EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1014*
HOUSE BILL 1014
Q3, Q7 5lr2254
CF SB 859
By: Delegates Palakovich Carr, Wilkins, Smith, Stewart, Lehman, Acevero,
Addison, Bagnall, Boafo, Boyce, Charkoudian, Cullison, Ebersole, Embry,
Fair, Fennell, Foley, Forbes, Hill, Kaufman, R. Lewis, J. Long, Martinez,
McCaskill, Mireku–North, Pasteur, Pena–Melnyk, Ruff, Ruth, Shetty,
Solomon, Taveras, Terrasa, Wells, White Holland, Williams, Wims, Woods,
Woorman, and Young
Introduced and read first time: February 3, 2025
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Fair Share for Maryland Act of 2025 2
FOR the purpose of altering a certain limit on the unified credit used for determining the 3
Maryland estate tax for decedents dying on or after a certain date; altering a certain 4
limitation on the amount of the Maryland estate tax for decedents dying on or after 5
a certain date; prohibiting, except under certain circumstances, the application of 6
certain amendments to the Internal Revenue Code to the determination of Maryland 7
taxable income for certain taxable years; altering the definition of “qualified child” 8
for purposes of a certain credit against the State income tax for certain dependent 9
children; imposing a certain business transportation fee on certain taxable income of 10
corporations and pass–through entities for certain taxable years; limiting, for certain 11
taxable years, the maximum amount of net operating losses that may be allowed in 12
determining Maryland taxable income and Maryland modified income; requiring 13
that certain sales of tangible personal property be included in the numerator of the 14
sales factor used for apportioning a corporation’s income to the State under certain 15
circumstances; altering the State income tax rate on Maryland taxable income of 16
certain individuals; providing for an additional State individual income tax rate on 17
the net investment income of certain individuals; imposing a certain income tax on 18
income distributed to a member of a certain pass–through entity from the 19
pass–through entity’s taxable income exceeding a certain amount; expanding 20
eligibility for the Maryland earned income tax credit for individuals without 21
qualifying children by altering the income thresholds at which the credit phases out; 22
providing that, after a certain taxable year, the income threshold and phase–out 23
amounts are adjusted annually for inflation; altering the income eligibility 24
requirements for purposes of qualifying for a certain credit against the State income 25
tax for certain dependent children; altering the calculation of the child tax credit; 26 2 HOUSE BILL 1014
requiring certain corporations to compute Maryland taxable income using a certain 1
method; requiring, subject to regulations adopted by the Comptroller, certain groups 2
of corporations to file a combined income tax return reflecting the aggregate income 3
tax liability of all the members of the group; requiring the Comptroller to adopt 4
certain regulations consistent with certain regulations adopted by the Multistate 5
Tax Commission; requiring the Comptroller to assess interest and penalties under 6
certain circumstances; and generally relating to Maryland estate tax and income tax. 7
BY repealing and reenacting, without amendments, 8
Article – Tax – General 9
Section 7–309(a) and (b)(1), (2), and (9) and 10–310 10
Annotated Code of Maryland 11
(2022 Replacement Volume and 2024 Supplement) 12
BY repealing and reenacting, with amendments, 13
Article – Tax – General 14
Section 7–309(b)(3), 10–104(5), (6), and (8), 10–105(a), 10–108(a) and (c), 15
10–210.1(b)(2), 10–402(d), 10–704, 10–751, and 10–811 16
Annotated Code of Maryland 17
(2022 Replacement Volume and 2024 Supplement) 18
BY adding to 19
Article – Tax – General 20
Section 10–102.2, 10–102.3, and 10–402.1 21
Annotated Code of Maryland 22
(2022 Replacement Volume and 2024 Supplement) 23
BY repealing and reenacting, with amendments, 24
Article – Tax – General 25
Section 10–104(5), (6), and (8) 26
Annotated Code of Maryland 27
(2022 Replacement Volume and 2024 Supplement) 28
(As enacted by Section 3 of this Act) 29
BY repealing and reenacting, with amendments, 30
Article – Tax – General 31
Section 10–751 32
Annotated Code of Maryland 33
(2022 Replacement Volume and 2024 Supplement) 34
(As enacted by Section 2 of this Act) 35
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 36
That the Laws of Maryland read as follows: 37
Article – Tax – General 38
7–309. 39 HOUSE BILL 1014 3
(a) Notwithstanding an Act of Congress that repeals or reduces the federal credit 1
under § 2011 of the Internal Revenue Code, the provisions of this subtitle in effect before 2
the passage of the Act of Congress shall apply with respect to a decedent who dies after the 3
effective date of the Act of Congress so as to continue the Maryland estate tax in force 4
without reduction in the same manner as if the federal credit had not been repealed or 5
reduced. 6
(b) (1) Except as provided in paragraphs (2) through (9) of this subsection and 7
subsection (c) of this section, after the effective date of an Act of Congress described in 8
subsection (a) of this section, the Maryland estate tax shall be determined using: 9
(i) the federal credit allowable by § 2011 of the Internal Revenue 10
Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 11
Congress; and 12
(ii) other provisions of federal estate tax law as in effect on the date 13
of the decedent’s death. 14
(2) Except as provided in paragraphs (3) through (9) of this subsection and 15
subsection (c) of this section, if the federal estate tax is not in effect on the date of the 16
decedent’s death, the Maryland estate tax shall be determined using: 17
(i) the federal credit allowable by § 2011 of the Internal Revenue 18
Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 19
Congress; and 20
(ii) other provisions of federal estate tax law as in effect on the date 21
immediately preceding the effective date of the repeal of the federal estate tax. 22
(3) (i) Notwithstanding any increase in the unified credit allowed 23
