Maryland 2025 Regular Session

Maryland Senate Bill SB859 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	sb0859
6	6
7	7	SENATE BILL 859
8	8	Q3, Q7 5lr2255
9	9	SB 766/24 – B&T CF HB 1014
10	10	By: Senators Hettleman, Benson, Rosapepe, Lewis Young, and M. Washington
11	11	Introduced and read first time: January 28, 2025
12	12	Assigned to: Budget and Taxation
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	Fair Share for Maryland Act of 2025 2
19	19
20	20	FOR the purpose of altering a certain limit on the unified credit used for determining the 3
21	21	Maryland estate tax for decedents dying on or after a certain date; altering a certain 4
22	22	limitation on the amount of the Maryland estate tax for decedents dying on or after 5
23	23	a certain date; prohibiting, except under certain circumstances, the application of 6
24	24	certain amendments to the Internal Revenue Code to the determination of Maryland 7
25	25	taxable income for certain taxable years; altering the definition of “qualified child” 8
26	26	for purposes of a certain credit against the State income tax for certain dependent 9
27	27	children; imposing a certain business transportation fee on certain taxable income of 10
28	28	corporations and pass–through entities for certain taxable years; limiting, for certain 11
29	29	taxable years, the maximum amount of net operating losses that may be allowed in 12
30	30	determining Maryland taxable income and Maryland modified income; requiring 13
31	31	that certain sales of tangible personal property be included in the numerator of the 14
32	32	sales factor used for apportioning a corporation’s income to the State under certain 15
33	33	circumstances; altering the State income tax rate on Maryland taxable income of 16
34	34	certain individuals; providing for an additional State individual income tax rate on 17
35	35	the net investment income of certain individuals; imposing a certain income tax on 18
36	36	income distributed to a member of a certain pass–through entity from the 19
37	37	pass–through entity’s taxable income exceeding a certain amount; expanding 20
38	38	eligibility for the Maryland earned income tax credit for individuals without 21
39	39	qualifying children by altering the income thresholds at which the credit phases out; 22
40	40	providing that, after a certain taxable year, the income threshold and phase–out 23
41	41	amounts are adjusted annually for inflation; altering the income eligibility 24
42	42	requirements for purposes of qualifying for a certain credit against the State income 25
43	43	tax for certain dependent children; altering the calculation of the child tax credit; 26
44	44	requiring certain corporations to compute Maryland taxable income using a certain 27
45	45	method; requiring, subject to regulations adopted by the Comptroller, certain groups 28
46	46	of corporations to file a combined income tax return reflecting the aggregate income 29
47	47	tax liability of all the members of the group; requiring the Comptroller to adopt 30
48	48	certain regulations consistent with certain regulations adopted by the Multistate 31 2 SENATE BILL 859
49	49
50	50
51	51	Tax Commission; requiring the Comptroller to assess interest and penalties under 1
52	52	certain circumstances; and generally relating to Maryland estate tax and income tax. 2
53	53
54	54	BY repealing and reenacting, without amendments, 3
55	55	Article – Tax – General 4
56	56	Section 7–309(a) and (b)(1), (2), and (9) and 10–310 5
57	57	Annotated Code of Maryland 6
58	58	(2022 Replacement Volume and 2024 Supplement) 7
59	59
60	60	BY repealing and reenacting, with amendments, 8
61	61	Article – Tax – General 9
62	62	Section 7–309(b)(3), 10–104(5), (6), and (8), 10–105(a), 10–108(a) and (c), 10
63	63	10–210.1(b)(2), 10–402(d), 10–704, 10–751, and 10–811 11
64	64	Annotated Code of Maryland 12
65	65	(2022 Replacement Volume and 2024 Supplement) 13
66	66
67	67	BY adding to 14
68	68	Article – Tax – General 15
69	69	Section 10–102.2, 10–102.3, and 10–402.1 16
70	70	Annotated Code of Maryland 17
71	71	(2022 Replacement Volume and 2024 Supplement) 18
72	72
73	73	BY repealing and reenacting, with amendments, 19
74	74	Article – Tax – General 20
75	75	Section 10–104(5), (6), and (8) 21
76	76	Annotated Code of Maryland 22
77	77	(2022 Replacement Volume and 2024 Supplement) 23
78	78	(As enacted by Section 3 of this Act) 24
79	79
80	80	BY repealing and reenacting, with amendments, 25
81	81	Article – Tax – General 26
82	82	Section 10–751 27
83	83	Annotated Code of Maryland 28
84	84	(2022 Replacement Volume and 2024 Supplement) 29
85	85	(As enacted by Section 2 of this Act) 30
86	86
87	87	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 31
88	88	That the Laws of Maryland read as follows: 32
89	89
90	90	Article – Tax – General 33
91	91
92	92	7–309. 34
93	93
94	94	(a) Notwithstanding an Act of Congress that repeals or reduces the federal credit 35
95	95	under § 2011 of the Internal Revenue Code, the provisions of this subtitle in effect before 36
96	96	the passage of the Act of Congress shall apply with respect to a decedent who dies after the 37
