 20
for earned income. 21 2 SENATE BILL 404
(2) A resident who is a taxpayer may claim a credit against the county 1
income tax for a taxable year in the amount determined under subsection (d) of this section 2
for earned income. 3
(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 4
subject to subsection (e) of this section, the credit allowed against the State income tax 5
under subsection (b)(1) of this section is the lesser of: 6
(i) 50% of the earned income credit allowable for the taxable year 7
under § 32 of the Internal Revenue Code or that would have been allowable but for the 8
limitation under § 32(m) of the Internal Revenue Code; or 9
(ii) the State income tax for the taxable year. 10
(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 11
of this section, a resident may claim a refund in the amount, if any, by which the applicable 12
percentage specified in subparagraph (ii) of this paragraph of the earned income credit 13
allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 14
income tax for the taxable year. 15
(ii) Subject to subparagraph (iii) of this paragraph, the applicable 16
percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 17
to be used for purposes of determining the refund provided under this paragraph is: 18
1. 25% for a taxable year beginning after December 31, 2013, 19
but before January 1, 2015; 20
2. 25.5% for a taxable year beginning after December 31, 21
2014, but before January 1, 2016; 22
3. 26% for a taxable year beginning after December 31, 2015, 23
but before January 1, 2017; 24
4. 27% for a taxable year beginning after December 31, 2016, 25
but before January 1, 2018; 26
5. 28% for a taxable year beginning after December 31, 2017, 27
but before January 1, 2020; AND 28
6. 45% for a taxable year beginning after December 31, 29
2019[, but before January 1, 2023; and 30
7. 28% for a taxable year beginning after December 31, 31
2022]. 32
SENATE BILL 404 3
(iii) For purposes of determining the refund provided under this 1
paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 2
calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 3
(3) (i) For purposes of this section for an individual without a qualifying 4
child, the credit allowable for a taxable year under § 32 of the Internal Revenue Code is 5
calculated without regard to: 6
1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 7
the Internal Revenue Code; or 8
2. the limitation under § 32(m) of the Internal Revenue Code. 9
(ii) Subject to subparagraph (iii) of this paragraph, for a taxable year 10
beginning after December 31, 2019[, but before January 1, 2023], the credit allowed against 11
the State income tax under subsection (b)(1) of this section for an individual without a 12
qualifying child is equal to 100% of the earned income credit allowable for a taxable year 13
under § 32 of the Internal Revenue Code. 14
(iii) The tax credit allowed under this paragraph may not exceed $530 15
for a taxable year. 16
(iv) If the tax credit allowed under this paragraph in any taxable year 17
exceeds the total tax otherwise payable by the individual without a qualifying child for that 18
taxable year, the individual may claim a refund in the amount of the excess. 19
(d) (1) Except as provided in paragraph (2) of this subsection and subject to 20
subsection (e) of this section, the credit allowed against the county income tax under 21
subsection (b)(2) of this section is the lesser of: 22
(i) the earned income credit allowable for the taxable year under § 23
32 of the Internal Revenue Code or that would have been allowable but for the limitation 24
under § 32(m) of the Internal Revenue Code multiplied by 10 times the county income tax 25
rate for the taxable year; or 26
(ii) the county income tax for the taxable year. 27
(2) (i) A county may provide, by law, for a refundable county earned 28
income credit as provided in this paragraph. 29
(ii) If a county provides for a refundable county earned income credit 30
under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 31
which it is applicable, the county shall give the Comptroller notice of the refundable county 32
earned income credit. 33
(iii) If a county provides for a refundable county earned income credit 34
under this paragraph, a resident may claim a refund of the amount, if any, by which the 35 4 SENATE BILL 404
product of multiplying the credit allowable for the taxable year under § 32 of the Internal 1
Revenue Code or that would have been allowable but for the limitation under § 32(m) of 2
the Internal Revenue Code by 5 times the county income tax rate for the taxable year 3
exceeds the county income tax for the taxable year. 4
(iv) The amount of any refunds payable under a refundable county 5
earned income credit operates to reduce the income tax revenue from individuals 6
attributable to the county income tax for that county. 7
(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 8
resident of the State for only a part of the year, the amount of the credit or refund allowed 9
under this section shall be determined based on the part of the earned income credit 10
allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 11
to Maryland, determined by multiplying the federal earned income credit by a fraction: 12
(i) the numerator of which is the Maryland adjusted gross income of 13
the individual; and 14
(ii) the denominator of which is the federal adjusted gross income of 15
the individual. 16
(2) For purposes of determining the amount of the credit or refund under 17
paragraph (1) of this subsection, the part of the earned income credit allowable for the 18
taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 19
limitation under § 32(m) of the Internal Revenue Code. 20
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 21
1, 2022. 22