against the federal estate tax for decedents dying after 2003, the unified credit used for 24
determining the Maryland estate tax for a decedent may not exceed the applicable credit 25
amount corresponding to an applicable exclusion amount, within the meaning of § 2010(c) 26
of the Internal Revenue Code, of: 27
1. $1,000,000 for a decedent dying before January 1, 2015; 28
2. $1,500,000 for a decedent dying on or after January 1, 29
2015, but before January 1, 2016; 30
3. $2,000,000 for a decedent dying on or after January 1, 31
2016, but before January 1, 2017; 32
4. $3,000,000 for a decedent dying on or after January 1, 33
2017, but before January 1, 2018; 34
4 HOUSE BILL 1014
5. $4,000,000 for a decedent dying on or after January 1, 1
2018, but before January 1, 2019; [and] 2
6. $5,000,000 for a decedent dying on or after January 1, 3
2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 4
amount calculated in accordance with paragraph (9) of this subsection; AND 5
7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 6
JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 7
CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 8
(ii) The Maryland estate tax shall be determined without regard to 9
any deduction for State death taxes allowed under § 2058 of the Internal Revenue Code. 10
(iii) Unless the federal credit allowable by § 2011 of the Internal 11
Revenue Code is in effect on the date of the decedent’s death, the federal credit used to 12
determine the Maryland estate tax may not exceed 16% of the amount by which the 13
decedent’s taxable estate, as defined in § 2051 of the Internal Revenue Code, exceeds: 14
1. $1,000,000 for a decedent dying before January 1, 2015; 15
2. $1,500,000 for a decedent dying on or after January 1, 16
2015, but before January 1, 2016; 17
3. $2,000,000 for a decedent dying on or after January 1, 18
2016, but before January 1, 2017; 19
4. $3,000,000 for a decedent dying on or after January 1, 20
2017, but before January 1, 2018; 21
5. $4,000,000 for a decedent dying on or after January 1, 22
2018, but before January 1, 2019; [and] 23
6. $5,000,000 for a decedent dying on or after January 1, 24
2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 25
amount calculated in accordance with paragraph (9) of this subsection; AND 26
7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 27
JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 28
CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 29
(9) (i) In this paragraph, “deceased spousal unused exclusion amount” 30
means the applicable exclusion amount in effect at the time of the death of the last 31
predeceased spouse of the decedent under paragraph (3) of this subsection reduced by the 32
taxable estate of the last predeceased spouse: 33
HOUSE BILL 1014 5
1. as reported on a Maryland estate tax return filed with the 1
Comptroller; or 2
2. as reported on a federal estate tax return, if: 3
A. the last predeceased spouse was not a Maryland resident 4
and no property with a Maryland estate tax situs was includible in the gross estate of the 5
last predeceased spouse; or 6
B. the last predeceased spouse died before January 1, 2019, 7
and no Maryland estate tax return was required to be filed with respect to the predeceased 8
spouse’s estate. 9
(ii) The deceased spousal unused exclusion amount may not be taken 10
into account under paragraph (3) of this subsection unless: 11
1. if the last predeceased spouse died on or after January 1, 12
2019, a Maryland estate tax return is timely filed for the last predeceased spouse, on which 13
the deceased spousal unused exclusion amount is calculated and an irrevocable election is 14
made that the deceased spousal unused exclusion amount may be taken into account; or 15
2. if the last predeceased spouse died before January 1, 2019, 16
or was not a Maryland resident and no property with a Maryland estate tax situs was 17
includible in the gross estate of the last predeceased spouse, an election was made under § 18
2010(c) of the Internal Revenue Code on the federal estate tax return of the last 19
predeceased spouse. 20
(iii) 1. Notwithstanding any other provision of this article, the 21
Comptroller may examine a Maryland estate tax return of a predeceased spouse after the 22
time for assessing a tax under this title has expired under § 13–1101 of this article solely 23
for the purposes of determining the validity of the deceased spousal unused exclusion 24
election and the amount to be taken into account under paragraph (3) of this subsection. 25
2. This subparagraph may not be construed to authorize the 26
assessment of any additional tax with respect to the predeceased spouse’s Maryland estate 27
tax return if the period of limitation under § 13–1101 of this article has expired. 28
10–108. 29
(a) Except as provided in subsection (c) of this section and unless expressly 30
provided otherwise by law, an amendment of the Internal Revenue Code that affects the 31
determination of federal adjusted gross income or federal taxable income, does not affect 32
the determination of Maryland taxable income under this title for: 33
(1) any taxable year that begins in the calendar year in which the 34
amendment is enacted; [or] 35
6 HOUSE BILL 1014
(2) THE TAXABLE YEAR THA T BEGINS IN THE CALE NDAR YEAR THAT 1
IMMEDIATELY FOLLOWS THE CALENDAR YEAR IN WHICH THE AMENDMENT IS 2
ENACTED; OR 3
[(2)] (3) any taxable year that precedes the calendar year in which the 4
amendment is enacted. 5
(c) Subsection (a) of this section does not apply to an amendment of the Internal 6
Revenue Code if the Comptroller determines that the impact of the amendment on State 7
income tax revenue is less than $5,000,000 for: 8
(1) the fiscal year that begins during the calendar year in which the 9
amendment is enacted; [or] 10
(2) THE FISCAL YEAR THAT BEGINS DURING THE CA LENDAR YEAR 11
IMMEDIATELY FOLLOWIN G THE CALENDAR YEAR IN WHICH THE AMENDME NT IS 12
ENACTED; OR 13
[(2)] (3) any fiscal year that precedes the calendar year in which the 14
amendment is enacted. 15
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 16
as follows: 17
Article – Tax – General 18