97	97	effective date of the Act of Congress so as to continue the Maryland estate tax in force 38 SENATE BILL 859 3
98	98
99	99
100	100	without reduction in the same manner as if the federal credit had not been repealed or 1
101	101	reduced. 2
102	102
103	103	(b) (1) Except as provided in paragraphs (2) through (9) of this subsection and 3
104	104	subsection (c) of this section, after the effective date of an Act of Congress described in 4
105	105	subsection (a) of this section, the Maryland estate tax shall be determined using: 5
106	106
107	107	(i) the federal credit allowable by § 2011 of the Internal Revenue 6
108	108	Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 7
109	109	Congress; and 8
110	110
111	111	(ii) other provisions of federal estate tax law as in effect on the date 9
112	112	of the decedent’s death. 10
113	113
114	114	(2) Except as provided in paragraphs (3) through (9) of this subsection and 11
115	115	subsection (c) of this section, if the federal estate tax is not in effect on the date of the 12
116	116	decedent’s death, the Maryland estate tax shall be determined using: 13
117	117
118	118	(i) the federal credit allowable by § 2011 of the Internal Revenue 14
119	119	Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 15
120	120	Congress; and 16
121	121
122	122	(ii) other provisions of federal estate tax law as in effect on the date 17
123	123	immediately preceding the effective date of the repeal of the federal estate tax. 18
124	124
125	125	(3) (i) Notwithstanding any increase in the unified credit allowed 19
126	126	against the federal estate tax for decedents dying after 2003, the unified credit used for 20
127	127	determining the Maryland estate tax for a decedent may not exceed the applicable credit 21
128	128	amount corresponding to an applicable exclusion amount, within the meaning of § 2010(c) 22
129	129	of the Internal Revenue Code, of: 23
130	130
131	131	1. $1,000,000 for a decedent dying before January 1, 2015; 24
132	132
133	133	2. $1,500,000 for a decedent dying on or after January 1, 25
134	134	2015, but before January 1, 2016; 26
135	135
136	136	3. $2,000,000 for a decedent dying on or after January 1, 27
137	137	2016, but before January 1, 2017; 28
138	138
139	139	4. $3,000,000 for a decedent dying on or after January 1, 29
140	140	2017, but before January 1, 2018; 30
141	141
142	142	5. $4,000,000 for a decedent dying on or after January 1, 31
143	143	2018, but before January 1, 2019; [and] 32
144	144
145	145	6. $5,000,000 for a decedent dying on or after January 1, 33
146	146	2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 34 4 SENATE BILL 859
147	147
148	148
149	149	amount calculated in accordance with paragraph (9) of this subsection; AND 1
150	150
151	151	7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 2
152	152	JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 3
153	153	CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 4
154	154
155	155	(ii) The Maryland estate tax shall be determined without regard to 5
156	156	any deduction for State death taxes allowed under § 2058 of the Internal Revenue Code. 6
157	157
158	158	(iii) Unless the federal credit allowable by § 2011 of the Internal 7
159	159	Revenue Code is in effect on the date of the decedent’s death, the federal credit used to 8
160	160	determine the Maryland estate tax may not exceed 16% of the amount by which the 9
161	161	decedent’s taxable estate, as defined in § 2051 of the Internal Revenue Code, exceeds: 10
162	162
163	163	1. $1,000,000 for a decedent dying before January 1, 2015; 11
164	164
165	165	2. $1,500,000 for a decedent dying on or after January 1, 12
166	166	2015, but before January 1, 2016; 13
167	167
168	168	3. $2,000,000 for a decedent dying on or after January 1, 14
169	169	2016, but before January 1, 2017; 15
170	170
171	171	4. $3,000,000 for a decedent dying on or after January 1, 16
172	172	2017, but before January 1, 2018; 17
173	173
174	174	5. $4,000,000 for a decedent dying on or after January 1, 18
175	175	2018, but before January 1, 2019; [and] 19
176	176
177	177	6. $5,000,000 for a decedent dying on or after January 1, 20
178	178	2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 21
179	179	amount calculated in accordance with paragraph (9) of this subsection; AND 22
180	180
181	181	7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 23
182	182	JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 24
183	183	CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 25
184	184
185	185	(9) (i) In this paragraph, “deceased spousal unused exclusion amount” 26
186	186	means the applicable exclusion amount in effect at the time of the death of the last 27
187	187	predeceased spouse of the decedent under paragraph (3) of this subsection reduced by the 28
188	188	taxable estate of the last predeceased spouse: 29
189	189
190	190	1. as reported on a Maryland estate tax return filed with the 30
191	191	Comptroller; or 31
192	192
193	193	2. as reported on a federal estate tax return, if: 32
194	194	SENATE BILL 859 5
195	195
196	196
197	197	A. the last predeceased spouse was not a Maryland resident 1
