Maryland 2025 Regular Session

Maryland House Bill HB1014 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb1014
6	6
7	7	HOUSE BILL 1014
8	8	Q3, Q7 5lr2254
9	9	CF SB 859
10	10	By: Delegates Palakovich Carr, Wilkins, Smith, Stewart, Lehman, Acevero,
11	11	Addison, Bagnall, Boafo, Boyce, Charkoudian, Cullison, Ebersole, Embry,
12	12	Fair, Fennell, Foley, Forbes, Hill, Kaufman, R. Lewis, J. Long, Martinez,
13	13	McCaskill, Mireku–North, Pasteur, Pena–Melnyk, Ruff, Ruth, Shetty,
14	14	Solomon, Taveras, Terrasa, Wells, White Holland, Williams, Wims, Woods,
15	15	Woorman, and Young
16	16	Introduced and read first time: February 3, 2025
17	17	Assigned to: Ways and Means
18	18
19	19	A BILL ENTITLED
20	20
21	21	AN ACT concerning 1
22	22
23	23	Fair Share for Maryland Act of 2025 2
24	24
25	25	FOR the purpose of altering a certain limit on the unified credit used for determining the 3
26	26	Maryland estate tax for decedents dying on or after a certain date; altering a certain 4
27	27	limitation on the amount of the Maryland estate tax for decedents dying on or after 5
28	28	a certain date; prohibiting, except under certain circumstances, the application of 6
29	29	certain amendments to the Internal Revenue Code to the determination of Maryland 7
30	30	taxable income for certain taxable years; altering the definition of “qualified child” 8
31	31	for purposes of a certain credit against the State income tax for certain dependent 9
32	32	children; imposing a certain business transportation fee on certain taxable income of 10
33	33	corporations and pass–through entities for certain taxable years; limiting, for certain 11
34	34	taxable years, the maximum amount of net operating losses that may be allowed in 12
35	35	determining Maryland taxable income and Maryland modified income; requiring 13
36	36	that certain sales of tangible personal property be included in the numerator of the 14
37	37	sales factor used for apportioning a corporation’s income to the State under certain 15
38	38	circumstances; altering the State income tax rate on Maryland taxable income of 16
39	39	certain individuals; providing for an additional State individual income tax rate on 17
40	40	the net investment income of certain individuals; imposing a certain income tax on 18
41	41	income distributed to a member of a certain pass–through entity from the 19
42	42	pass–through entity’s taxable income exceeding a certain amount; expanding 20
43	43	eligibility for the Maryland earned income tax credit for individuals without 21
44	44	qualifying children by altering the income thresholds at which the credit phases out; 22
45	45	providing that, after a certain taxable year, the income threshold and phase–out 23
46	46	amounts are adjusted annually for inflation; altering the income eligibility 24
47	47	requirements for purposes of qualifying for a certain credit against the State income 25
48	48	tax for certain dependent children; altering the calculation of the child tax credit; 26 2 HOUSE BILL 1014
49	49
50	50
51	51	requiring certain corporations to compute Maryland taxable income using a certain 1
52	52	method; requiring, subject to regulations adopted by the Comptroller, certain groups 2
53	53	of corporations to file a combined income tax return reflecting the aggregate income 3
54	54	tax liability of all the members of the group; requiring the Comptroller to adopt 4
55	55	certain regulations consistent with certain regulations adopted by the Multistate 5
56	56	Tax Commission; requiring the Comptroller to assess interest and penalties under 6
57	57	certain circumstances; and generally relating to Maryland estate tax and income tax. 7
58	58
59	59	BY repealing and reenacting, without amendments, 8
60	60	Article – Tax – General 9
61	61	Section 7–309(a) and (b)(1), (2), and (9) and 10–310 10
62	62	Annotated Code of Maryland 11
63	63	(2022 Replacement Volume and 2024 Supplement) 12
64	64
65	65	BY repealing and reenacting, with amendments, 13
66	66	Article – Tax – General 14
67	67	Section 7–309(b)(3), 10–104(5), (6), and (8), 10–105(a), 10–108(a) and (c), 15
68	68	10–210.1(b)(2), 10–402(d), 10–704, 10–751, and 10–811 16
69	69	Annotated Code of Maryland 17
70	70	(2022 Replacement Volume and 2024 Supplement) 18
71	71
72	72	BY adding to 19
73	73	Article – Tax – General 20
74	74	Section 10–102.2, 10–102.3, and 10–402.1 21
75	75	Annotated Code of Maryland 22
76	76	(2022 Replacement Volume and 2024 Supplement) 23
77	77
78	78	BY repealing and reenacting, with amendments, 24
79	79	Article – Tax – General 25
80	80	Section 10–104(5), (6), and (8) 26
81	81	Annotated Code of Maryland 27
82	82	(2022 Replacement Volume and 2024 Supplement) 28
83	83	(As enacted by Section 3 of this Act) 29
84	84
85	85	BY repealing and reenacting, with amendments, 30
86	86	Article – Tax – General 31
87	87	Section 10–751 32
88	88	Annotated Code of Maryland 33
89	89	(2022 Replacement Volume and 2024 Supplement) 34
90	90	(As enacted by Section 2 of this Act) 35
91	91
92	92	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 36
93	93	That the Laws of Maryland read as follows: 37
94	94
95	95	Article – Tax – General 38
96	96
97	97	7–309. 39 HOUSE BILL 1014 3
98	98
99	99
100	100
101	101	(a) Notwithstanding an Act of Congress that repeals or reduces the federal credit 1
102	102	under § 2011 of the Internal Revenue Code, the provisions of this subtitle in effect before 2
103	103	the passage of the Act of Congress shall apply with respect to a decedent who dies after the 3
104	104	effective date of the Act of Congress so as to continue the Maryland estate tax in force 4
105	105	without reduction in the same manner as if the federal credit had not been repealed or 5
106	106	reduced. 6
107	107
108	108	(b) (1) Except as provided in paragraphs (2) through (9) of this subsection and 7
109	109	subsection (c) of this section, after the effective date of an Act of Congress described in 8
110	110	subsection (a) of this section, the Maryland estate tax shall be determined using: 9
111	111
112	112	(i) the federal credit allowable by § 2011 of the Internal Revenue 10
113	113	Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 11
114	114	Congress; and 12
115	115
116	116	(ii) other provisions of federal estate tax law as in effect on the date 13
117	117	of the decedent’s death. 14
118	118
119	119	(2) Except as provided in paragraphs (3) through (9) of this subsection and 15
120	120	subsection (c) of this section, if the federal estate tax is not in effect on the date of the 16
121	121	decedent’s death, the Maryland estate tax shall be determined using: 17
122	122
123	123	(i) the federal credit allowable by § 2011 of the Internal Revenue 18
124	124	Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 19
125	125	Congress; and 20
126	126
127	127	(ii) other provisions of federal estate tax law as in effect on the date 21
128	128	immediately preceding the effective date of the repeal of the federal estate tax. 22
129	129
130	130	(3) (i) Notwithstanding any increase in the unified credit allowed 23
131	131	against the federal estate tax for decedents dying after 2003, the unified credit used for 24
132	132	determining the Maryland estate tax for a decedent may not exceed the applicable credit 25
133	133	amount corresponding to an applicable exclusion amount, within the meaning of § 2010(c) 26