10–751. 19
(a) (1) In this section the following words have the meanings indicated. 20
(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 21
(i) is a dependent for purposes of § 152 of the Internal Revenue Code 22
IN EFFECT ON DECEMBER 31, 2024; and 23
(ii) 1. is under the age of 6 years; or 24
2. A. is under the age of 17 years; and 25
B. is a child with a disability, as defined under § 8–401 of the 26
Education Article. 27
(3) “Taxpayer” means: 28
(i) an individual filing an income tax return; or 29
HOUSE BILL 1014 7
(ii) a married couple filing a joint income tax return. 1
(b) A taxpayer who is a resident and has federal adjusted gross income for the 2
taxable year of $15,000 or less may claim a credit against the State income tax for each 3
qualified child in an amount equal to $500. 4
(c) If the credit allowed under this section in any taxable year exceeds the State 5
income tax for that taxable year, the taxpayer may claim a refund in the amount of the 6
excess. 7
SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 8
as follows: 9
Article – Tax – General 10
10–102.2. 11
(A) IN THIS SECTION , “PASS–THROUGH ENTITY” AND “PASS–THROUGH 12
ENTITY’S TAXABLE INCOME ” HAVE THE MEANINGS ST ATED IN § 10–102.1 OF THIS 13
SUBTITLE. 14
(B) IN ADDITION TO THE STATE INCOME TAX IMPO SED UNDER THIS 15
SUBTITLE, FOR A TAXABLE YEAR B EGINNING AFTER DECEMBER 31, 2026, BUT 16
BEFORE JANUARY 1, 2033, EACH CORPORATION AND PASS–THROUGH ENTITY SHALL 17
PAY A BUSINESS TRANS PORTATION FEE IN ACC ORDANCE WITH THIS SE CTION. 18
(C) THE BUSINESS TRANSPOR TATION FEE IMPOSED U NDER THIS SECTION 19
SHALL EQUAL 2.5% OF THE AMOUNT OF THE CORPORATION ’S MARYLAND TAXABLE 20
INCOME OR PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS 21
$10,000,000. 22
(D) RETURNS AND PAYMENTS OF THE BUSINESS TRANSPORTAT ION FEE 23
SHALL BE DUE AND PAY ABLE IN THE SAME MAN NER AS RETURNS AND PAYMENTS OF 24
THE STATE INCOME TA X UNDER SUBTITLES 8 AND 9 OF THIS TITLE. 25
(E) NOTWITHSTANDING ANY O THER PROVISION OF LA W, A TAXPAYER MAY 26
NOT CLAIM ANY CREDIT AGAINST THE BUSINESS TRANSPORTATION FEE I MPOSED 27
UNDER THIS SECTION E XCEPT FOR CREDITS FO R INSTALLMENT PAYMEN TS, 28
ESTIMATED PAYMENT S MADE WITH A REQUES T FOR AN EXTENSION O F TIME FOR 29
FILING A RETURN , OR OVERPAYMENTS FROM PRIOR PERIODS . 30
(F) THE COMPTROLLER SHALL DIS TRIBUTE REVENUE FROM THE BUSINESS 31
TRANSPORTATION FEE I MPOSED UNDER THIS SE CTION TO THE TRANSPORTATION 32
TRUST FUND ESTABLISHED UNDER § 3–216 OF THE TRANSPORTATION ARTICLE. 33 8 HOUSE BILL 1014
(G) THE COMPTROLLER SHALL ADO PT REGULATIONS TO IM PLEMENT THIS 1
SECTION. 2
10–104. 3
The income tax does not apply to the income of: 4
(5) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 5
subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 6
(6) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 7
subtitle and § 10–304(3) of this title, an S corporation; 8
(8) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 9
subtitle, a limited liability company as defined under Title 4A of the Corporations and 10
Associations Article to the extent that the company is taxable as a partnership, as defined 11
in § 761 of the Internal Revenue Code. 12
SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
as follows: 14
Article – Tax – General 15
10–210.1. 16
(b) In addition to the modifications under §§ 10–204 through 10–210 of this 17
subtitle, to determine Maryland adjusted gross income of an individual: 18
(2) an amount is added to or subtracted from federal adjusted gross income 19
to determine the net operating loss deduction allowed under § 172 of the Internal Revenue 20
Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a 21
carryback period of up to 5 years, PROVIDED THAT ONLY THE FIRST $500,000 OF NET 22
OPERATING LOSSES MAY BE ALLOWED FOR A TAX ABLE YEAR BEGINNING AFTER 23
DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2032; 24
10–310. 25
In addition to the modifications under §§ 10–305 through 10–309 of this subtitle, to 26
determine Maryland modified income the federal taxable income of a corporation shall be 27
adjusted as provided for an individual under § 10–210.1 of this title. 28
10–402. 29
(d) (1) (i) In this paragraph: 30
HOUSE BILL 1014 9
1. “manufacturing corporation” means a domestic or foreign 1
corporation which is primarily engaged in activities that, in accordance with the North 2
American Industrial Classification System (NAICS), United States Manual, United States 3
Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 4
33; and 5
2. “manufacturing corporation” does not include a refiner, as 6
defined in § 10–101 of the Business Regulation Article. 7
(ii) If a manufacturing corporation carries on its trade or business 8
within and outside the State and the trade or business is a unitary business, the part of the 9
corporation’s Maryland modified income derived from or reasonably attributable to trade 10
or business carried on in the State shall be determined using a single sales factor 11
apportionment formula, by multiplying its Maryland modified income by 100% of the sales 12
factor. 13
(iii) In filing its tax return for each year, a manufacturing corporation 14
shall certify that the NAICS Code reported on its Maryland return is consistent with that 15
reported to other government agencies. 16
(iv) If the Comptroller determines that a corporation has submitted 17
information that incorrectly classifies the corporation as a manufacturing corporation 18
under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation 19
in an appropriate manner. 20
(2) Except as provided in paragraphs (1) and (3) of this subsection: 21
(i) for a taxable year beginning after December 31, 2017, but before 22
January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s 23
Maryland modified income derived from or reasonably attributable to trade or business 24
carried on in the State shall be determined using a 3–factor apportionment fraction: 25
1. the numerator of which is the sum of the property factor, 26
the payroll factor, and 3 times the sales factor; and 27
2. the denominator of which is 5; 28
(ii) for a taxable year beginning after December 31, 2018, but before 29