198	198	and no property with a Maryland estate tax situs was includible in the gross estate of the 2
199	199	last predeceased spouse; or 3
200	200
201	201	B. the last predeceased spouse died before January 1, 2019, 4
202	202	and no Maryland estate tax return was required to be filed with respect to the predeceased 5
203	203	spouse’s estate. 6
204	204
205	205	(ii) The deceased spousal unused exclusion amount may not be taken 7
206	206	into account under paragraph (3) of this subsection unless: 8
207	207
208	208	1. if the last predeceased spouse died on or after January 1, 9
209	209	2019, a Maryland estate tax return is timely filed for the last predeceased spouse, on which 10
210	210	the deceased spousal unused exclusion amount is calculated and an irrevocable election is 11
211	211	made that the deceased spousal unused exclusion amount may be taken into account; or 12
212	212
213	213	2. if the last predeceased spouse died before January 1, 2019, 13
214	214	or was not a Maryland resident and no property with a Maryland estate tax situs was 14
215	215	includible in the gross estate of the last predeceased spouse, an election was made under § 15
216	216	2010(c) of the Internal Revenue Code on the federal estate tax return of the last 16
217	217	predeceased spouse. 17
218	218
219	219	(iii) 1. Notwithstanding any other provision of this article, the 18
220	220	Comptroller may examine a Maryland estate tax return of a predeceased spouse after the 19
221	221	time for assessing a tax under this title has expired under § 13–1101 of this article solely 20
222	222	for the purposes of determining the validity of the deceased spousal unused exclusion 21
223	223	election and the amount to be taken into account under paragraph (3) of this subsection. 22
224	224
225	225	2. This subparagraph may not be construed to authorize the 23
226	226	assessment of any additional tax with respect to the predeceased spouse’s Maryland estate 24
227	227	tax return if the period of limitation under § 13–1101 of this article has expired. 25
228	228
229	229	10–108. 26
230	230
231	231	(a) Except as provided in subsection (c) of this section and unless expressly 27
232	232	provided otherwise by law, an amendment of the Internal Revenue Code that affects the 28
233	233	determination of federal adjusted gross income or federal taxable income, does not affect 29
234	234	the determination of Maryland taxable income under this title for: 30
235	235
236	236	(1) any taxable year that begins in the calendar year in which the 31
237	237	amendment is enacted; [or] 32
238	238
239	239	(2) THE TAXABLE YEAR THA T BEGINS IN THE CALE NDAR YEAR THAT 33
240	240	IMMEDIATELY FOLLOWS THE CALENDAR YEAR IN WHICH THE AMENDMENT IS 34
241	241	ENACTED; OR 35
242	242	6 SENATE BILL 859
243	243
244	244
245	245	[(2)] (3) any taxable year that precedes the calendar year in which the 1
246	246	amendment is enacted. 2
247	247
248	248	(c) Subsection (a) of this section does not apply to an amendment of the Internal 3
249	249	Revenue Code if the Comptroller determines that the impact of the amendment on State 4
250	250	income tax revenue is less than $5,000,000 for: 5
251	251
252	252	(1) the fiscal year that begins during the calendar year in which the 6
253	253	amendment is enacted; [or] 7
254	254
255	255	(2) THE FISCAL YEAR THAT BEGINS DURING THE CA LENDAR YEAR 8
256	256	IMMEDIATELY FOLLOWIN G THE CALENDAR YEAR IN WHICH THE AMENDMEN T IS 9
257	257	ENACTED; OR 10
258	258
259	259	[(2)] (3) any fiscal year that precedes the calendar year in which the 11
260	260	amendment is enacted. 12
261	261
262	262	SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
263	263	as follows: 14
264	264
265	265	Article – Tax – General 15
266	266
267	267	10–751. 16
268	268
269	269	(a) (1) In this section the following words have the meanings indicated. 17
270	270
271	271	(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 18
272	272
273	273	(i) is a dependent for purposes of § 152 of the Internal Revenue Code 19
274	274	IN EFFECT ON DECEMBER 31, 2024; and 20
275	275
276	276	(ii) 1. is under the age of 6 years; or 21
277	277
278	278	2. A. is under the age of 17 years; and 22
279	279
280	280	B. is a child with a disability, as defined under § 8–401 of the 23
281	281	Education Article. 24
282	282
283	283	(3) “Taxpayer” means: 25
284	284
285	285	(i) an individual filing an income tax return; or 26
286	286
287	287	(ii) a married couple filing a joint income tax return. 27
288	288	SENATE BILL 859 7
289	289
290	290
291	291	(b) A taxpayer who is a resident and has federal adjusted gross income for the 1
292	292	taxable year of $15,000 or less may claim a credit against the State income tax for each 2
293	293	qualified child in an amount equal to $500. 3
294	294
295	295	(c) If the credit allowed under this section in any taxable year exceeds the State 4
296	296	income tax for that taxable year, the taxpayer may claim a refund in the amount of the 5
297	297	excess. 6
298	298
299	299	SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 7
300	300	as follows: 8
301	301
302	302	Article – Tax – General 9
303	303
304	304	10–102.2. 10
305	305
306	306	(A) IN THIS SECTION , “PASS–THROUGH ENTITY ” AND “PASS–THROUGH 11