134	134	of the Internal Revenue Code, of: 27
135	135
136	136	1. $1,000,000 for a decedent dying before January 1, 2015; 28
137	137
138	138	2. $1,500,000 for a decedent dying on or after January 1, 29
139	139	2015, but before January 1, 2016; 30
140	140
141	141	3. $2,000,000 for a decedent dying on or after January 1, 31
142	142	2016, but before January 1, 2017; 32
143	143
144	144	4. $3,000,000 for a decedent dying on or after January 1, 33
145	145	2017, but before January 1, 2018; 34
146	146	4 HOUSE BILL 1014
147	147
148	148
149	149	5. $4,000,000 for a decedent dying on or after January 1, 1
150	150	2018, but before January 1, 2019; [and] 2
151	151
152	152	6. $5,000,000 for a decedent dying on or after January 1, 3
153	153	2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 4
154	154	amount calculated in accordance with paragraph (9) of this subsection; AND 5
155	155
156	156	7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 6
157	157	JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 7
158	158	CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 8
159	159
160	160	(ii) The Maryland estate tax shall be determined without regard to 9
161	161	any deduction for State death taxes allowed under § 2058 of the Internal Revenue Code. 10
162	162
163	163	(iii) Unless the federal credit allowable by § 2011 of the Internal 11
164	164	Revenue Code is in effect on the date of the decedent’s death, the federal credit used to 12
165	165	determine the Maryland estate tax may not exceed 16% of the amount by which the 13
166	166	decedent’s taxable estate, as defined in § 2051 of the Internal Revenue Code, exceeds: 14
167	167
168	168	1. $1,000,000 for a decedent dying before January 1, 2015; 15
169	169
170	170	2. $1,500,000 for a decedent dying on or after January 1, 16
171	171	2015, but before January 1, 2016; 17
172	172
173	173	3. $2,000,000 for a decedent dying on or after January 1, 18
174	174	2016, but before January 1, 2017; 19
175	175
176	176	4. $3,000,000 for a decedent dying on or after January 1, 20
177	177	2017, but before January 1, 2018; 21
178	178
179	179	5. $4,000,000 for a decedent dying on or after January 1, 22
180	180	2018, but before January 1, 2019; [and] 23
181	181
182	182	6. $5,000,000 for a decedent dying on or after January 1, 24
183	183	2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 25
184	184	amount calculated in accordance with paragraph (9) of this subsection; AND 26
185	185
186	186	7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 27
187	187	JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 28
188	188	CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 29
189	189
190	190	(9) (i) In this paragraph, “deceased spousal unused exclusion amount” 30
191	191	means the applicable exclusion amount in effect at the time of the death of the last 31
192	192	predeceased spouse of the decedent under paragraph (3) of this subsection reduced by the 32
193	193	taxable estate of the last predeceased spouse: 33
194	194	HOUSE BILL 1014 5
195	195
196	196
197	197	1. as reported on a Maryland estate tax return filed with the 1
198	198	Comptroller; or 2
199	199
200	200	2. as reported on a federal estate tax return, if: 3
201	201
202	202	A. the last predeceased spouse was not a Maryland resident 4
203	203	and no property with a Maryland estate tax situs was includible in the gross estate of the 5
204	204	last predeceased spouse; or 6
205	205
206	206	B. the last predeceased spouse died before January 1, 2019, 7
207	207	and no Maryland estate tax return was required to be filed with respect to the predeceased 8
208	208	spouse’s estate. 9
209	209
210	210	(ii) The deceased spousal unused exclusion amount may not be taken 10
211	211	into account under paragraph (3) of this subsection unless: 11
212	212
213	213	1. if the last predeceased spouse died on or after January 1, 12
214	214	2019, a Maryland estate tax return is timely filed for the last predeceased spouse, on which 13
215	215	the deceased spousal unused exclusion amount is calculated and an irrevocable election is 14
216	216	made that the deceased spousal unused exclusion amount may be taken into account; or 15
217	217
218	218	2. if the last predeceased spouse died before January 1, 2019, 16
219	219	or was not a Maryland resident and no property with a Maryland estate tax situs was 17
220	220	includible in the gross estate of the last predeceased spouse, an election was made under § 18
221	221	2010(c) of the Internal Revenue Code on the federal estate tax return of the last 19
222	222	predeceased spouse. 20
223	223
224	224	(iii) 1. Notwithstanding any other provision of this article, the 21
225	225	Comptroller may examine a Maryland estate tax return of a predeceased spouse after the 22
226	226	time for assessing a tax under this title has expired under § 13–1101 of this article solely 23
227	227	for the purposes of determining the validity of the deceased spousal unused exclusion 24
228	228	election and the amount to be taken into account under paragraph (3) of this subsection. 25
229	229
230	230	2. This subparagraph may not be construed to authorize the 26
231	231	assessment of any additional tax with respect to the predeceased spouse’s Maryland estate 27
232	232	tax return if the period of limitation under § 13–1101 of this article has expired. 28
233	233
234	234	10–108. 29
235	235
236	236	(a) Except as provided in subsection (c) of this section and unless expressly 30
237	237	provided otherwise by law, an amendment of the Internal Revenue Code that affects the 31
238	238	determination of federal adjusted gross income or federal taxable income, does not affect 32
239	239	the determination of Maryland taxable income under this title for: 33
240	240
241	241	(1) any taxable year that begins in the calendar year in which the 34
242	242	amendment is enacted; [or] 35
243	243	6 HOUSE BILL 1014
244	244
245	245
246	246	(2) THE TAXABLE YEAR THA T BEGINS IN THE CALE NDAR YEAR THAT 1
247	247	IMMEDIATELY FOLLOWS THE CALENDAR YEAR IN WHICH THE AMENDMENT IS 2
248	248	ENACTED; OR 3
249	249
250	250	[(2)] (3) any taxable year that precedes the calendar year in which the 4
251	251	amendment is enacted. 5
252	252
253	253	(c) Subsection (a) of this section does not apply to an amendment of the Internal 6
254	254	Revenue Code if the Comptroller determines that the impact of the amendment on State 7
255	255	income tax revenue is less than $5,000,000 for: 8
256	256
257	257	(1) the fiscal year that begins during the calendar year in which the 9
258	258	amendment is enacted; [or] 10
259	259
260	260	(2) THE FISCAL YEAR THAT BEGINS DURING THE CA LENDAR YEAR 11
261	261	IMMEDIATELY FOLLOWIN G THE CALENDAR YEAR IN WHICH THE AMENDME NT IS 12
262	262	ENACTED; OR 13
263	263
264	264	[(2)] (3) any fiscal year that precedes the calendar year in which the 14
265	265	amendment is enacted. 15
266	266
267	267	SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 16
268	268	as follows: 17
269	269
270	270	Article – Tax – General 18
271	271
272	272	10–751. 19
273	273
274	274	(a) (1) In this section the following words have the meanings indicated. 20
275	275
276	276	(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 21
277	277
278	278	(i) is a dependent for purposes of § 152 of the Internal Revenue Code 22
279	279	IN EFFECT ON DECEMBER 31, 2024; and 23
280	280
281	281	(ii) 1. is under the age of 6 years; or 24