January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s 30
Maryland modified income derived from or reasonably attributable to trade or business 31
carried on in the State shall be determined using a 3–factor apportionment fraction: 32
1. the numerator of which is the sum of the property factor, 33
the payroll factor, and 4 times the sales factor; and 34
2. the denominator of which is 6; 35
10 HOUSE BILL 1014
(iii) for a taxable year beginning after December 31, 2019, but before 1
January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s 2
Maryland modified income derived from or reasonably attributable to trade or business 3
carried on in the State shall be determined using a 3–factor apportionment fraction: 4
1. the numerator of which is the sum of the property factor, 5
the payroll factor, and 5 times the sales factor; and 6
2. the denominator of which is 7; 7
(iv) for a taxable year beginning after December 31, 2020, but before 8
January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s 9
Maryland modified income derived from or reasonably attributable to trade or business 10
carried on in the State shall be determined using a 3–factor apportionment fraction: 11
1. the numerator of which is the sum of the property factor, 12
the payroll factor, and 6 times the sales factor; and 13
2. the denominator of which is 8; and 14
(v) for a taxable year beginning after December 31, 2021, if the trade 15
or business is a unitary business, the part of the corporation’s Maryland modified income 16
derived from or reasonably attributable to trade or business carried on in the State shall 17
be determined using a single sales factor apportionment formula, by multiplying its 18
Maryland modified income by 100% of the sales factor. 19
(3) (i) Each year a worldwide headquartered company that filed a 20
federal corporate income tax return for the taxable year may elect to calculate its Maryland 21
modified income derived from or reasonably attributable to trade or business carried on in 22
the State using a 3–factor apportionment fraction: 23
1. the numerator of which is the sum of the property factor, 24
the payroll factor, and twice the sales factor; and 25
2. the denominator of which is 4. 26
(ii) To determine under subparagraph (i) of this paragraph the 27
Maryland modified income of a corporation or group of corporations that is a worldwide 28
headquartered company that filed a federal corporate income tax return for the taxable 29
year, gross income from intangible investments, including dividends, interest, royalties, 30
and capital gains from the sale of intangible property, shall be included in the calculation 31
of the numerator based on the average of the property and payroll factors. 32
(4) The property factor under paragraphs (2) and (3) of this subsection shall 33
include: 34
(i) rented and owned real property; and 35 HOUSE BILL 1014 11
(ii) tangible personal property located in the State and used in the 1
trade or business. 2
(5) (I) FOR A TAXABLE YEAR BE GINNING AFTER DECEMBER 31, 3
2026, SALES OF TANGIBLE PERSONAL PROPERTY SH ALL BE INCLUDED IN T HE 4
NUMERATOR OF THE SAL ES FACTOR UNDER PARA GRAPH (1), (2), OR (3) OF THIS 5
SUBSECTION IF: 6
1. THE PROPERTY IS DELI VERED OR SHIPPED TO A 7
PURCHASER WITHIN THE STATE, REGARDLESS OF THE FR EE ON BOARD (F.O.B.) 8
POINT OR OTHER CONDITIONS OF THE SALE; OR 9
2. THE PROPERTY IS SHIP PED FROM AN OFFICE , A 10
STORE, A WAREHOUSE , A FACTORY, OR ANY OTHER PLACE O F STORAGE IN THE 11
STATE AND THE CORPORA TION IS NOT TAXABLE IN THE STATE OF THE PURCHASER . 12
(II) FOR PURPOSES OF SUBPA RAGRAPH (I) OF THIS 13
PARAGRAPH , A CORPORATION IS TAX ABLE IN A STATE IF: 14
1. IN THAT STATE THE CO RPORATION IS SUBJECT TO A 15
NET INCOME TAX , FRANCHISE TAX MEASUR ED BY NET INCOME , FRANCHISE TAX FOR 16
THE PRIVILEGE OF DOI NG BUSINESS, OR CORPORATE STOCK T AX; OR 17
2. THAT STATE HAS JURIS DICTION TO SUBJECT T HE 18
TAXPAYER TO A NET IN COME TAX, REGARDLESS OF WHETHE R, IN FACT, THE STATE 19
IMPOSES A TAX. 20
SECTION 5. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 21
as follows: 22
Article – Tax – General 23
10–102.3. 24
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 25
INDICATED. 26
(2) “MEMBER” MEANS: 27
(I) A SHAREHOLDER OF AN S CORPORATION ; 28
(II) A GENERAL OR LIMITED PARTNER OF A PARTNER SHIP, 29
LIMITED PARTNERSHIP , OR LIMITED LIABILITY PARTNERSHIP ; 30 12 HOUSE BILL 1014
(III) A MEMBER OF A LIMITE D LIABILITY COMPANY ; OR 1
(IV) A BENEFICIARY OF A B USINESS TRUST OR STA TUTORY 2
TRUST. 3
(3) “PASS–THROUGH ENTITY ” MEANS: 4
(I) AN S CORPORATION ; 5
(II) A PARTNERSHIP ; 6
(III) A LIMITED LIABILITY COMPANY THAT IS NOT TAXED AS A 7
CORPORATION UNDER TH IS TITLE; OR 8
(IV) A BUSINESS TRUST OR STATUTORY TRUST THAT IS NOT 9
TAXED AS A CORPORATI ON UNDER THIS TITLE . 10
(B) THIS SECTION DOES NOT APPLY TO THE INCOME OF A PASS–THROUGH 11
ENTITY THAT IS A SOL E PROPRIETORSHIP . 12
(C) (1) IN ADDITION TO ANY OT HER TAX IMPOSED UNDE R THIS TITLE, A 13
TAX IS IMPOSED ON TH E DISTRIBUTIVE SHARE OR PRO RATA SHARE OF INCOME 14
DISTRIBUTED TO A MEM BER OF A PASS –THROUGH ENTITY FROM THE 15
PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS $1,000,000. 16
(2) THE RATE OF THE TAX IM POSED UNDER PARAGRAP H (1) OF THIS 17
SUBSECTION IS 8.25%. 18
10–104. 19
The income tax does not apply to the income of: 20
(5) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 21
this subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 22
(6) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 23
this subtitle and § 10–304(3) of this title, an S corporation; 24
(8) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 25
this subtitle, a limited liability company as defined under Title 4A of the Corporations and 26
Associations Article to the extent that the company is taxable as a partnership, as defined 27
in § 761 of the Internal Revenue Code. 28
HOUSE BILL 1014 13
10–105. 1
(a) (1) For an individual other than an individual described in paragraph (2) 2
of this subsection, the State income tax rate is: 3
(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 4