307	307	ENTITY’S TAXABLE INCOME ” HAVE THE MEANINGS ST ATED IN § 10–102.1 OF THIS 12
308	308	SUBTITLE. 13
309	309
310	310	(B) IN ADDITION TO THE STATE INCOME TAX IMPOSED UNDER THIS 14
311	311	SUBTITLE, FOR A TAXABLE YEAR B EGINNING AFTER DECEMBER 31, 2026, BUT 15
312	312	BEFORE JANUARY 1, 2033, EACH CORPORATION AND PASS–THROUGH ENTITY SHALL 16
313	313	PAY A BUSINESS TRANS PORTATION FEE IN ACC ORDANCE WITH THIS SE CTION. 17
314	314
315	315	(C) THE BUSINESS TRANSPOR TATION FEE IMPOSED UNDER THIS SECTION 18
316	316	SHALL EQUAL 2.5% OF THE AMOUNT OF THE CORPORATION ’S MARYLAND TAXABLE 19
317	317	INCOME OR PASS –THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS 20
318	318	$10,000,000. 21
319	319
320	320	(D) RETURNS AND PAYMENTS OF THE BUSINESS TRAN SPORTATION FEE 22
321	321	SHALL BE DUE AND P AYABLE IN THE SAME M ANNER AS RETURNS AND PAYMENTS OF 23
322	322	THE STATE INCOME TAX UNDE R SUBTITLES 8 AND 9 OF THIS TITLE. 24
323	323
324	324	(E) NOTWITHSTANDING ANY O THER PROVISION OF LA W, A TAXPAYER MAY 25
325	325	NOT CLAIM ANY CREDIT AGAINST THE BUSINESS TRANSPORTATION FEE I MPOSED 26
326	326	UNDER THI S SECTION EXCEPT FOR CREDITS FOR INSTALLM ENT PAYMENTS , 27
327	327	ESTIMATED PAYMENTS M ADE WITH A REQUEST F OR AN EXTENSION OF T IME FOR 28
328	328	FILING A RETURN , OR OVERPAYMENTS FROM PRIOR PERIODS . 29
329	329
330	330	(F) THE COMPTROLLER SHALL DIS TRIBUTE REVENUE FROM THE BUSINESS 30
331	331	TRANSPORTATION FEE IMPOSED UNDER TH IS SECTION TO THE TRANSPORTATION 31
332	332	TRUST FUND ESTABLISHED UNDE R § 3–216 OF THE TRANSPORTATION ARTICLE. 32
333	333
334	334	(G) THE COMPTROLLER SHALL ADO PT REGULATIONS TO IM PLEMENT THIS 33 8 SENATE BILL 859
335	335
336	336
337	337	SECTION. 1
338	338
339	339	10–104. 2
340	340
341	341	The income tax does not apply to the income of: 3
342	342
343	343	(5) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 4
344	344	subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 5
345	345
346	346	(6) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 6
347	347	subtitle and § 10–304(3) of this title, an S corporation; 7
348	348
349	349	(8) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 8
350	350	subtitle, a limited liability company as defined under Title 4A of the Corporations and 9
351	351	Associations Article to the extent that the company is taxable as a partnership, as defined 10
352	352	in § 761 of the Internal Revenue Code. 11
353	353
354	354	SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 12
355	355	as follows: 13
356	356
357	357	Article – Tax – General 14
358	358
359	359	10–210.1. 15
360	360
361	361	(b) In addition to the modifications under §§ 10–204 through 10–210 of this 16
362	362	subtitle, to determine Maryland adjusted gross income of an individual: 17
363	363
364	364	(2) an amount is added to or subtracted from federal adjusted gross income 18
365	365	to determine the net operating loss deduction allowed under § 172 of the Internal Revenue 19
366	366	Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a 20
367	367	carryback period of up to 5 years, PROVIDED THAT ONLY T HE FIRST $500,000 OF NET 21
368	368	OPERATING LOSSES MAY BE ALLOWED FOR A TAX ABLE YEAR BEGINNING AFTER 22
369	369	DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2032; 23
370	370
371	371	10–310. 24
372	372
373	373	In addition to the modifications under §§ 10–305 through 10–309 of this subtitle, to 25
374	374	determine Maryland modified income the federal taxable income of a corporation shall be 26
375	375	adjusted as provided for an individual under § 10–210.1 of this title. 27
376	376
377	377	10–402. 28
378	378
379	379	(d) (1) (i) In this paragraph: 29
380	380
381	381	1. “manufacturing corporation” means a domestic or foreign 30
382	382	corporation which is primarily engaged in activities that, in accordance with the North 31 SENATE BILL 859 9
383	383
384	384
385	385	American Industrial Classification System (NAICS), United States Manual, United States 1
386	386	Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 2
387	387	33; and 3
388	388
389	389	2. “manufacturing corporation” does not include a refiner, as 4
390	390	defined in § 10–101 of the Business Regulation Article. 5
391	391
392	392	(ii) If a manufacturing corporation carries on its trade or business 6
393	393	within and outside the State and the trade or business is a unitary business, the part of the 7
394	394	corporation’s Maryland modified income derived from or reasonably attributable to trade 8
395	395	or business carried on in the State shall be determined using a single sales factor 9
396	396	apportionment formula, by multiplying its Maryland modified income by 100% of the sales 10
397	397	factor. 11
398	398
399	399	(iii) In filing its tax return for each year, a manufacturing corporation 12
400	400	shall certify that the NAICS Code reported on its Maryland return is consistent with that 13
401	401	reported to other government agencies. 14
402	402
403	403	(iv) If the Comptroller determines that a corporation has submitted 15
404	404	information that incorrectly classifies the corporation as a manufacturing corporation 16