282	282
283	283	2. A. is under the age of 17 years; and 25
284	284
285	285	B. is a child with a disability, as defined under § 8–401 of the 26
286	286	Education Article. 27
287	287
288	288	(3) “Taxpayer” means: 28
289	289
290	290	(i) an individual filing an income tax return; or 29
291	291	HOUSE BILL 1014 7
292	292
293	293
294	294	(ii) a married couple filing a joint income tax return. 1
295	295
296	296	(b) A taxpayer who is a resident and has federal adjusted gross income for the 2
297	297	taxable year of $15,000 or less may claim a credit against the State income tax for each 3
298	298	qualified child in an amount equal to $500. 4
299	299
300	300	(c) If the credit allowed under this section in any taxable year exceeds the State 5
301	301	income tax for that taxable year, the taxpayer may claim a refund in the amount of the 6
302	302	excess. 7
303	303
304	304	SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 8
305	305	as follows: 9
306	306
307	307	Article – Tax – General 10
308	308
309	309	10–102.2. 11
310	310
311	311	(A) IN THIS SECTION , “PASS–THROUGH ENTITY” AND “PASS–THROUGH 12
312	312	ENTITY’S TAXABLE INCOME ” HAVE THE MEANINGS ST ATED IN § 10–102.1 OF THIS 13
313	313	SUBTITLE. 14
314	314
315	315	(B) IN ADDITION TO THE STATE INCOME TAX IMPO SED UNDER THIS 15
316	316	SUBTITLE, FOR A TAXABLE YEAR B EGINNING AFTER DECEMBER 31, 2026, BUT 16
317	317	BEFORE JANUARY 1, 2033, EACH CORPORATION AND PASS–THROUGH ENTITY SHALL 17
318	318	PAY A BUSINESS TRANS PORTATION FEE IN ACC ORDANCE WITH THIS SE CTION. 18
319	319
320	320	(C) THE BUSINESS TRANSPOR TATION FEE IMPOSED U NDER THIS SECTION 19
321	321	SHALL EQUAL 2.5% OF THE AMOUNT OF THE CORPORATION ’S MARYLAND TAXABLE 20
322	322	INCOME OR PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS 21
323	323	$10,000,000. 22
324	324
325	325	(D) RETURNS AND PAYMENTS OF THE BUSINESS TRANSPORTAT ION FEE 23
326	326	SHALL BE DUE AND PAY ABLE IN THE SAME MAN NER AS RETURNS AND PAYMENTS OF 24
327	327	THE STATE INCOME TA X UNDER SUBTITLES 8 AND 9 OF THIS TITLE. 25
328	328
329	329	(E) NOTWITHSTANDING ANY O THER PROVISION OF LA W, A TAXPAYER MAY 26
330	330	NOT CLAIM ANY CREDIT AGAINST THE BUSINESS TRANSPORTATION FEE I MPOSED 27
331	331	UNDER THIS SECTION E XCEPT FOR CREDITS FO R INSTALLMENT PAYMEN TS, 28
332	332	ESTIMATED PAYMENT S MADE WITH A REQUES T FOR AN EXTENSION O F TIME FOR 29
333	333	FILING A RETURN , OR OVERPAYMENTS FROM PRIOR PERIODS . 30
334	334
335	335	(F) THE COMPTROLLER SHALL DIS TRIBUTE REVENUE FROM THE BUSINESS 31
336	336	TRANSPORTATION FEE I MPOSED UNDER THIS SE CTION TO THE TRANSPORTATION 32
337	337	TRUST FUND ESTABLISHED UNDER § 3–216 OF THE TRANSPORTATION ARTICLE. 33 8 HOUSE BILL 1014
338	338
339	339
340	340
341	341	(G) THE COMPTROLLER SHALL ADO PT REGULATIONS TO IM PLEMENT THIS 1
342	342	SECTION. 2
343	343
344	344	10–104. 3
345	345
346	346	The income tax does not apply to the income of: 4
347	347
348	348	(5) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 5
349	349	subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 6
350	350
351	351	(6) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 7
352	352	subtitle and § 10–304(3) of this title, an S corporation; 8
353	353
354	354	(8) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 9
355	355	subtitle, a limited liability company as defined under Title 4A of the Corporations and 10
356	356	Associations Article to the extent that the company is taxable as a partnership, as defined 11
357	357	in § 761 of the Internal Revenue Code. 12
358	358
359	359	SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
360	360	as follows: 14
361	361
362	362	Article – Tax – General 15
363	363
364	364	10–210.1. 16
365	365
366	366	(b) In addition to the modifications under §§ 10–204 through 10–210 of this 17
367	367	subtitle, to determine Maryland adjusted gross income of an individual: 18
368	368
369	369	(2) an amount is added to or subtracted from federal adjusted gross income 19
370	370	to determine the net operating loss deduction allowed under § 172 of the Internal Revenue 20
371	371	Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a 21
372	372	carryback period of up to 5 years, PROVIDED THAT ONLY THE FIRST $500,000 OF NET 22
373	373	OPERATING LOSSES MAY BE ALLOWED FOR A TAX ABLE YEAR BEGINNING AFTER 23
374	374	DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2032; 24
375	375
376	376	10–310. 25
377	377
378	378	In addition to the modifications under §§ 10–305 through 10–309 of this subtitle, to 26
379	379	determine Maryland modified income the federal taxable income of a corporation shall be 27
380	380	adjusted as provided for an individual under § 10–210.1 of this title. 28
381	381
382	382	10–402. 29
383	383
384	384	(d) (1) (i) In this paragraph: 30
385	385	HOUSE BILL 1014 9
386	386
387	387
388	388	1. “manufacturing corporation” means a domestic or foreign 1
389	389	corporation which is primarily engaged in activities that, in accordance with the North 2
390	390	American Industrial Classification System (NAICS), United States Manual, United States 3
391	391	Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 4
392	392	33; and 5
393	393
394	394	2. “manufacturing corporation” does not include a refiner, as 6
395	395	defined in § 10–101 of the Business Regulation Article. 7
396	396
397	397	(ii) If a manufacturing corporation carries on its trade or business 8
398	398	within and outside the State and the trade or business is a unitary business, the part of the 9
399	399	corporation’s Maryland modified income derived from or reasonably attributable to trade 10
400	400	or business carried on in the State shall be determined using a single sales factor 11
401	401	apportionment formula, by multiplying its Maryland modified income by 100% of the sales 12
402	402	factor. 13
403	403
404	404	(iii) In filing its tax return for each year, a manufacturing corporation 14
405	405	shall certify that the NAICS Code reported on its Maryland return is consistent with that 15
406	406	reported to other government agencies. 16
407	407
408	408	(iv) If the Comptroller determines that a corporation has submitted 17
409	409	information that incorrectly classifies the corporation as a manufacturing corporation 18
410	410	under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation 19
411	411	in an appropriate manner. 20
412	412
413	413	(2) Except as provided in paragraphs (1) and (3) of this subsection: 21
414	414
415	415	(i) for a taxable year beginning after December 31, 2017, but before 22
416	416	January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s 23
417	417	Maryland modified income derived from or reasonably attributable to trade or business 24
418	418	carried on in the State shall be determined using a 3–factor apportionment fraction: 25
419	419
420	420	1. the numerator of which is the sum of the property factor, 26
421	421	the payroll factor, and 3 times the sales factor; and 27
422	422
423	423	2. the denominator of which is 5; 28
424	424
425	425	(ii) for a taxable year beginning after December 31, 2018, but before 29
426	426	January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s 30
427	427	Maryland modified income derived from or reasonably attributable to trade or business 31
428	428	carried on in the State shall be determined using a 3–factor apportionment fraction: 32
429	429
