EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0355*
HOUSE BILL 355
Q3 5lr0737
HB 674/24 – W&M
By: Delegates Grammer, Arikan, Chisholm, Fisher, M. Morgan, Nawrocki, and
Szeliga
Introduced and read first time: January 16, 2025
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Income Tax – Subtraction Modification – Retirement Income 2
FOR the purpose of including income from certain retirement plans within a certain 3
subtraction modification allowed under the Maryland income tax for certain 4
individuals who are at least a certain age or who are disabled or whose spouse is 5
disabled; altering the maximum amount of the subtraction modification for certain 6
taxable years; repealing a limitation on the maximum amount of the subtraction 7
modification; providing that income included in certain subtraction modifications 8
may not be taken into account for purposes of the subtraction modification for 9
retirement income; and generally relating to a subtraction modification under the 10
Maryland income tax for retirement income. 11
BY repealing and reenacting, with amendments, 12
Article – Tax – General 13
Section 10–209 14
Annotated Code of Maryland 15
(2022 Replacement Volume and 2024 Supplement) 16
(As amended by Chapter 39 of the Acts of the General Assembly of 2022) 17
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 18
That the Laws of Maryland read as follows: 19
Article – Tax – General 20
10–209. 21
(a) In this section: 22
(1) [“employee retirement system” means a plan: 23 2 HOUSE BILL 355
(i) established and maintained by an employer for the benefit of its 1
employees; and 2
(ii) qualified under § 401(a), § 403, or § 457(b) of the Internal 3
Revenue Code; and 4
(2) “employee retirement system” does not include: 5
(i) an individual retirement account or annuity under § 408 of the 6
Internal Revenue Code; 7
(ii) a Roth individual retirement account under § 408A of the 8
Internal Revenue Code; 9
(iii) a rollover individual retirement account; 10
(iv) a simplified employee pension under Internal Revenue Code § 11
408(k); or 12
(v) an ineligible deferred compensation plan under § 457(f) of the 13
Internal Revenue Code.] “QUALIFIED RETIREMENT PLAN” MEANS: 14
(I) A RETIREMENT PLAN QU ALIFIED UNDER § 401(A), § 403, OR 15
§ 457(B) OF THE INTERNAL REVENUE CODE; 16
(II) AN INDIVIDUAL RETIRE MENT ACCOUNT OR ANNU ITY UNDER 17
§ 408 OF THE INTERNAL REVENUE CODE; 18
(III) A ROTH INDIVIDUAL RETIREMENT ACCOU NT UNDER § 408A 19
OF THE INTERNAL REVENUE CODE; 20
(IV) A ROLLOVER INDIVIDUA L RETIREMENT ACCOUNT ; OR 21
(V) A SIMPLIFIED EMPLOYE E PENSION UNDER § 408(K) OF THE 22
INTERNAL REVENUE CODE; AND 23
(2) “QUALIFIED RETIREMENT PLAN” DOES NOT INCLU DE AN 24
INELIGIBLE DEFERRED COMPENSATION PLAN UN DER § 457(F) OF THE INTERNAL 25
REVENUE CODE. 26
(b) Subject to subsections (C) AND (d) [and (e)] of this section, to determine 27
Maryland adjusted gross income, if, on the last day of the taxable year, a resident is at least 28
65 years old or is totally disabled or the resident’s spouse is totally disabled, or the resident 29
is 55 years old and is a retired forest ranger, park ranger, or wildlife ranger of the United 30 HOUSE BILL 355 3
States, the State, or a political subdivision of the State, an amount is subtracted from 1
federal adjusted gross income equal to [the lesser of]: 2
(1) [the cumulative or total annuity, pension, or endowment income from 3
an employee retirement system] 30% OF THE TOTAL INCOME FROM A QUALIFIED 4
RETIREMENT PLAN included in federal adjusted gross income FOR A TAXABLE YEAR 5
BEGINNING AFTER DECEMBER 31, 2024, BUT BEFORE JANUARY 1, 2026; [or] 6
[(2) the maximum annual benefit under the Social Security Act computed 7
under subsection (c) of this section, less any payment received as old age, survivors, or 8
disability benefits under the Social Security Act, the Railroad Retirement Act, or both.] 9
(2) 60% OF THE TOTAL INCOME FROM A QUALIFIED RET IREMENT 10
PLAN INCLUDED IN FED ERAL ADJUSTED GROSS INCOME FOR A TAXABLE YEAR 11
BEGINNING AFTER DECEMBER 31, 2025, BUT BEFORE JANUARY 1, 2027; AND 12
(3) 100% OF THE TOTAL INCOME FROM A QUALIFIED RET IREMENT 13
PLAN INCLUDED IN FED ERAL ADJUSTED GROSS INCOME FOR A TAXABLE YEAR 14
BEGINNING AFTER DECEMBER 31, 2026. 15
[(c) For purposes of subsection (b)(2) of this section, the Comptroller: 16
(1) shall determine the maximum annual benefit under the Social Security 17
Act allowed for an individual who retired at age 65 for the prior calendar year; and 18
(2) may allow the subtraction to the nearest $100. 19
(d) (1) Military retirement income that is included in the subtraction under § 20
10–207(q) of this subtitle may not be taken into account for purposes of the subtraction 21
under this section. 22
(2) Public safety employee retirement income that is included in the 23
subtraction under § 10–207(mm) of this subtitle may not be taken into account for purposes 24
of the subtraction under this section.] 25
(C) ANY INCOME THAT IS IN CLUDED IN THE SUBTRA CTIONS UNDER § 26
10–207 OF THIS SUBTITLE MAY NOT BE TAKEN INTO AC COUNT FOR THE PURPOSES 27
OF THE SUBTRACTION U NDER THIS SECTION . 28
[(e)] (D) In the case of a retired forest ranger, park ranger, or wildlife ranger of 29
the United States, the State, or a political subdivision of the State, the amount included 30
under subsection [(b)(1)] (B) of this section is limited to the first $15,000 of retirement 31
income that is attributable to the resident’s employment as a forest ranger, park ranger, or 32
wildlife ranger of the United States, the State, or a political subdivision of the State unless: 33
4 HOUSE BILL 355
(1) the resident is at least 65 years old or is totally disabled; or 1
(2) the resident’s spouse is totally disabled. 2
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 3
1, 2025, and shall be applicable to all taxable years beginning after December 31, 2024. 4