INCOME DOES NOT EXCE ED $250,001: 5
[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 6
[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 7
[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 8
[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 9
$100,000; 10
[(v)] 5. 5% of Maryland taxable income of $100,001 through 11
$125,000; 12
[(vi)] 6. 5.25% of Maryland taxable income of $125,001 through 13
$150,000; AND 14
[(vii)] 7. 5.5% of Maryland taxable income of $150,001 through 15
$250,000; [and] 16
[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 17
MARYLAND TAXABLE INCO ME IS AT LEAST $250,001 BUT DOES NOT EXCEED 18
$500,000, 6% of Maryland taxable income [in excess of $250,000]; 19
(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 20
INCOME IS AT LEAST $500,001 BUT DOES NOT EXCEED $1,000,000, 6.5% OF 21
MARYLAND TAXABLE INCO ME; AND 22
(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 23
INCOME IS AT LEAST $1,000,001, 7% OF MARYLAND TAXABLE INCO ME. 24
(2) For spouses filing a joint return or for a surviving spouse or head of 25
household as defined in § 2 of the Internal Revenue Code, the State income tax rate is: 26
(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 27
INCOME DOES NOT EXCE ED $300,001: 28
[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 29
14 HOUSE BILL 1014
[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 1
[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 2
[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 3
$150,000; 4
[(v)] 5. 5% of Maryland taxable income of $150,001 through 5
$175,000; 6
[(vi)] 6. 5.25% of Maryland taxable income of $175,001 through 7
$225,000; AND 8
[(vii)] 7. 5.5% of Maryland taxable income of $225,001 through 9
$300,000; [and] 10
[(viii)] (II) [5.75%] WITH RESPECT TO TAXPAYERS WHOSE 11
MARYLAND TAXABLE INCO ME IS AT LEAST $300,001 BUT DOES NOT EXCEED 12
$600,000, 6% of Maryland taxable income [in excess of $300,000]; 13
(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 14
INCOME IS AT LEAST $600,001 BUT DOES NOT EXCEED $1,200,000, 6.5% OF 15
MARYLAND TAXABLE INCO ME; AND 16
(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 17
INCOME IS AT LEAST $1,200,001, 7% OF MARYLAND TAXABLE INCO ME. 18
(3) (I) IN THIS PARAGRAPH , “NET INVESTMENT INCOM E” HAS THE 19
MEANING STATED UNDER § 1411(C) OF THE INTERNAL REVENUE CODE, EXCLUDING 20
THE NET GAIN ATTRIBU TABLE TO THE DISPOSI TION OF PARCELS OF PROPERTY , OR 21
PORTIONS THEREOF , THAT ARE AGRICULTURA L LAND AND BUILDINGS . 22
(II) IN ADDITION TO THE TAX CALCULATED U NDER PARAGRAPH 23
(1) OR (2) OF THIS SUBSECTION , FOR AN INDIVIDUAL WI TH FEDERAL ADJUSTED 24
GROSS INCOME IN EXCE SS OF $350,000, A TAX IS IMPOSED ON THE NET INVESTMENT 25
INCOME OF THE INDIVIDUAL AT A RATE OF 1%. 26
(III) FOR AN INDIVIDUAL WHO IS NOT A RESIDENT OF THE STATE 27
FOR THE ENTIRE TAXAB LE YEAR, THE TAX UNDER THIS P ARAGRAPH SHALL BE 28
CALCULATED AS IF THE INDIVIDUAL IS A RESI DENT OF THE STATE, MULTIPLIED BY 29
A FRACTION IN WHICH: 30
1. THE NUMERATOR IS NET INVESTMENT INCOME 31
ALLOCABLE TO THE STATE; AND 32 HOUSE BILL 1014 15
2. THE DENOMINATOR IS T HE TOTAL OF NET 1
INVESTMENT INCOME FO R THE TAXABLE YEAR . 2
10–704. 3
(a) In this section, “taxpayer” means: 4
(1) an individual filing an income tax return; or 5
(2) a married couple filing a joint income tax return. 6
(b) (1) A resident who is a taxpayer may claim a credit against the State 7
income tax for a taxable year in the amount determined under subsection (c) of this section 8
for earned income. 9
(2) A resident who is a taxpayer may claim a credit against the county 10
income tax for a taxable year in the amount determined under subsection (d) of this section 11
for earned income. 12
(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 13
subject to subsection (e) of this section, the credit allowed against the State income tax 14
under subsection (b)(1) of this section is the lesser of: 15
(i) 50% of the earned income credit allowable for the taxable year 16
under § 32 of the Internal Revenue Code or that would have been allowable but for the 17
limitation under § 32(m) of the Internal Revenue Code; or 18
(ii) the State income tax for the taxable year. 19
(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 20
of this section, a resident may claim a refund in the amount, if any, by which the applicable 21
percentage specified in subparagraph (ii) of this paragraph of the earned income credit 22
allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 23
income tax for the taxable year. 24
(ii) Subject to subparagraph (iii) of this paragraph, the applicable 25
percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 26
to be used for purposes of determining the refund provided under this paragraph is: 27
1. 25% for a taxable year beginning after December 31, 2013, 28
but before January 1, 2015; 29
2. 25.5% for a taxable year beginning after December 31, 30
2014, but before January 1, 2016; 31
16 HOUSE BILL 1014
3. 26% for a taxable year beginning after December 31, 2015, 1
but before January 1, 2017; 2
4. 27% for a taxable year beginning after December 31, 2016, 3
but before January 1, 2018; 4
5. 28% for a taxable year beginning after December 31, 2017, 5
but before January 1, 2020; and 6
6. 45% for a taxable year beginning after December 31, 2019. 7
(iii) For purposes of determining the refund provided under this 8
paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 9
calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 10
(3) (i) For purposes of this section for an individual without a qualifying 11
child, the credit allowable for a taxable year under § 32 of the Internal Revenue Code is 12
calculated without regard to: 13
1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 14
the Internal Revenue Code; or 15
2. the limitation under § 32(m) of the Internal Revenue Code. 16
(ii) [Subject to subparagraph (iii) of this paragraph, the] THE credit 17
allowed against the State income tax under subsection (b)(1) of this section for an individual 18
without a qualifying child is: 19
1. equal to 100% of the earned income credit allowable for a 20