430	430	1. the numerator of which is the sum of the property factor, 33
431	431	the payroll factor, and 4 times the sales factor; and 34
432	432
433	433	2. the denominator of which is 6; 35
434	434	10 HOUSE BILL 1014
435	435
436	436
437	437	(iii) for a taxable year beginning after December 31, 2019, but before 1
438	438	January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s 2
439	439	Maryland modified income derived from or reasonably attributable to trade or business 3
440	440	carried on in the State shall be determined using a 3–factor apportionment fraction: 4
441	441
442	442	1. the numerator of which is the sum of the property factor, 5
443	443	the payroll factor, and 5 times the sales factor; and 6
444	444
445	445	2. the denominator of which is 7; 7
446	446
447	447	(iv) for a taxable year beginning after December 31, 2020, but before 8
448	448	January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s 9
449	449	Maryland modified income derived from or reasonably attributable to trade or business 10
450	450	carried on in the State shall be determined using a 3–factor apportionment fraction: 11
451	451
452	452	1. the numerator of which is the sum of the property factor, 12
453	453	the payroll factor, and 6 times the sales factor; and 13
454	454
455	455	2. the denominator of which is 8; and 14
456	456
457	457	(v) for a taxable year beginning after December 31, 2021, if the trade 15
458	458	or business is a unitary business, the part of the corporation’s Maryland modified income 16
459	459	derived from or reasonably attributable to trade or business carried on in the State shall 17
460	460	be determined using a single sales factor apportionment formula, by multiplying its 18
461	461	Maryland modified income by 100% of the sales factor. 19
462	462
463	463	(3) (i) Each year a worldwide headquartered company that filed a 20
464	464	federal corporate income tax return for the taxable year may elect to calculate its Maryland 21
465	465	modified income derived from or reasonably attributable to trade or business carried on in 22
466	466	the State using a 3–factor apportionment fraction: 23
467	467
468	468	1. the numerator of which is the sum of the property factor, 24
469	469	the payroll factor, and twice the sales factor; and 25
470	470
471	471	2. the denominator of which is 4. 26
472	472
473	473	(ii) To determine under subparagraph (i) of this paragraph the 27
474	474	Maryland modified income of a corporation or group of corporations that is a worldwide 28
475	475	headquartered company that filed a federal corporate income tax return for the taxable 29
476	476	year, gross income from intangible investments, including dividends, interest, royalties, 30
477	477	and capital gains from the sale of intangible property, shall be included in the calculation 31
478	478	of the numerator based on the average of the property and payroll factors. 32
479	479
480	480	(4) The property factor under paragraphs (2) and (3) of this subsection shall 33
481	481	include: 34
482	482
483	483	(i) rented and owned real property; and 35 HOUSE BILL 1014 11
484	484
485	485
486	486
487	487	(ii) tangible personal property located in the State and used in the 1
488	488	trade or business. 2
489	489
490	490	(5) (I) FOR A TAXABLE YEAR BE GINNING AFTER DECEMBER 31, 3
491	491	2026, SALES OF TANGIBLE PERSONAL PROPERTY SH ALL BE INCLUDED IN T HE 4
492	492	NUMERATOR OF THE SAL ES FACTOR UNDER PARA GRAPH (1), (2), OR (3) OF THIS 5
493	493	SUBSECTION IF: 6
494	494
495	495	1. THE PROPERTY IS DELI VERED OR SHIPPED TO A 7
496	496	PURCHASER WITHIN THE STATE, REGARDLESS OF THE FR EE ON BOARD (F.O.B.) 8
497	497	POINT OR OTHER CONDITIONS OF THE SALE; OR 9
498	498
499	499	2. THE PROPERTY IS SHIP PED FROM AN OFFICE , A 10
500	500	STORE, A WAREHOUSE , A FACTORY, OR ANY OTHER PLACE O F STORAGE IN THE 11
501	501	STATE AND THE CORPORA TION IS NOT TAXABLE IN THE STATE OF THE PURCHASER . 12
502	502
503	503	(II) FOR PURPOSES OF SUBPA RAGRAPH (I) OF THIS 13
504	504	PARAGRAPH , A CORPORATION IS TAX ABLE IN A STATE IF: 14
505	505
506	506	1. IN THAT STATE THE CO RPORATION IS SUBJECT TO A 15
507	507	NET INCOME TAX , FRANCHISE TAX MEASUR ED BY NET INCOME , FRANCHISE TAX FOR 16
508	508	THE PRIVILEGE OF DOI NG BUSINESS, OR CORPORATE STOCK T AX; OR 17
509	509
510	510	2. THAT STATE HAS JURIS DICTION TO SUBJECT T HE 18
511	511	TAXPAYER TO A NET IN COME TAX, REGARDLESS OF WHETHE R, IN FACT, THE STATE 19
512	512	IMPOSES A TAX. 20
513	513
514	514	SECTION 5. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 21
515	515	as follows: 22
516	516
517	517	Article – Tax – General 23
518	518
519	519	10–102.3. 24
520	520
521	521	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 25
522	522	INDICATED. 26
523	523
524	524	(2) “MEMBER” MEANS: 27
525	525
526	526	(I) A SHAREHOLDER OF AN S CORPORATION ; 28
527	527
528	528	(II) A GENERAL OR LIMITED PARTNER OF A PARTNER SHIP, 29
529	529	LIMITED PARTNERSHIP , OR LIMITED LIABILITY PARTNERSHIP ; 30 12 HOUSE BILL 1014
530	530
531	531
532	532
533	533	(III) A MEMBER OF A LIMITE D LIABILITY COMPANY ; OR 1
534	534
535	535	(IV) A BENEFICIARY OF A B USINESS TRUST OR STA TUTORY 2
536	536	TRUST. 3
537	537
538	538	(3) “PASS–THROUGH ENTITY ” MEANS: 4
539	539
540	540	(I) AN S CORPORATION ; 5
541	541
542	542	(II) A PARTNERSHIP ; 6
543	543
544	544	(III) A LIMITED LIABILITY COMPANY THAT IS NOT TAXED AS A 7
545	545	CORPORATION UNDER TH IS TITLE; OR 8
546	546
547	547	(IV) A BUSINESS TRUST OR STATUTORY TRUST THAT IS NOT 9
548	548	TAXED AS A CORPORATI ON UNDER THIS TITLE . 10
549	549
550	550	(B) THIS SECTION DOES NOT APPLY TO THE INCOME OF A PASS–THROUGH 11
551	551	ENTITY THAT IS A SOL E PROPRIETORSHIP . 12
552	552
553	553	(C) (1) IN ADDITION TO ANY OT HER TAX IMPOSED UNDE R THIS TITLE, A 13
554	554	TAX IS IMPOSED ON TH E DISTRIBUTIVE SHARE OR PRO RATA SHARE OF INCOME 14
555	555	DISTRIBUTED TO A MEM BER OF A PASS –THROUGH ENTITY FROM THE 15
556	556	PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS $1,000,000. 16
557	557
558	558	(2) THE RATE OF THE TAX IM POSED UNDER PARAGRAP H (1) OF THIS 17
559	559	SUBSECTION IS 8.25%. 18
560	560
561	561	10–104. 19
562	562
563	563	The income tax does not apply to the income of: 20
564	564
565	565	(5) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 21
566	566	this subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 22
567	567
568	568	(6) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 23
569	569	this subtitle and § 10–304(3) of this title, an S corporation; 24
570	570
571	571	(8) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 25
572	572	this subtitle, a limited liability company as defined under Title 4A of the Corporations and 26
573	573	Associations Article to the extent that the company is taxable as a partnership, as defined 27
574	574	in § 761 of the Internal Revenue Code. 28
575	575	HOUSE BILL 1014 13
576	576
577	577
578	578	10–105. 1
579	579
580	580	(a) (1) For an individual other than an individual described in paragraph (2) 2
581	581	of this subsection, the State income tax rate is: 3
582	582
583	583	(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 4
584	584	INCOME DOES NOT EXCE ED $250,001: 5
585	585
586	586	[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 6
587	587
588	588	[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 7
589	589
590	590	[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 8