405	405	under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation 17
406	406	in an appropriate manner. 18
407	407
408	408	(2) Except as provided in paragraphs (1) and (3) of this subsection: 19
409	409
410	410	(i) for a taxable year beginning after December 31, 2017, but before 20
411	411	January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s 21
412	412	Maryland modified income derived from or reasonably attributable to trade or business 22
413	413	carried on in the State shall be determined using a 3–factor apportionment fraction: 23
414	414
415	415	1. the numerator of which is the sum of the property factor, 24
416	416	the payroll factor, and 3 times the sales factor; and 25
417	417
418	418	2. the denominator of which is 5; 26
419	419
420	420	(ii) for a taxable year beginning after December 31, 2018, but before 27
421	421	January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s 28
422	422	Maryland modified income derived from or reasonably attributable to trade or business 29
423	423	carried on in the State shall be determined using a 3–factor apportionment fraction: 30
424	424
425	425	1. the numerator of which is the sum of the property factor, 31
426	426	the payroll factor, and 4 times the sales factor; and 32
427	427
428	428	2. the denominator of which is 6; 33
429	429
430	430	(iii) for a taxable year beginning after December 31, 2019, but before 34
431	431	January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s 35 10 SENATE BILL 859
432	432
433	433
434	434	Maryland modified income derived from or reasonably attributable to trade or business 1
435	435	carried on in the State shall be determined using a 3–factor apportionment fraction: 2
436	436
437	437	1. the numerator of which is the sum of the property factor, 3
438	438	the payroll factor, and 5 times the sales factor; and 4
439	439
440	440	2. the denominator of which is 7; 5
441	441
442	442	(iv) for a taxable year beginning after December 31, 2020, but before 6
443	443	January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s 7
444	444	Maryland modified income derived from or reasonably attributable to trade or business 8
445	445	carried on in the State shall be determined using a 3–factor apportionment fraction: 9
446	446
447	447	1. the numerator of which is the sum of the property factor, 10
448	448	the payroll factor, and 6 times the sales factor; and 11
449	449
450	450	2. the denominator of which is 8; and 12
451	451
452	452	(v) for a taxable year beginning after December 31, 2021, if the trade 13
453	453	or business is a unitary business, the part of the corporation’s Maryland modified income 14
454	454	derived from or reasonably attributable to trade or business carried on in the State shall 15
455	455	be determined using a single sales factor apportionment formula, by multiplying its 16
456	456	Maryland modified income by 100% of the sales factor. 17
457	457
458	458	(3) (i) Each year a worldwide headquartered company that filed a 18
459	459	federal corporate income tax return for the taxable year may elect to calculate its Maryland 19
460	460	modified income derived from or reasonably attributable to trade or business carried on in 20
461	461	the State using a 3–factor apportionment fraction: 21
462	462
463	463	1. the numerator of which is the sum of the property factor, 22
464	464	the payroll factor, and twice the sales factor; and 23
465	465
466	466	2. the denominator of which is 4. 24
467	467
468	468	(ii) To determine under subparagraph (i) of this paragraph the 25
469	469	Maryland modified income of a corporation or group of corporations that is a worldwide 26
470	470	headquartered company that filed a federal corporate income tax return for the taxable 27
471	471	year, gross income from intangible investments, including dividends, interest, royalties, 28
472	472	and capital gains from the sale of intangible property, shall be included in the calculation 29
473	473	of the numerator based on the average of the property and payroll factors. 30
474	474
475	475	(4) The property factor under paragraphs (2) and (3) of this subsection shall 31
476	476	include: 32
477	477
478	478	(i) rented and owned real property; and 33
479	479
480	480	(ii) tangible personal property located in the State and used in the 34 SENATE BILL 859 11
481	481
482	482
483	483	trade or business. 1
484	484
485	485	(5) (I) FOR A TAXABLE YEAR BE GINNING AFTER DECEMBER 31, 2
486	486	2026, SALES OF TANGIBLE PE RSONAL PROPERTY SHAL L BE INCLUDED IN THE 3
487	487	NUMERATOR OF THE SAL ES FACTOR UNDER PARA GRAPH (1), (2), OR (3) OF THIS 4
488	488	SUBSECTION IF: 5
489	489
490	490	1. THE PROPERTY IS DELI VERED OR SHIPPED TO A 6
491	491	PURCHASER WITHIN THE STATE, REGARDLESS OF THE FR EE ON BOARD (F.O.B.) 7
492	492	POINT OR OTHER CONDI TIONS OF THE SALE ; OR 8
493	493
494	494	2. THE PROPERTY IS SHIP PED FROM AN OFFICE , A 9
495	495	STORE, A WAREHOUSE , A FACTORY, OR ANY OTHER PLACE O F STORAGE IN THE 10
496	496	STATE AND THE CORPORATION IS NOT TAXABLE IN THE S TATE OF THE PURCHASE R. 11
497	497
498	498	(II) FOR PURPOSES OF SUBPA RAGRAPH (I) OF THIS 12
499	499	PARAGRAPH , A CORPORATION IS TAX ABLE IN A STATE IF: 13