taxable year under § 32 of the Internal Revenue Code; AND 21
2. CALCULATED BY SUBSTI TUTING: 22
A. $7,840 FOR THE EARNED INCOM E AMOUNT IN § 23
32(B)(2)(A) OF THE INTERNAL REVENUE CODE; AND 24
B. $19,160 FOR THE PHASE –OUT AMOUNT IN § 25
32(B)(2)(A) OF THE INTERNAL REVENUE CODE. 26
[(iii) For a taxable year beginning after December 31, 2019, but before 27
January 1, 2023, the tax credit allowed under this paragraph may not exceed $530 for a 28
taxable year.] 29
(III) 1. FOR EACH TAXABLE YEAR BEGINNING AFTER 30
DECEMBER 31, 2028, THE EARNED INCOME AM OUNT AND PHASE –OUT AMOU NT IN 31 HOUSE BILL 1014 17
SUBPARAGRAPH (II)2 OF THIS PARAGRAPH SH ALL BE INCREASED BY AN AMOUNT 1
EQUAL TO THE PRODUCT OF MULTIPLYING EACH AMOUNT BY THE COST –OF–LIVING 2
ADJUSTMENT SPECIFIED IN SUBSUBPARAGRAPH 2 OF THIS SUBPARAGRAPH . 3
2. FOR THE PURPOSES OF T HIS SUBPARAGRAPH , THE 4
COST–OF–LIVING ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE 5
MEANING OF § 1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR 6
IN WHICH THE TAXABLE YEAR BEGINS, AS DETERMINED BY THE COMPTROLLER BY 7
SUBSTITUTING “CALENDAR YEAR 2022” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) 8
OF THE INTERNAL REVENUE CODE. 9
3. IF ANY INCREASE DETER MINED UNDER 10
SUBSUBPARAGRAPH 1 OF THIS SUBPARAGRAPH IS NOT A MULTIPLE OF $10, THE 11
INCREASE SHALL BE RO UNDED DOWN TO THE NE XT LOWEST MULTIPLE O F $10. 12
(iv) If the tax credit allowed under this paragraph in any taxable year 13
exceeds the total tax otherwise payable by the individual without a qualifying child for that 14
taxable year, the individual may claim a refund in the amount of the excess. 15
(d) (1) Except as provided in paragraph (2) of this subsection and subject to 16
subsection (e) of this section, the credit allowed against the county income tax under 17
subsection (b)(2) of this section is the lesser of: 18
(i) the earned income credit allowable for the taxable year under § 19
32 of the Internal Revenue Code or that would have been allowable but for the limitation 20
under § 32(m) of the Internal Revenue Code multiplied by 10 times the county income tax 21
rate for the taxable year; or 22
(ii) the county income tax for the taxable year. 23
(2) (i) A county may provide, by law, for a refundable county earned 24
income credit as provided in this paragraph. 25
(ii) If a county provides for a refundable county earned income credit 26
under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 27
which it is applicable, the county shall give the Comptroller notice of the refundable county 28
earned income credit. 29
(iii) If a county provides for a refundable county earned income credit 30
under this paragraph, a resident may claim a refund of the amount, if any, by which the 31
product of multiplying the credit allowable for the taxable year under § 32 of the Internal 32
Revenue Code or that would have been allowable but for the limitation under § 32(m) of 33
the Internal Revenue Code by 5 times the county income tax rate for the taxable year 34
exceeds the county income tax for the taxable year. 35
18 HOUSE BILL 1014
(iv) The amount of any refunds payable under a refundable county 1
earned income credit operates to reduce the income tax revenue from individuals 2
attributable to the county income tax for that county. 3
(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 4
resident of the State for only a part of the year, the amount of the credit or refund allowed 5
under this section shall be determined based on the part of the earned income credit 6
allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 7
to Maryland, determined by multiplying the federal earned income credit by a fraction: 8
(i) the numerator of which is the Maryland adjusted gross income of 9
the individual; and 10
(ii) the denominator of which is the federal adjusted gross income of 11
the individual. 12
(2) For purposes of determining the amount of the credit or refund under 13
paragraph (1) of this subsection, the part of the earned income credit allowable for the 14
taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 15
limitation under § 32(m) of the Internal Revenue Code. 16
10–751. 17
(a) (1) In this section the following words have the meanings indicated. 18
(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 19
(i) is a dependent for purposes of § 152 of the Internal Revenue Code 20
in effect on December 31, 2024; and 21
(ii) [1.] is under the age of [6] 18 years[; or 22
2. A. is under the age of 17 years; and 23
B. is a child with a disability, as defined under § 8–401 of the 24
Education Article]. 25
(3) “Taxpayer” means: 26
(i) an individual filing an income tax return; or 27
(ii) a married couple filing a joint income tax return. 28
(b) [A] SUBJECT TO SUBSECTION (D) OF THIS SECTION, A taxpayer who is a 29
resident [and has federal adjusted gross income for the taxable year of $15,000 or less] may 30
claim a credit against the State income tax for each qualified child in an amount equal to: 31 HOUSE BILL 1014 19
(1) $750, IF THE QUALIFIED CHI LD IS UNDER THE AGE OF 6 YEARS; OR 1
(2) $500, IF THE QUALIFIED CHI LD IS AT LEAST 6 YEARS OLD. 2
(C) (1) FOR EACH TAXABLE YEA R BEGINNING AFTER DECEMBER 31, 3
2028, THE AMOUNTS SPECIFIE D IN SUBSECTION (B) OF THIS SECTION SHAL L BE 4
INCREASED BY AN AMOU NT EQUAL TO THE PROD UCT OF MULTIPLYING T HE 5
AMOUNTS BY THE COST –OF–LIVING ADJUSTMENT SP ECIFIED IN THIS SUBS ECTION. 6
(2) FOR THE PURPO SES OF THIS SUBSECTI ON, THE COST–OF–LIVING 7
ADJUSTMENT IS THE CO ST–OF–LIVING ADJUSTMENT WI THIN THE MEANING OF § 8
1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR IN WHICH THE 9
TAXABLE YEAR BEGINS , AS DETERMINED BY THE COMPTROLLER , BY SUBSTITUTING 10
“CALENDAR YEAR 2027” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) OF THE 11
INTERNAL REVENUE CODE. 12
(3) IF ANY INCREASE DETERMINED UN DER PARAGRAPH (1) OF THIS 13
SUBSECTION IS NOT A MULTIPLE OF $50, THE INCREASE SHALL B E ROUNDED DOWN 14
TO THE NEXT LOWEST M ULTIPLE OF $50. 15
(D) THE AMOUNT OF THE CRE DIT ALLOWED UNDER SU BSECTION (B) OF 16
THIS SECTION FOR A Q UALIFIED CHILD SHALL BE REDUCED, BUT NOT BELOW ZERO , 17