591	591
592	592	[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 9
593	593	$100,000; 10
594	594
595	595	[(v)] 5. 5% of Maryland taxable income of $100,001 through 11
596	596	$125,000; 12
597	597
598	598	[(vi)] 6. 5.25% of Maryland taxable income of $125,001 through 13
599	599	$150,000; AND 14
600	600
601	601	[(vii)] 7. 5.5% of Maryland taxable income of $150,001 through 15
602	602	$250,000; [and] 16
603	603
604	604	[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 17
605	605	MARYLAND TAXABLE INCO ME IS AT LEAST $250,001 BUT DOES NOT EXCEED 18
606	606	$500,000, 6% of Maryland taxable income [in excess of $250,000]; 19
607	607
608	608	(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 20
609	609	INCOME IS AT LEAST $500,001 BUT DOES NOT EXCEED $1,000,000, 6.5% OF 21
610	610	MARYLAND TAXABLE INCO ME; AND 22
611	611
612	612	(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 23
613	613	INCOME IS AT LEAST $1,000,001, 7% OF MARYLAND TAXABLE INCO ME. 24
614	614
615	615	(2) For spouses filing a joint return or for a surviving spouse or head of 25
616	616	household as defined in § 2 of the Internal Revenue Code, the State income tax rate is: 26
617	617
618	618	(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 27
619	619	INCOME DOES NOT EXCE ED $300,001: 28
620	620
621	621	[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 29
622	622	14 HOUSE BILL 1014
623	623
624	624
625	625	[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 1
626	626
627	627	[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 2
628	628
629	629	[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 3
630	630	$150,000; 4
631	631
632	632	[(v)] 5. 5% of Maryland taxable income of $150,001 through 5
633	633	$175,000; 6
634	634
635	635	[(vi)] 6. 5.25% of Maryland taxable income of $175,001 through 7
636	636	$225,000; AND 8
637	637
638	638	[(vii)] 7. 5.5% of Maryland taxable income of $225,001 through 9
639	639	$300,000; [and] 10
640	640
641	641	[(viii)] (II) [5.75%] WITH RESPECT TO TAXPAYERS WHOSE 11
642	642	MARYLAND TAXABLE INCO ME IS AT LEAST $300,001 BUT DOES NOT EXCEED 12
643	643	$600,000, 6% of Maryland taxable income [in excess of $300,000]; 13
644	644
645	645	(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 14
646	646	INCOME IS AT LEAST $600,001 BUT DOES NOT EXCEED $1,200,000, 6.5% OF 15
647	647	MARYLAND TAXABLE INCO ME; AND 16
648	648
649	649	(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 17
650	650	INCOME IS AT LEAST $1,200,001, 7% OF MARYLAND TAXABLE INCO ME. 18
651	651
652	652	(3) (I) IN THIS PARAGRAPH , “NET INVESTMENT INCOM E” HAS THE 19
653	653	MEANING STATED UNDER § 1411(C) OF THE INTERNAL REVENUE CODE, EXCLUDING 20
654	654	THE NET GAIN ATTRIBU TABLE TO THE DISPOSI TION OF PARCELS OF PROPERTY , OR 21
655	655	PORTIONS THEREOF , THAT ARE AGRICULTURA L LAND AND BUILDINGS . 22
656	656
657	657	(II) IN ADDITION TO THE TAX CALCULATED U NDER PARAGRAPH 23
658	658	(1) OR (2) OF THIS SUBSECTION , FOR AN INDIVIDUAL WI TH FEDERAL ADJUSTED 24
659	659	GROSS INCOME IN EXCE SS OF $350,000, A TAX IS IMPOSED ON THE NET INVESTMENT 25
660	660	INCOME OF THE INDIVIDUAL AT A RATE OF 1%. 26
661	661
662	662	(III) FOR AN INDIVIDUAL WHO IS NOT A RESIDENT OF THE STATE 27
663	663	FOR THE ENTIRE TAXAB LE YEAR, THE TAX UNDER THIS P ARAGRAPH SHALL BE 28
664	664	CALCULATED AS IF THE INDIVIDUAL IS A RESI DENT OF THE STATE, MULTIPLIED BY 29
665	665	A FRACTION IN WHICH: 30
666	666
667	667	1. THE NUMERATOR IS NET INVESTMENT INCOME 31
668	668	ALLOCABLE TO THE STATE; AND 32 HOUSE BILL 1014 15
669	669
670	670
671	671
672	672	2. THE DENOMINATOR IS T HE TOTAL OF NET 1
673	673	INVESTMENT INCOME FO R THE TAXABLE YEAR . 2
674	674
675	675	10–704. 3
676	676
677	677	(a) In this section, “taxpayer” means: 4
678	678
679	679	(1) an individual filing an income tax return; or 5
680	680
681	681	(2) a married couple filing a joint income tax return. 6
682	682
683	683	(b) (1) A resident who is a taxpayer may claim a credit against the State 7
684	684	income tax for a taxable year in the amount determined under subsection (c) of this section 8
685	685	for earned income. 9
686	686
687	687	(2) A resident who is a taxpayer may claim a credit against the county 10
688	688	income tax for a taxable year in the amount determined under subsection (d) of this section 11
689	689	for earned income. 12
690	690
691	691	(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 13
692	692	subject to subsection (e) of this section, the credit allowed against the State income tax 14
693	693	under subsection (b)(1) of this section is the lesser of: 15
694	694
695	695	(i) 50% of the earned income credit allowable for the taxable year 16
696	696	under § 32 of the Internal Revenue Code or that would have been allowable but for the 17
697	697	limitation under § 32(m) of the Internal Revenue Code; or 18
698	698
699	699	(ii) the State income tax for the taxable year. 19
700	700
701	701	(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 20
702	702	of this section, a resident may claim a refund in the amount, if any, by which the applicable 21
703	703	percentage specified in subparagraph (ii) of this paragraph of the earned income credit 22
704	704	allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 23
705	705	income tax for the taxable year. 24
706	706
707	707	(ii) Subject to subparagraph (iii) of this paragraph, the applicable 25
708	708	percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 26
709	709	to be used for purposes of determining the refund provided under this paragraph is: 27
710	710
711	711	1. 25% for a taxable year beginning after December 31, 2013, 28
712	712	but before January 1, 2015; 29
713	713
714	714	2. 25.5% for a taxable year beginning after December 31, 30
715	715	2014, but before January 1, 2016; 31
716	716	16 HOUSE BILL 1014
717	717
718	718
719	719	3. 26% for a taxable year beginning after December 31, 2015, 1
720	720	but before January 1, 2017; 2
721	721
722	722	4. 27% for a taxable year beginning after December 31, 2016, 3
723	723	but before January 1, 2018; 4
724	724
725	725	5. 28% for a taxable year beginning after December 31, 2017, 5
726	726	but before January 1, 2020; and 6
727	727
728	728	6. 45% for a taxable year beginning after December 31, 2019. 7
729	729
730	730	(iii) For purposes of determining the refund provided under this 8
731	731	paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 9
732	732	calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 10
733	733
734	734	(3) (i) For purposes of this section for an individual without a qualifying 11
735	735	child, the credit allowable for a taxable year under § 32 of the Internal Revenue Code is 12
736	736	calculated without regard to: 13
737	737
738	738	1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 14
739	739	the Internal Revenue Code; or 15
740	740
741	741	2. the limitation under § 32(m) of the Internal Revenue Code. 16
742	742
743	743	(ii) [Subject to subparagraph (iii) of this paragraph, the] THE credit 17
744	744	allowed against the State income tax under subsection (b)(1) of this section for an individual 18
745	745	without a qualifying child is: 19
746	746
747	747	1. equal to 100% of the earned income credit allowable for a 20
748	748	taxable year under § 32 of the Internal Revenue Code; AND 21
749	749
750	750	2. CALCULATED BY SUBSTI TUTING: 22