500	500
501	501	1. IN THAT STATE THE CO RPORATION IS SUBJECT TO A 14
502	502	NET INCOME TAX , FRANCHISE TAX MEASUR ED BY NET INCOME , FRANCHISE TAX FOR 15
503	503	THE PRIVILEGE OF DOI NG BUSINESS, OR CORPORATE STOCK T AX; OR 16
504	504
505	505	2. THAT STATE HAS JURIS DICTION TO SUBJECT T HE 17
506	506	TAXPAYER TO A NET IN COME TAX, REGARDLESS OF WHETHE R, IN FACT, THE STATE 18
507	507	IMPOSES A TAX. 19
508	508
509	509	SECTION 5. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 20
510	510	as follows: 21
511	511
512	512	Article – Tax – General 22
513	513
514	514	10–102.3. 23
515	515
516	516	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 24
517	517	INDICATED. 25
518	518
519	519	(2) “MEMBER” MEANS: 26
520	520
521	521	(I) A SHAREHOLDER OF AN S CORPORATION ; 27
522	522
523	523	(II) A GENERAL OR LIMITED PARTNER O F A PARTNERSHIP , 28
524	524	LIMITED PARTNERSHIP , OR LIMITED LIABILITY PARTNERSHIP ; 29
525	525
526	526	(III) A MEMBER OF A LIMITE D LIABILITY COMPANY ; OR 30 12 SENATE BILL 859
527	527
528	528
529	529
530	530	(IV) A BENEFICIARY OF A B USINESS TRUST OR STA TUTORY 1
531	531	TRUST. 2
532	532
533	533	(3) “PASS–THROUGH ENTITY ” MEANS: 3
534	534
535	535	(I) AN S CORPORATION ; 4
536	536
537	537	(II) A PARTNERSHIP ; 5
538	538
539	539	(III) A LIMITED LIABILITY COMPANY THAT IS NOT TAXED AS A 6
540	540	CORPORATION UNDER TH IS TITLE; OR 7
541	541
542	542	(IV) A BUSINESS TRUST OR STATUTORY TRUST THAT IS NOT 8
543	543	TAXED AS A CORPORATI ON UNDER THIS TITLE . 9
544	544
545	545	(B) THIS SECTION DOES N OT APPLY TO THE INCO ME OF A PASS–THROUGH 10
546	546	ENTITY THAT IS A SOL E PROPRIETORSHIP . 11
547	547
548	548	(C) (1) IN ADDITION TO ANY OT HER TAX IMPOSED UNDE R THIS TITLE, A 12
549	549	TAX IS IMPOSED ON TH E DISTRIBUTIVE SHARE OR PRO RATA SHARE OF INCOME 13
550	550	DISTRIBUTED TO A MEM BER OF A PASS –THROUGH ENTITY FROM THE 14
551	551	PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS $1,000,000. 15
552	552
553	553	(2) THE RATE OF THE TAX I MPOSED UNDER PARAGRA PH (1) OF THIS 16
554	554	SUBSECTION IS 8.25%. 17
555	555
556	556	10–104. 18
557	557
558	558	The income tax does not apply to the income of: 19
559	559
560	560	(5) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 20
561	561	this subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 21
562	562
563	563	(6) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 22
564	564	this subtitle and § 10–304(3) of this title, an S corporation; 23
565	565
566	566	(8) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 24
567	567	this subtitle, a limited liability company as defined under Title 4A of the Corporations and 25
568	568	Associations Article to the extent that the company is taxable as a partnership, as defined 26
569	569	in § 761 of the Internal Revenue Code. 27
570	570
571	571	10–105. 28
572	572
573	573	(a) (1) For an individual other than an individual described in paragraph (2) 29 SENATE BILL 859 13
574	574
575	575
576	576	of this subsection, the State income tax rate is: 1
577	577
578	578	(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 2
579	579	INCOME DOES NOT EXCE ED $250,001: 3
580	580
581	581	[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 4
582	582
583	583	[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 5
584	584
585	585	[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 6
586	586
587	587	[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 7
588	588	$100,000; 8
589	589
590	590	[(v)] 5. 5% of Maryland taxable income of $100,001 through 9
591	591	$125,000; 10
592	592
593	593	[(vi)] 6. 5.25% of Maryland taxable income of $125,001 through 11
594	594	$150,000; AND 12
595	595
596	596	[(vii)] 7. 5.5% of Maryland taxable income of $150,001 through 13
597	597	$250,000; [and] 14
598	598
599	599	[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 15
600	600	MARYLAND TAXABLE INCO ME IS AT LEAST $250,001 BUT DOES NOT EXCEED 16
601	601	$500,000, 6% of Maryland taxable income [in excess of $250,000]; 17
602	602
603	603	(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 18
604	604	INCOME IS AT LEAST $500,001 BUT DOES NOT EXCEED $1,000,000, 6.5% OF 19
605	605	MARYLAND TAXABLE INCO ME; AND 20
606	606
607	607	(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 21
608	608	INCOME IS AT LEAST $1,000,001, 7% OF MARYLAND TAXABLE INCO ME. 22
609	609
610	610	(2) For spouses filing a joint return or for a surviving spouse or head of 23
611	611	household as defined in § 2 of the Internal Revenue Code, the State income tax rate is: 24
612	612
613	613	(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 25
614	614	INCOME DOES NOT EXCE ED $300,001: 26
615	615
616	616	[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 27
617	617
618	618	[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 28
619	619
620	620	[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 29 14 SENATE BILL 859
621	621
622	622
623	623
624	624	[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 1
625	625	$150,000; 2
626	626
627	627	[(v)] 5. 5% of Maryland taxable income of $150,001 through 3
628	628	$175,000; 4
629	629
630	630	[(vi)] 6. 5.25% of Maryland taxable income of $175,001 through 5