BY $50 FOR EACH $1,000, OR FRACTION THEREOF , BY WHICH THE TAXPAYE R’S 18
FEDERAL ADJUSTED GRO SS INCOME EXCEEDS : 19
(1) $65,000 IN THE CASE OF A MAR RIED COUPLE FILING A JOINT 20
RETURN OR A SURVIVIN G SPOUSE OR HEAD OF HOUSEHOLD AS DEFINED IN § 2 OF 21
THE INTERNAL REVENUE CODE FILING AN INCOME TAX RETURN; 22
(2) $32,500 IN THE CASE OF A MAR RIED INDIVIDUAL FILI NG 23
SEPARATELY; OR 24
(3) $45,000 IN THE CASE OF ANY O THER INDIVIDUAL . 25
[(c)] (E) If the credit allowed under this section in any taxable year exceeds the 26
State income tax for that taxable year, the taxpayer may claim a refund in the amount of 27
the excess. 28
SECTION 6. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 29
as follows: 30
Article – Tax – General 31
20 HOUSE BILL 1014
10–402.1. 1
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 2
INDICATED. 3
(2) “COMBINED GROUP ” MEANS A GROUP OF COR PORATIONS: 4
(I) THAT IS ENGAGED IN A UNITARY BUSINESS ; 5
(II) IN WHICH MORE THAN 50% OF THE VOTING STOCK OF EACH 6
MEMBER IS DIRECTLY O R INDIRECTLY OWNED B Y: 7
1. A COMMON OWNER OR CO MMON OWNERS , EITHER 8
CORPORATE OR NONCORP ORATE; OR 9
2. ONE OR MORE MEMBER C ORPORATIONS OF THE 10
GROUP; 11
(III) THE MEMBERS OF WHICH ARE SUBJECT TO THE I NCOME TAX 12
OR WOULD BE SUBJECT TO THE INCOME TAX IF DOING BUSINESS IN TH E STATE; AND 13
(IV) CONSISTING OF ANY OT HER MEMBERS UNDER TH E 14
CIRCUMSTANCES AND TO THE EXTENT PROVIDED IN REGULATIONS ADOPT ED BY 15
THE COMPTROLLER TO PREVEN T THE AVOIDANCE OF T AX OR TO REFLECT CLE ARLY 16
THE INCOME OF ANY ME MBER OF THE COMBINED GROUP FOR ANY PERIOD . 17
(3) “COMBINED RETURN ” MEANS A TAX RETURN F OR THE COMBINED 18
GROUP CONTAINING INF ORMATION AS PROVIDED IN THIS SECTION OR O THERWISE 19
REQUIRED BY THE COMPTROLLER . 20
(4) “UNITARY BUSINESS ” MEANS A SINGLE ECONO MIC ENTERPRISE 21
THAT IS MADE EITHER OF SEPARATE PARTS OF A SINGLE BUSINESS EN TITY OR OF A 22
COMMONLY CONTROLLED GROUP OF BUSINESS EN TITIES THAT ARE SUFF ICIENTLY 23
INTERDEPENDENT , INTEGRATED, AND INTERRELATED THR OUGH THEIR ACTIVITIE S 24
SO AS TO PROVIDE MUT UAL BENEFIT THAT PRO DUCES A SHARING OR E XCHANGE OF 25
VALUE AMONG THEM AND A SIGNIFICANT FLOW O F VALUE TO THE SEPAR ATE PARTS. 26
(B) (1) THE TERM “UNITARY BUSINESS ” SHALL BE CONSTRUED T O THE 27
BROADEST EXTENT ALLO WED UNDER THE U.S. CONSTITUTION. 28
(2) A BUSINESS CONDUCTED D IRECTLY OR INDIRECTL Y BY ONE 29
CORPORATION IS A UNI TARY BUSINESS WITH R ESPECT TO THAT PORTI ON OF A 30
BUSINESS CONDUCTED B Y ANOTHER CORPORATIO N THROUGH ITS DIRECT OR 31
INDIRECT INTEREST IN A PARTNERS HIP IF THE REQUIREME NTS OF SUBSECTION 32 HOUSE BILL 1014 21
(A)(4) OF THIS SECTION ARE SATISFIED, INCLUDING IF THERE I S SYNERGY AND AN 1
EXCHANGE AND FLOW OF VALUE BETWEEN THE TW O PARTS OF THE BUSIN ESS AND 2
THE TWO CORPORATIONS ARE MEMBERS OF THE S AME COMMONLY CONTROLLED 3
GROUP. 4
(3) A BUSINESS CONDUCTED B Y A PARTNERSHIP SHAL L BE TREATED 5
AS CONDUCTED BY ITS PARTNERS, WHETHER DIRECTLY HEL D OR INDIRECTLY HELD 6
THROUGH A SERIES OF PARTNERSHIPS , TO THE EXTENT OF THE PARTNER’S 7
DISTRIBUTIVE SHARE O F THE PARTNERSHIP ’S INCOME, REGARDLESS OF THE 8
PERCENTAGE OF THE PA RTNER’S OWNERSHIP INTEREST OR ITS DISTRIBUTIVE OR 9
ANY OTHER SHARE OF P ARTNERSHIP INCOME . 10
(C) (1) EXCEPT AS PROVIDED BY AND SUBJECT TO REGUL ATIONS 11
ADOPTED BY THE COMPTROLLER , FOR ALL TAXABLE YEAR S BEGINNING AF TER 12
DECEMBER 31, 2028, A CORPORATION ENGAGE D IN A UNITARY BUSIN ESS SHALL 13
FILE A COMBINED RETU RN, REPORTING AND PAYING TAX ON WORLDWIDE TAX ABLE 14
INCOME AS A COMBINED GROUP, REFLECTING THE AGGRE GATE INCOME TAX 15
LIABILITY OF ALL MEM BERS OF THE COMBINED GROUP TH AT ARE ENGAGED IN A 16
UNITARY BUSINESS . 17
(2) THE TAXABLE INCOME OF A CORPORATION REQUIR ED TO FILE 18
UNDER § 10–811(A)(2) OF THIS TITLE IS EQU AL TO THE COMBINED G ROUP’S 19
MARYLAND MODIFIED INC OME AS ADJUSTED UNDE R SUBSECTION (D)(3) OF THIS 20
SECTION. 21
(D) (1) THE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP 22
EQUALS THE PRODUCT O F: 23
(I) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND 24
MODIFIED INCOME , AS DETERMINED UNDER PARAGRAPH (2) OF THIS SUBSECTION 25
AND ADJUSTED UNDER P ARAGRAPH (3) OF THIS SUBSECTION ; AND 26
(II) THE COMBINED GROUP ’S MARYLAND APPORTIONMEN T 27
FACTOR, AS DETERMINED UNDER PARAGRAPH (4) OF THIS SUBSECTION . 28
(2) (I) SUBJECT TO SUBPARAGRA PHS (II) THROUGH (IV) OF THIS 29
PARAGRAPH , THE APPORTIONABLE MARYLAND MODIFIED INC OME OF THE 30
COMBINED GROUP EQUAL S THE SUM OF THE CORPO RATION’S AND EACH MEMBER ’S 31
MARYLAND MODIFIED INC OME. 32
(II) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 33
SUBPARAGRAPH , FOR ANY MEMBER INCOR PORATED IN THE UNITED STATES OR 34
INCLUDED IN A CONSOL IDATED FEDERAL CORPO RATE INCOME TAX RETU RN, THE 35
INCOME TO BE INCLUDE D IN THE TOTAL APPOR TIONABLE INCOME OF T HE 36 22 HOUSE BILL 1014
COMBINED GROUP IS TH E MARYLAND MODIFIED INC OME AS CALCULATED UN DER § 1
10–304 OF THIS TITLE. 2
2. THE INCOME OF EACH ME MBER SHALL BE 3
CALCULATED ON A SEPA RATE RETURN BASIS AS IF THE MEMBER WERE N OT 4
CONSOLIDATED FOR FED ERAL INCOME TAX PURP OSES. 5
(III) 1. FOR ANY MEMBER NOT IN CLUDED UNDER 6
SUBPARAGRAPH (II) OF THIS PARAGRAPH , THE INCOME TO BE INC LUDED IN THE 7
TOTAL INCOME OF THE COMBINED GROUP IS DE TERMINED AS PROVIDED UNDER 8
THIS SUBPARAGRAPH . 9
2. A PROFIT AND LOSS STAT EMENT SHALL BE PREPA RED 10
FOR EACH FOREIGN BRA NCH OR CORPOR ATION IN THE CURRENC Y IN WHICH THE 11
BOOKS OF ACCOUNT OF THE BRANCH OR CORPOR ATION ARE REGULARLY 12
MAINTAINED. 13
3. THE PROFIT AND LOSS S TATEMENT SHALL BE 14
ADJUSTED TO CONFORM TO GENERALLY ACCEPTE D ACCOUNTING PRINCIP LES AS 15
ADOPTED BY THE U.S. FINANCIAL ACCOUNTING STANDARDS BOARD FOR THE 16
PREPARATION OF THE P ROFIT AND LOSS STATE MENTS, EXCEPT AS MODIFIED B Y 17
REGULATION . 18
4. EXCEPT AS OTHERWISE P ROVIDED BY REGULATIO N, 19
THE PROFIT AND LOSS STATEMENT OF EACH ME MBER OF THE COMBINED GROUP, 20
AND THE APPORTIONMEN T FACTORS RELATED TO EACH STATEMENT, WHETHER 21
UNITED STATES OR FOREIGN , SHALL BE TRANSLATED INTO THE CURRENCY IN 22
WHICH THE PARENT COM PANY MAINTAINS ITS B OOKS AND RECORDS . 23
5. INCOME APPORTIONED TO THE STATE SHALL BE 24