751	751
752	752	A. $7,840 FOR THE EARNED INCOM E AMOUNT IN § 23
753	753	32(B)(2)(A) OF THE INTERNAL REVENUE CODE; AND 24
754	754
755	755	B. $19,160 FOR THE PHASE –OUT AMOUNT IN § 25
756	756	32(B)(2)(A) OF THE INTERNAL REVENUE CODE. 26
757	757
758	758	[(iii) For a taxable year beginning after December 31, 2019, but before 27
759	759	January 1, 2023, the tax credit allowed under this paragraph may not exceed $530 for a 28
760	760	taxable year.] 29
761	761
762	762	(III) 1. FOR EACH TAXABLE YEAR BEGINNING AFTER 30
763	763	DECEMBER 31, 2028, THE EARNED INCOME AM OUNT AND PHASE –OUT AMOU NT IN 31 HOUSE BILL 1014 17
764	764
765	765
766	766	SUBPARAGRAPH (II)2 OF THIS PARAGRAPH SH ALL BE INCREASED BY AN AMOUNT 1
767	767	EQUAL TO THE PRODUCT OF MULTIPLYING EACH AMOUNT BY THE COST –OF–LIVING 2
768	768	ADJUSTMENT SPECIFIED IN SUBSUBPARAGRAPH 2 OF THIS SUBPARAGRAPH . 3
769	769
770	770	2. FOR THE PURPOSES OF T HIS SUBPARAGRAPH , THE 4
771	771	COST–OF–LIVING ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE 5
772	772	MEANING OF § 1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR 6
773	773	IN WHICH THE TAXABLE YEAR BEGINS, AS DETERMINED BY THE COMPTROLLER BY 7
774	774	SUBSTITUTING “CALENDAR YEAR 2022” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) 8
775	775	OF THE INTERNAL REVENUE CODE. 9
776	776
777	777	3. IF ANY INCREASE DETER MINED UNDER 10
778	778	SUBSUBPARAGRAPH 1 OF THIS SUBPARAGRAPH IS NOT A MULTIPLE OF $10, THE 11
779	779	INCREASE SHALL BE RO UNDED DOWN TO THE NE XT LOWEST MULTIPLE O F $10. 12
780	780
781	781	(iv) If the tax credit allowed under this paragraph in any taxable year 13
782	782	exceeds the total tax otherwise payable by the individual without a qualifying child for that 14
783	783	taxable year, the individual may claim a refund in the amount of the excess. 15
784	784
785	785	(d) (1) Except as provided in paragraph (2) of this subsection and subject to 16
786	786	subsection (e) of this section, the credit allowed against the county income tax under 17
787	787	subsection (b)(2) of this section is the lesser of: 18
788	788
789	789	(i) the earned income credit allowable for the taxable year under § 19
790	790	32 of the Internal Revenue Code or that would have been allowable but for the limitation 20
791	791	under § 32(m) of the Internal Revenue Code multiplied by 10 times the county income tax 21
792	792	rate for the taxable year; or 22
793	793
794	794	(ii) the county income tax for the taxable year. 23
795	795
796	796	(2) (i) A county may provide, by law, for a refundable county earned 24
797	797	income credit as provided in this paragraph. 25
798	798
799	799	(ii) If a county provides for a refundable county earned income credit 26
800	800	under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 27
801	801	which it is applicable, the county shall give the Comptroller notice of the refundable county 28
802	802	earned income credit. 29
803	803
804	804	(iii) If a county provides for a refundable county earned income credit 30
805	805	under this paragraph, a resident may claim a refund of the amount, if any, by which the 31
806	806	product of multiplying the credit allowable for the taxable year under § 32 of the Internal 32
807	807	Revenue Code or that would have been allowable but for the limitation under § 32(m) of 33
808	808	the Internal Revenue Code by 5 times the county income tax rate for the taxable year 34
809	809	exceeds the county income tax for the taxable year. 35
810	810	18 HOUSE BILL 1014
811	811
812	812
813	813	(iv) The amount of any refunds payable under a refundable county 1
814	814	earned income credit operates to reduce the income tax revenue from individuals 2
815	815	attributable to the county income tax for that county. 3
816	816
817	817	(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 4
818	818	resident of the State for only a part of the year, the amount of the credit or refund allowed 5
819	819	under this section shall be determined based on the part of the earned income credit 6
820	820	allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 7
821	821	to Maryland, determined by multiplying the federal earned income credit by a fraction: 8
822	822
823	823	(i) the numerator of which is the Maryland adjusted gross income of 9
824	824	the individual; and 10
825	825
826	826	(ii) the denominator of which is the federal adjusted gross income of 11
827	827	the individual. 12
828	828
829	829	(2) For purposes of determining the amount of the credit or refund under 13
830	830	paragraph (1) of this subsection, the part of the earned income credit allowable for the 14
831	831	taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 15
832	832	limitation under § 32(m) of the Internal Revenue Code. 16
833	833
834	834	10–751. 17
835	835
836	836	(a) (1) In this section the following words have the meanings indicated. 18
837	837
838	838	(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 19
839	839
840	840	(i) is a dependent for purposes of § 152 of the Internal Revenue Code 20
841	841	in effect on December 31, 2024; and 21
842	842
843	843	(ii) [1.] is under the age of [6] 18 years[; or 22
844	844
845	845	2. A. is under the age of 17 years; and 23
846	846
847	847	B. is a child with a disability, as defined under § 8–401 of the 24
848	848	Education Article]. 25
849	849
850	850	(3) “Taxpayer” means: 26
851	851
852	852	(i) an individual filing an income tax return; or 27
853	853
854	854	(ii) a married couple filing a joint income tax return. 28
855	855
856	856	(b) [A] SUBJECT TO SUBSECTION (D) OF THIS SECTION, A taxpayer who is a 29
857	857	resident [and has federal adjusted gross income for the taxable year of $15,000 or less] may 30
858	858	claim a credit against the State income tax for each qualified child in an amount equal to: 31 HOUSE BILL 1014 19
859	859
860	860
861	861
862	862	(1) $750, IF THE QUALIFIED CHI LD IS UNDER THE AGE OF 6 YEARS; OR 1
863	863
864	864	(2) $500, IF THE QUALIFIED CHI LD IS AT LEAST 6 YEARS OLD. 2
865	865
866	866	(C) (1) FOR EACH TAXABLE YEA R BEGINNING AFTER DECEMBER 31, 3
867	867	2028, THE AMOUNTS SPECIFIE D IN SUBSECTION (B) OF THIS SECTION SHAL L BE 4
868	868	INCREASED BY AN AMOU NT EQUAL TO THE PROD UCT OF MULTIPLYING T HE 5
869	869	AMOUNTS BY THE COST –OF–LIVING ADJUSTMENT SP ECIFIED IN THIS SUBS ECTION. 6
870	870
871	871	(2) FOR THE PURPO SES OF THIS SUBSECTI ON, THE COST–OF–LIVING 7
872	872	ADJUSTMENT IS THE CO ST–OF–LIVING ADJUSTMENT WI THIN THE MEANING OF § 8
873	873	1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR IN WHICH THE 9
874	874	TAXABLE YEAR BEGINS , AS DETERMINED BY THE COMPTROLLER , BY SUBSTITUTING 10
875	875	“CALENDAR YEAR 2027” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) OF THE 11
876	876	INTERNAL REVENUE CODE. 12
877	877
878	878	(3) IF ANY INCREASE DETERMINED UN DER PARAGRAPH (1) OF THIS 13
879	879	SUBSECTION IS NOT A MULTIPLE OF $50, THE INCREASE SHALL B E ROUNDED DOWN 14
880	880	TO THE NEXT LOWEST M ULTIPLE OF $50. 15
881	881
882	882	(D) THE AMOUNT OF THE CRE DIT ALLOWED UNDER SU BSECTION (B) OF 16
883	883	THIS SECTION FOR A Q UALIFIED CHILD SHALL BE REDUCED, BUT NOT BELOW ZERO , 17
884	884	BY $50 FOR EACH $1,000, OR FRACTION THEREOF , BY WHICH THE TAXPAYE R’S 18
885	885	FEDERAL ADJUSTED GRO SS INCOME EXCEEDS : 19
886	886
887	887	(1) $65,000 IN THE CASE OF A MAR RIED COUPLE FILING A JOINT 20