631	631	$225,000; AND 6
632	632
633	633	[(vii)] 7. 5.5% of Maryland taxable income of $225,001 through 7
634	634	$300,000; [and] 8
635	635
636	636	[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 9
637	637	MARYLAND TAXABLE INCO ME IS AT LEAST $300,001 BUT DOES NOT EXCEED 10
638	638	$600,000, 6% of Maryland taxable income [in excess of $300,000]; 11
639	639
640	640	(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 12
641	641	INCOME IS AT LEAST $600,001 BUT DOES NOT EXCEED $1,200,000, 6.5% OF 13
642	642	MARYLAND TAXABLE INCO ME; AND 14
643	643
644	644	(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 15
645	645	INCOME IS AT LEAST $1,200,001, 7% OF MARYLAND TAXABLE INCO ME. 16
646	646
647	647	(3) (I) IN THIS PARAGRAPH , “NET INVESTMENT INCOM E” HAS THE 17
648	648	MEANING STATED UNDER § 1411(C) OF THE INTERNAL REVENUE CODE, EXCLUDING 18
649	649	THE NET GAIN ATTRIBU TABLE TO THE DISPOSI TION OF PARCELS OF P ROPERTY, OR 19
650	650	PORTIONS THEREOF , THAT ARE AGRICULTURAL LAND AN D BUILDINGS. 20
651	651
652	652	(II) IN ADDITION TO THE TA X CALCULATED UNDER P ARAGRAPH 21
653	653	(1) OR (2) OF THIS SUBSECTION , FOR AN INDIVIDUAL WI TH FEDERAL ADJUSTED 22
654	654	GROSS INCOME IN EXCE SS OF $350,000, A TAX IS IMPOSED ON THE NET INVESTMENT 23
655	655	INCOME OF THE IND IVIDUAL AT A RATE OF 1%. 24
656	656
657	657	(III) FOR AN INDIVIDUAL WHO IS NOT A RESIDENT OF THE STATE 25
658	658	FOR THE ENTIRE TAXAB LE YEAR, THE TAX UNDER THIS P ARAGRAPH SHALL BE 26
659	659	CALCULATED AS IF THE INDIVIDUAL IS A RESI DENT OF THE STATE, MULTIPLIED BY 27
660	660	A FRACTION IN WHICH : 28
661	661
662	662	1. THE NUMERATOR IS NET INVESTMENT INCOME 29
663	663	ALLOCABLE TO THE STATE; AND 30
664	664
665	665	2. THE DENOMINATOR IS T HE TOTAL OF NET 31
666	666	INVESTMENT INCOME FO R THE TAXABLE YEAR . 32 SENATE BILL 859 15
667	667
668	668
669	669
670	670	10–704. 1
671	671
672	672	(a) In this section, “taxpayer” means: 2
673	673
674	674	(1) an individual filing an income tax return; or 3
675	675
676	676	(2) a married couple filing a joint income tax return. 4
677	677
678	678	(b) (1) A resident who is a taxpayer may claim a credit against the State 5
679	679	income tax for a taxable year in the amount determined under subsection (c) of this section 6
680	680	for earned income. 7
681	681
682	682	(2) A resident who is a taxpayer may claim a credit against the county 8
683	683	income tax for a taxable year in the amount determined under subsection (d) of this section 9
684	684	for earned income. 10
685	685
686	686	(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 11
687	687	subject to subsection (e) of this section, the credit allowed against the State income tax 12
688	688	under subsection (b)(1) of this section is the lesser of: 13
689	689
690	690	(i) 50% of the earned income credit allowable for the taxable year 14
691	691	under § 32 of the Internal Revenue Code or that would have been allowable but for the 15
692	692	limitation under § 32(m) of the Internal Revenue Code; or 16
693	693
694	694	(ii) the State income tax for the taxable year. 17
695	695
696	696	(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 18
697	697	of this section, a resident may claim a refund in the amount, if any, by which the applicable 19
698	698	percentage specified in subparagraph (ii) of this paragraph of the earned income credit 20
699	699	allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 21
700	700	income tax for the taxable year. 22
701	701
702	702	(ii) Subject to subparagraph (iii) of this paragraph, the applicable 23
703	703	percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 24
704	704	to be used for purposes of determining the refund provided under this paragraph is: 25
705	705
706	706	1. 25% for a taxable year beginning after December 31, 2013, 26
707	707	but before January 1, 2015; 27
708	708
709	709	2. 25.5% for a taxable year beginning after December 31, 28
710	710	2014, but before January 1, 2016; 29
711	711
712	712	3. 26% for a taxable year beginning after December 31, 2015, 30
713	713	but before January 1, 2017; 31
714	714	16 SENATE BILL 859
715	715
716	716
717	717	4. 27% for a taxable year beginning after December 31, 2016, 1
718	718	but before January 1, 2018; 2
719	719
720	720	5. 28% for a taxable year beginning after December 31, 2017, 3
721	721	but before January 1, 2020; and 4
722	722
723	723	6. 45% for a taxable year beginning after December 31, 2019. 5
724	724
725	725	(iii) For purposes of determining the refund provided under this 6
726	726	paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 7
727	727	calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 8
728	728
729	729	(3) (i) For purposes of this section for an individual without a qualifying 9
730	730	child, the credit allowable for a taxable year under § 32 of the Internal Revenue Code is 10
731	731	calculated without regard to: 11
732	732
733	733	1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 12
734	734	the Internal Revenue Code; or 13
735	735
736	736	2. the limitation under § 32(m) of the Internal Revenue Code. 14
737	737
738	738	(ii) [Subject to subparagraph (iii) of this paragraph, the] THE credit 15