EXPRESSED IN UNITED STATES DOLLARS . 25
(IV) IF A UNITARY BUSINESS INCLUDES INCOME FROM A 26
PARTNERSHIP , THE INCOME TO BE INC LUDED IN THE TOTAL I NCOME OF THE 27
COMBINED GROUP EQUAL S THE DIRECT AND IND IRECT DISTRIBUTIVE S HARE OF 28
THE PARTNERSHIP ’S UNITARY BUSINESS I NCOME ALLOCATED TO A NY MEMBER OF 29
THE COMBINED GROUP . 30
(3) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND MODIFIED 31
INCOME SHALL BE ADJU STED TO ELIMINATE IN TERCOMPANY TRANSACTI ONS AS 32
DETERMINED UNDER THE INTERNAL REVENUE CODE. 33
(4) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , THE 34
COMBINED GROUP’S MARYLAND APPORTIONMEN T FACTOR IS A FRACTI ON: 35 HOUSE BILL 1014 23
1. THE NUMERATOR OF WHI CH IS THE SUM OF THE 1
CORPORATION ’S AND EACH MEMBER ’S MARYLAND FACTORS UNDE R § 10–402 OF 2
THIS SUBTITLE; AND 3
2. THE DENOMINATOR OF W HICH IS THE SUM OF T HE 4
CORPORATION ’S AND EACH MEMBER ’S FACTORS UNDER § 10–402 OF THIS SUBTITLE. 5
(II) THE APPORTIONMENT FAC TORS OF PASS –THROUGH 6
ENTITY MEMBERS ARE I NCLUDED IN THE NUMER ATOR UNDER SUBPARAGR APH (I)1 7
OF THIS PARAGRAPH AN D THE DENOMINATOR UN DER SUBPARAGRAPH (I)2 OF THIS 8
PARAGRAPH TO THE EXT ENT OF THE CORPORATI ON’S DIRECT AND INDIREC T 9
DISTRIBUTIVE SHARE O F THAT ENTITY. 10
(E) (1) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 11
NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 12
(2) THE REGULATIONS ADOPT ED BY THE COMPTROLLER SHALL BE 13
CONSISTENT WITH THE “PRINCIPLES FOR DETERMINING THE EXISTENCE OF A 14
UNITARY BUSINESS” (REG. IV.1.(B)) OF THE MODEL GENERAL ALLOCATION AND 15
APPORTIONMENT REGULATIONS, AS ADOPTED BY THE MULTISTATE TAX 16
COMMISSION. 17
10–811. 18
(A) (1) [Each member of] EXCEPT AS PROVIDED BY AND SUBJECT TO 19
REGULATIONS ADOPTED BY THE COMPTROLLER , an affiliated group of corporations 20
[shall file a separate income tax return] ENGAGED IN A UNITARY BUSINESS SHALL FILE 21
A COMBINED INCOME TA X RETURN REFLECTING THE AGGREG ATE INCOME TAX 22
LIABILITY OF ALL THE MEMBERS OF THE AFFIL IATED GROUP THAT ARE ENGAGED IN 23
A UNITARY BUSINESS . 24
(2) THE RETURN REQUIRED U NDER PARAGRAPH (1) OF THIS 25
SUBSECTION SHALL INC LUDE THE INCOME AND APPORTIONMENT FACTOR S 26
DETERMINED UNDER § 10–402.1(D) OF THIS TITLE, AND ANY OTHER INFORM ATION 27
REQUIRED BY THE COMPTROLLER , FOR ALL MEMBERS OF T HE COMBINED GROUP 28
WHEREVER LOCATED OR DOING BUSINESS . 29
(3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 30
PARAGRAPH , THE COMBINED RETURN SHALL BE FILED UNDER THE NAME AND 31
FEDERAL EMPLOYER IDE NTIFICATION NUMBER O F THE PARENT CORPORA TION IF 32
THE PARENT IS A MEMB ER OF THE COMBINED G ROUP. 33
(II) IF THERE IS NO PARENT CORPORATION OR IF TH E PARENT 34 24 HOUSE BILL 1014
IS NOT A MEMBER OF T HE COMBINED GROUP , THE MEMBERS OF THE C OMBINED 1
GROUP SHALL CHOOSE A M EMBER TO FILE THE RE TURN. 2
(III) THE FILING MEMBER UND ER SUBPARAGRAPH (I) OR (II) OF 3
THIS PARAGRAPH SHALL CONTINUE TO FILE THE COMBINED RETURN UNLE SS THE 4
FILING MEMBER IS NO LONGER THE PARENT CO RPORATION OR NO LONG ER A 5
MEMBER OF THE COMBINED GROUP . 6
(4) THE RETURN SHALL BE S IGNED BY A RESPONSIB LE OFFICER OF 7
THE FILING MEMBER ON BEHALF OF THE COMBIN ED GROUP MEMBERS . 8
(5) MEMBERS OF THE COMBIN ED GROUP ARE JOINTLY AND 9
SEVERALLY LIABLE FOR THE TAX LIABILITY OF THE COMBINED GROUP I NCLUDED 10
IN THE COMBINED RETU RN. 11
(B) (1) THE COMPTROLLER MAY , BY REGULATION , REQUIRE THAT THE 12
COMBINED RETURN INCL UDE THE INCOME AND A SSOCIATED APPORTIONM ENT 13
FACTORS OF ENTITIES THAT ARE NOT INCLUDE D IN THE COMBINED RE PORT BUT 14
THAT ARE MEMBERS OF A UNITARY BUSINESS IN ORDER TO REFLECT PROPER 15
APPORTIONMENT OF INC OME OF THE ENTIRE UN ITARY BUSINESS. 16
(2) IF THE COMPTROLLER DETERMINE S THAT THE REPORTED 17
INCOME OR LOSS OF A TAXPAYER ENGAGED IN A UNITARY BUSINESS W ITH A MEMBER 18
NOT INCLUDED IN THE COMBINED GROUP R EPRESENTS AN AVOIDAN CE OR EVASION 19
OF TAX, THE COMPTROLLER MAY , ON A CASE–BY–CASE BASIS, REQUIRE THAT ALL 20
OR PART OF THE INCOM E AND ASSOCIATED APP ORTIONMENT FACTORS O F THE 21
MEMBER BE INCLUDED I N THE TAXPAYER ’S COMBINED RETURN . 22
(3) THE COMPTROLLER MAY REQU IRE: 23
(I) THE EXCLUSION OF ONE OR MORE FACTORS , THE 24
INCLUSION OF ONE OR MORE ADDITIONAL FACT ORS, OR THE EMPLOYMENT OF ANY 25
OTHER METHOD THAT WI LL FAIRLY REPRESENT THE TAXPAYER ’S BUSINESS IN THE 26
STATE; OR 27
(II) THE EMPLOYMENT OF AN Y OTHER METHOD TO EF FECTUATE 28
A PROPER REFLECTION OF THE TOTAL AMOUNT OF INCOME SUBJECT TO 29
APPORTIONMENT AND AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE 30
COMBINED GROUP ’S OR ITS MEMBERS ’ INCOME. 31
(C) THE COMPTROLLER SHALL ADO PT REG ULATIONS THAT ARE 32
NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 33
SECTION 7. AND BE IT FURTHER ENACTED, That, for a taxable year beginning 34 HOUSE BILL 1014 25
after December 31, 2026, but before January 1, 2028, notwithstanding §§ 13–602 and 1
13–702 of the Tax – General Article, the Comptroller shall assess interest and penalties 2
under §§ 13–602 and 13–702 of the Tax – General Article if a corporation pays estimated 3
income tax for the taxable year in an amount less than 90% of the tax required to be shown 4
on the corporation’s income tax return for the taxable year. 5
SECTION 8. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 6
applicable to all taxable years beginning after December 31, 2024. 7
SECTION 9. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall take 8
effect July 1, 2026. 9
SECTION 10. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall 10
take effect July 1, 2027, and shall be applicable to all taxable years beginning after 11
December 31, 2026. 12
SECTION 11. AND BE IT FURTHER ENACTED, That Section 5 of this Act shall 13
take effect July 1, 2028, and shall be applicable to all taxable years beginning after 14
December 31, 2027. 15
SECTION 12. AND BE IT FURTHER ENACTED, That Section 6 of this Act shall 16
take effect July 1, 2028, and shall be applicable to all taxable years beginning after 17
December 31, 2028. 18
SECTION 13. AND BE IT FURTHER ENACTED, That, except as provided in 19
Sections 9 through 12 of this Act, this Act shall take effect July 1, 2025. 20