888	888	RETURN OR A SURVIVIN G SPOUSE OR HEAD OF HOUSEHOLD AS DEFINED IN § 2 OF 21
889	889	THE INTERNAL REVENUE CODE FILING AN INCOME TAX RETURN; 22
890	890
891	891	(2) $32,500 IN THE CASE OF A MAR RIED INDIVIDUAL FILI NG 23
892	892	SEPARATELY; OR 24
893	893
894	894	(3) $45,000 IN THE CASE OF ANY O THER INDIVIDUAL . 25
895	895
896	896	[(c)] (E) If the credit allowed under this section in any taxable year exceeds the 26
897	897	State income tax for that taxable year, the taxpayer may claim a refund in the amount of 27
898	898	the excess. 28
899	899
900	900	SECTION 6. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 29
901	901	as follows: 30
902	902
903	903	Article – Tax – General 31
904	904	20 HOUSE BILL 1014
905	905
906	906
907	907	10–402.1. 1
908	908
909	909	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 2
910	910	INDICATED. 3
911	911
912	912	(2) “COMBINED GROUP ” MEANS A GROUP OF COR PORATIONS: 4
913	913
914	914	(I) THAT IS ENGAGED IN A UNITARY BUSINESS ; 5
915	915
916	916	(II) IN WHICH MORE THAN 50% OF THE VOTING STOCK OF EACH 6
917	917	MEMBER IS DIRECTLY O R INDIRECTLY OWNED B Y: 7
918	918
919	919	1. A COMMON OWNER OR CO MMON OWNERS , EITHER 8
920	920	CORPORATE OR NONCORP ORATE; OR 9
921	921
922	922	2. ONE OR MORE MEMBER C ORPORATIONS OF THE 10
923	923	GROUP; 11
924	924
925	925	(III) THE MEMBERS OF WHICH ARE SUBJECT TO THE I NCOME TAX 12
926	926	OR WOULD BE SUBJECT TO THE INCOME TAX IF DOING BUSINESS IN TH E STATE; AND 13
927	927
928	928	(IV) CONSISTING OF ANY OT HER MEMBERS UNDER TH E 14
929	929	CIRCUMSTANCES AND TO THE EXTENT PROVIDED IN REGULATIONS ADOPT ED BY 15
930	930	THE COMPTROLLER TO PREVEN T THE AVOIDANCE OF T AX OR TO REFLECT CLE ARLY 16
931	931	THE INCOME OF ANY ME MBER OF THE COMBINED GROUP FOR ANY PERIOD . 17
932	932
933	933	(3) “COMBINED RETURN ” MEANS A TAX RETURN F OR THE COMBINED 18
934	934	GROUP CONTAINING INF ORMATION AS PROVIDED IN THIS SECTION OR O THERWISE 19
935	935	REQUIRED BY THE COMPTROLLER . 20
936	936
937	937	(4) “UNITARY BUSINESS ” MEANS A SINGLE ECONO MIC ENTERPRISE 21
938	938	THAT IS MADE EITHER OF SEPARATE PARTS OF A SINGLE BUSINESS EN TITY OR OF A 22
939	939	COMMONLY CONTROLLED GROUP OF BUSINESS EN TITIES THAT ARE SUFF ICIENTLY 23
940	940	INTERDEPENDENT , INTEGRATED, AND INTERRELATED THR OUGH THEIR ACTIVITIE S 24
941	941	SO AS TO PROVIDE MUT UAL BENEFIT THAT PRO DUCES A SHARING OR E XCHANGE OF 25
942	942	VALUE AMONG THEM AND A SIGNIFICANT FLOW O F VALUE TO THE SEPAR ATE PARTS. 26
943	943
944	944	(B) (1) THE TERM “UNITARY BUSINESS ” SHALL BE CONSTRUED T O THE 27
945	945	BROADEST EXTENT ALLO WED UNDER THE U.S. CONSTITUTION. 28
946	946
947	947	(2) A BUSINESS CONDUCTED D IRECTLY OR INDIRECTL Y BY ONE 29
948	948	CORPORATION IS A UNI TARY BUSINESS WITH R ESPECT TO THAT PORTI ON OF A 30
949	949	BUSINESS CONDUCTED B Y ANOTHER CORPORATIO N THROUGH ITS DIRECT OR 31
950	950	INDIRECT INTEREST IN A PARTNERS HIP IF THE REQUIREME NTS OF SUBSECTION 32 HOUSE BILL 1014 21
951	951
952	952
953	953	(A)(4) OF THIS SECTION ARE SATISFIED, INCLUDING IF THERE I S SYNERGY AND AN 1
954	954	EXCHANGE AND FLOW OF VALUE BETWEEN THE TW O PARTS OF THE BUSIN ESS AND 2
955	955	THE TWO CORPORATIONS ARE MEMBERS OF THE S AME COMMONLY CONTROLLED 3
956	956	GROUP. 4
957	957
958	958	(3) A BUSINESS CONDUCTED B Y A PARTNERSHIP SHAL L BE TREATED 5
959	959	AS CONDUCTED BY ITS PARTNERS, WHETHER DIRECTLY HEL D OR INDIRECTLY HELD 6
960	960	THROUGH A SERIES OF PARTNERSHIPS , TO THE EXTENT OF THE PARTNER’S 7
961	961	DISTRIBUTIVE SHARE O F THE PARTNERSHIP ’S INCOME, REGARDLESS OF THE 8
962	962	PERCENTAGE OF THE PA RTNER’S OWNERSHIP INTEREST OR ITS DISTRIBUTIVE OR 9
963	963	ANY OTHER SHARE OF P ARTNERSHIP INCOME . 10
964	964
965	965	(C) (1) EXCEPT AS PROVIDED BY AND SUBJECT TO REGUL ATIONS 11
966	966	ADOPTED BY THE COMPTROLLER , FOR ALL TAXABLE YEAR S BEGINNING AF TER 12
967	967	DECEMBER 31, 2028, A CORPORATION ENGAGE D IN A UNITARY BUSIN ESS SHALL 13
968	968	FILE A COMBINED RETU RN, REPORTING AND PAYING TAX ON WORLDWIDE TAX ABLE 14
969	969	INCOME AS A COMBINED GROUP, REFLECTING THE AGGRE GATE INCOME TAX 15
970	970	LIABILITY OF ALL MEM BERS OF THE COMBINED GROUP TH AT ARE ENGAGED IN A 16
971	971	UNITARY BUSINESS . 17
972	972
973	973	(2) THE TAXABLE INCOME OF A CORPORATION REQUIR ED TO FILE 18
974	974	UNDER § 10–811(A)(2) OF THIS TITLE IS EQU AL TO THE COMBINED G ROUP’S 19
975	975	MARYLAND MODIFIED INC OME AS ADJUSTED UNDE R SUBSECTION (D)(3) OF THIS 20
976	976	SECTION. 21
977	977
978	978	(D) (1) THE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP 22
979	979	EQUALS THE PRODUCT O F: 23
980	980
981	981	(I) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND 24
982	982	MODIFIED INCOME , AS DETERMINED UNDER PARAGRAPH (2) OF THIS SUBSECTION 25
983	983	AND ADJUSTED UNDER P ARAGRAPH (3) OF THIS SUBSECTION ; AND 26
984	984
985	985	(II) THE COMBINED GROUP ’S MARYLAND APPORTIONMEN T 27
986	986	FACTOR, AS DETERMINED UNDER PARAGRAPH (4) OF THIS SUBSECTION . 28
987	987
988	988	(2) (I) SUBJECT TO SUBPARAGRA PHS (II) THROUGH (IV) OF THIS 29
989	989	PARAGRAPH , THE APPORTIONABLE MARYLAND MODIFIED INC OME OF THE 30
990	990	COMBINED GROUP EQUAL S THE SUM OF THE CORPO RATION’S AND EACH MEMBER ’S 31
991	991	MARYLAND MODIFIED INC OME. 32
992	992
993	993	(II) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 33
994	994	SUBPARAGRAPH , FOR ANY MEMBER INCOR PORATED IN THE UNITED STATES OR 34
995	995	INCLUDED IN A CONSOL IDATED FEDERAL CORPO RATE INCOME TAX RETU RN, THE 35
996	996	INCOME TO BE INCLUDE D IN THE TOTAL APPOR TIONABLE INCOME OF T HE 36 22 HOUSE BILL 1014
997	997
998	998
999	999	COMBINED GROUP IS TH E MARYLAND MODIFIED INC OME AS CALCULATED UN DER § 1
1000	1000	10–304 OF THIS TITLE. 2
1001	1001
1002	1002	2. THE INCOME OF EACH ME MBER SHALL BE 3
1003	1003	CALCULATED ON A SEPA RATE RETURN BASIS AS IF THE MEMBER WERE N OT 4
1004	1004	CONSOLIDATED FOR FED ERAL INCOME TAX PURP OSES. 5
1005	1005
1006	1006	(III) 1. FOR ANY MEMBER NOT IN CLUDED UNDER 6
1007	1007	SUBPARAGRAPH (II) OF THIS PARAGRAPH , THE INCOME TO BE INC LUDED IN THE 7
1008	1008	TOTAL INCOME OF THE COMBINED GROUP IS DE TERMINED AS PROVIDED UNDER 8
1009	1009	THIS SUBPARAGRAPH . 9
1010	1010
1011	1011	2. A PROFIT AND LOSS STAT EMENT SHALL BE PREPA RED 10
1012	1012	FOR EACH FOREIGN BRA NCH OR CORPOR ATION IN THE CURRENC Y IN WHICH THE 11
1013	1013	BOOKS OF ACCOUNT OF THE BRANCH OR CORPOR ATION ARE REGULARLY 12
1014	1014	MAINTAINED. 13
1015	1015
1016	1016	3. THE PROFIT AND LOSS S TATEMENT SHALL BE 14
1017	1017	ADJUSTED TO CONFORM TO GENERALLY ACCEPTE D ACCOUNTING PRINCIP LES AS 15
1018	1018	ADOPTED BY THE U.S. FINANCIAL ACCOUNTING STANDARDS BOARD FOR THE 16
1019	1019	PREPARATION OF THE P ROFIT AND LOSS STATE MENTS, EXCEPT AS MODIFIED B Y 17
1020	1020	REGULATION . 18
1021	1021
1022	1022	4. EXCEPT AS OTHERWISE P ROVIDED BY REGULATIO N, 19
1023	1023	THE PROFIT AND LOSS STATEMENT OF EACH ME MBER OF THE COMBINED GROUP, 20
1024	1024	AND THE APPORTIONMEN T FACTORS RELATED TO EACH STATEMENT, WHETHER 21
1025	1025	UNITED STATES OR FOREIGN , SHALL BE TRANSLATED INTO THE CURRENCY IN 22
1026	1026	WHICH THE PARENT COM PANY MAINTAINS ITS B OOKS AND RECORDS . 23
1027	1027
1028	1028	5. INCOME APPORTIONED TO THE STATE SHALL BE 24
1029	1029	EXPRESSED IN UNITED STATES DOLLARS . 25
1030	1030
1031	1031	(IV) IF A UNITARY BUSINESS INCLUDES INCOME FROM A 26
1032	1032	PARTNERSHIP , THE INCOME TO BE INC LUDED IN THE TOTAL I NCOME OF THE 27
1033	1033	COMBINED GROUP EQUAL S THE DIRECT AND IND IRECT DISTRIBUTIVE S HARE OF 28
1034	1034	THE PARTNERSHIP ’S UNITARY BUSINESS I NCOME ALLOCATED TO A NY MEMBER OF 29
1035	1035	THE COMBINED GROUP . 30
1036	1036
1037	1037	(3) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND MODIFIED 31
1038	1038	INCOME SHALL BE ADJU STED TO ELIMINATE IN TERCOMPANY TRANSACTI ONS AS 32
1039	1039	DETERMINED UNDER THE INTERNAL REVENUE CODE. 33
1040	1040
1041	1041	(4) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , THE 34
1042	1042	COMBINED GROUP’S MARYLAND APPORTIONMEN T FACTOR IS A FRACTI ON: 35 HOUSE BILL 1014 23
1043	1043
1044	1044
1045	1045
1046	1046	1. THE NUMERATOR OF WHI CH IS THE SUM OF THE 1
1047	1047	CORPORATION ’S AND EACH MEMBER ’S MARYLAND FACTORS UNDE R § 10–402 OF 2
1048	1048	THIS SUBTITLE; AND 3
1049	1049
1050	1050	2. THE DENOMINATOR OF W HICH IS THE SUM OF T HE 4
1051	1051	CORPORATION ’S AND EACH MEMBER ’S FACTORS UNDER § 10–402 OF THIS SUBTITLE. 5
1052	1052
1053	1053	(II) THE APPORTIONMENT FAC TORS OF PASS –THROUGH 6
1054	1054	ENTITY MEMBERS ARE I NCLUDED IN THE NUMER ATOR UNDER SUBPARAGR APH (I)1 7
1055	1055	OF THIS PARAGRAPH AN D THE DENOMINATOR UN DER SUBPARAGRAPH (I)2 OF THIS 8
1056	1056	PARAGRAPH TO THE EXT ENT OF THE CORPORATI ON’S DIRECT AND INDIREC T 9
1057	1057	DISTRIBUTIVE SHARE O F THAT ENTITY. 10
1058	1058
1059	1059	(E) (1) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 11
1060	1060	NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 12
1061	1061
1062	1062	(2) THE REGULATIONS ADOPT ED BY THE COMPTROLLER SHALL BE 13
1063	1063	CONSISTENT WITH THE “PRINCIPLES FOR DETERMINING THE EXISTENCE OF A 14
1064	1064	UNITARY BUSINESS” (REG. IV.1.(B)) OF THE MODEL GENERAL ALLOCATION AND 15
1065	1065	APPORTIONMENT REGULATIONS, AS ADOPTED BY THE MULTISTATE TAX 16
1066	1066	COMMISSION. 17
1067	1067
1068	1068	10–811. 18
1069	1069
1070	1070	(A) (1) [Each member of] EXCEPT AS PROVIDED BY AND SUBJECT TO 19
1071	1071	REGULATIONS ADOPTED BY THE COMPTROLLER , an affiliated group of corporations 20
1072	1072	[shall file a separate income tax return] ENGAGED IN A UNITARY BUSINESS SHALL FILE 21
1073	1073	A COMBINED INCOME TA X RETURN REFLECTING THE AGGREG ATE INCOME TAX 22
1074	1074	LIABILITY OF ALL THE MEMBERS OF THE AFFIL IATED GROUP THAT ARE ENGAGED IN 23
1075	1075	A UNITARY BUSINESS . 24
1076	1076
1077	1077	(2) THE RETURN REQUIRED U NDER PARAGRAPH (1) OF THIS 25
1078	1078	SUBSECTION SHALL INC LUDE THE INCOME AND APPORTIONMENT FACTOR S 26
1079	1079	DETERMINED UNDER § 10–402.1(D) OF THIS TITLE, AND ANY OTHER INFORM ATION 27
1080	1080	REQUIRED BY THE COMPTROLLER , FOR ALL MEMBERS OF T HE COMBINED GROUP 28
1081	1081	WHEREVER LOCATED OR DOING BUSINESS . 29
1082	1082
1083	1083	(3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 30
1084	1084	PARAGRAPH , THE COMBINED RETURN SHALL BE FILED UNDER THE NAME AND 31
1085	1085	FEDERAL EMPLOYER IDE NTIFICATION NUMBER O F THE PARENT CORPORA TION IF 32
1086	1086	THE PARENT IS A MEMB ER OF THE COMBINED G ROUP. 33
1087	1087
1088	1088	(II) IF THERE IS NO PARENT CORPORATION OR IF TH E PARENT 34 24 HOUSE BILL 1014
1089	1089
1090	1090
1091	1091	IS NOT A MEMBER OF T HE COMBINED GROUP , THE MEMBERS OF THE C OMBINED 1
1092	1092	GROUP SHALL CHOOSE A M EMBER TO FILE THE RE TURN. 2
1093	1093
1094	1094	(III) THE FILING MEMBER UND ER SUBPARAGRAPH (I) OR (II) OF 3
1095	1095	THIS PARAGRAPH SHALL CONTINUE TO FILE THE COMBINED RETURN UNLE SS THE 4
1096	1096	FILING MEMBER IS NO LONGER THE PARENT CO RPORATION OR NO LONG ER A 5
1097	1097	MEMBER OF THE COMBINED GROUP . 6
1098	1098
1099	1099	(4) THE RETURN SHALL BE S IGNED BY A RESPONSIB LE OFFICER OF 7
1100	1100	THE FILING MEMBER ON BEHALF OF THE COMBIN ED GROUP MEMBERS . 8
1101	1101
1102	1102	(5) MEMBERS OF THE COMBIN ED GROUP ARE JOINTLY AND 9
1103	1103	SEVERALLY LIABLE FOR THE TAX LIABILITY OF THE COMBINED GROUP I NCLUDED 10
1104	1104	IN THE COMBINED RETU RN. 11
1105	1105
1106	1106	(B) (1) THE COMPTROLLER MAY , BY REGULATION , REQUIRE THAT THE 12
1107	1107	COMBINED RETURN INCL UDE THE INCOME AND A SSOCIATED APPORTIONM ENT 13
1108	1108	FACTORS OF ENTITIES THAT ARE NOT INCLUDE D IN THE COMBINED RE PORT BUT 14
1109	1109	THAT ARE MEMBERS OF A UNITARY BUSINESS IN ORDER TO REFLECT PROPER 15
1110	1110	APPORTIONMENT OF INC OME OF THE ENTIRE UN ITARY BUSINESS. 16
1111	1111
1112	1112	(2) IF THE COMPTROLLER DETERMINE S THAT THE REPORTED 17
1113	1113	INCOME OR LOSS OF A TAXPAYER ENGAGED IN A UNITARY BUSINESS W ITH A MEMBER 18
1114	1114	NOT INCLUDED IN THE COMBINED GROUP R EPRESENTS AN AVOIDAN CE OR EVASION 19
1115	1115	OF TAX, THE COMPTROLLER MAY , ON A CASE–BY–CASE BASIS, REQUIRE THAT ALL 20
1116	1116	OR PART OF THE INCOM E AND ASSOCIATED APP ORTIONMENT FACTORS O F THE 21
1117	1117	MEMBER BE INCLUDED I N THE TAXPAYER ’S COMBINED RETURN . 22
1118	1118
1119	1119	(3) THE COMPTROLLER MAY REQU IRE: 23
1120	1120
1121	1121	(I) THE EXCLUSION OF ONE OR MORE FACTORS , THE 24
1122	1122	INCLUSION OF ONE OR MORE ADDITIONAL FACT ORS, OR THE EMPLOYMENT OF ANY 25
1123	1123	OTHER METHOD THAT WI LL FAIRLY REPRESENT THE TAXPAYER ’S BUSINESS IN THE 26
1124	1124	STATE; OR 27
1125	1125
1126	1126	(II) THE EMPLOYMENT OF AN Y OTHER METHOD TO EF FECTUATE 28
1127	1127	A PROPER REFLECTION OF THE TOTAL AMOUNT OF INCOME SUBJECT TO 29
1128	1128	APPORTIONMENT AND AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE 30
1129	1129	COMBINED GROUP ’S OR ITS MEMBERS ’ INCOME. 31
1130	1130
1131	1131	(C) THE COMPTROLLER SHALL ADO PT REG ULATIONS THAT ARE 32
1132	1132	NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 33
1133	1133
1134	1134	SECTION 7. AND BE IT FURTHER ENACTED, That, for a taxable year beginning 34 HOUSE BILL 1014 25
1135	1135
1136	1136
1137	1137	after December 31, 2026, but before January 1, 2028, notwithstanding §§ 13–602 and 1
1138	1138	13–702 of the Tax – General Article, the Comptroller shall assess interest and penalties 2
1139	1139	under §§ 13–602 and 13–702 of the Tax – General Article if a corporation pays estimated 3
1140	1140	income tax for the taxable year in an amount less than 90% of the tax required to be shown 4
1141	1141	on the corporation’s income tax return for the taxable year. 5
1142	1142
1143	1143	SECTION 8. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 6
1144	1144	applicable to all taxable years beginning after December 31, 2024. 7
1145	1145
1146	1146	SECTION 9. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall take 8
1147	1147	effect July 1, 2026. 9
1148	1148
1149	1149	SECTION 10. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall 10
1150	1150	take effect July 1, 2027, and shall be applicable to all taxable years beginning after 11
1151	1151	December 31, 2026. 12
1152	1152
1153	1153	SECTION 11. AND BE IT FURTHER ENACTED, That Section 5 of this Act shall 13
1154	1154	take effect July 1, 2028, and shall be applicable to all taxable years beginning after 14
1155	1155	December 31, 2027. 15
1156	1156
1157	1157	SECTION 12. AND BE IT FURTHER ENACTED, That Section 6 of this Act shall 16
1158	1158	take effect July 1, 2028, and shall be applicable to all taxable years beginning after 17
1159	1159	December 31, 2028. 18
1160	1160
1161	1161	SECTION 13. AND BE IT FURTHER ENACTED, That, except as provided in 19
1162	1162	Sections 9 through 12 of this Act, this Act shall take effect July 1, 2025. 20