739	739	allowed against the State income tax under subsection (b)(1) of this section for an individual 16
740	740	without a qualifying child is: 17
741	741
742	742	1. equal to 100% of the earned income credit allowable for a 18
743	743	taxable year under § 32 of the Internal Revenue Code; AND 19
744	744
745	745	2. CALCULATED BY SUBSTI TUTING: 20
746	746
747	747	A. $7,840 FOR THE EARNED INCOM E AMOUNT IN § 21
748	748	32(B)(2)(A) OF THE INTERNAL REVENUE CODE; AND 22
749	749
750	750	B. $19,160 FOR THE PHASE –OUT AMOUNT IN § 23
751	751	32(B)(2)(A) OF THE INTERNAL REVENUE CODE. 24
752	752
753	753	[(iii) For a taxable year beginning after December 31, 2019, but before 25
754	754	January 1, 2023, the tax credit allowed under this paragraph may not exceed $530 for a 26
755	755	taxable year.] 27
756	756
757	757	(III) 1. FOR EACH TAXABLE YEAR BEGINNING AFTER 28
758	758	DECEMBER 31, 2028, THE EARNED INCOME AM OUNT AND PHASE –OUT AMOUNT IN 29
759	759	SUBPARAGRAPH (II)2 OF THIS PARA GRAPH SHALL BE INCRE ASED BY AN AMOUNT 30
760	760	EQUAL TO THE PRODUCT OF MULTIPLYING EACH AMOUNT BY THE COST –OF–LIVING 31
761	761	ADJUSTMENT SPECIFIED IN SUBSUBPARAGRAPH 2 OF THIS SUBPARAGRAPH . 32 SENATE BILL 859 17
762	762
763	763
764	764
765	765	2. FOR THE PURPOSES OF T HIS SUBPARAGRAPH , THE 1
766	766	COST–OF–LIVING ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE 2
767	767	MEANING OF § 1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR 3
768	768	IN WHICH THE TAXABLE YEAR BEGINS, AS DETERMINED BY THE COMPTROLLER BY 4
769	769	SUBSTITUTING “CALENDAR YEAR 2022” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) 5
770	770	OF THE INTERNAL REVENUE CODE. 6
771	771
772	772	3. IF ANY INCREASE DETER MINED UNDER 7
773	773	SUBSUBPARAGRAPH 1 OF THIS SUBPARAGRAPH IS NOT A MULTIPLE OF $10, THE 8
774	774	INCREASE SHALL BE RO UNDED DOWN TO THE NE XT LOWEST MULTIPLE O F $10. 9
775	775
776	776	(iv) If the tax credit allowed under this paragraph in any taxable year 10
777	777	exceeds the total tax otherwise payable by the individual without a qualifying child for that 11
778	778	taxable year, the individual may claim a refund in the amount of the excess. 12
779	779
780	780	(d) (1) Except as provided in paragraph (2) of this subsection and subject to 13
781	781	subsection (e) of this section, the credit allowed against the county income tax under 14
782	782	subsection (b)(2) of this section is the lesser of: 15
783	783
784	784	(i) the earned income credit allowable for the taxable year under § 16
785	785	32 of the Internal Revenue Code or that would have been allowable but for the limitation 17
786	786	under § 32(m) of the Internal Revenue Code multiplied by 10 times the county income tax 18
787	787	rate for the taxable year; or 19
788	788
789	789	(ii) the county income tax for the taxable year. 20
790	790
791	791	(2) (i) A county may provide, by law, for a refundable county earned 21
792	792	income credit as provided in this paragraph. 22
793	793
794	794	(ii) If a county provides for a refundable county earned income credit 23
795	795	under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 24
796	796	which it is applicable, the county shall give the Comptroller notice of the refundable county 25
797	797	earned income credit. 26
798	798
799	799	(iii) If a county provides for a refundable county earned income credit 27
800	800	under this paragraph, a resident may claim a refund of the amount, if any, by which the 28
801	801	product of multiplying the credit allowable for the taxable year under § 32 of the Internal 29
802	802	Revenue Code or that would have been allowable but for the limitation under § 32(m) of 30
803	803	the Internal Revenue Code by 5 times the county income tax rate for the taxable year 31
804	804	exceeds the county income tax for the taxable year. 32
805	805
806	806	(iv) The amount of any refunds payable under a refundable county 33
807	807	earned income credit operates to reduce the income tax revenue from individuals 34
808	808	attributable to the county income tax for that county. 35
809	809	18 SENATE BILL 859
810	810
811	811
812	812	(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 1
813	813	resident of the State for only a part of the year, the amount of the credit or refund allowed 2
814	814	under this section shall be determined based on the part of the earned income credit 3
815	815	allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 4
816	816	to Maryland, determined by multiplying the federal earned income credit by a fraction: 5
817	817
818	818	(i) the numerator of which is the Maryland adjusted gross income of 6
819	819	the individual; and 7
820	820
821	821	(ii) the denominator of which is the federal adjusted gross income of 8
822	822	the individual. 9
823	823
824	824	(2) For purposes of determining the amount of the credit or refund under 10
825	825	paragraph (1) of this subsection, the part of the earned income credit allowable for the 11
826	826	taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 12
827	827	limitation under § 32(m) of the Internal Revenue Code. 13
828	828
829	829	10–751. 14
830	830
831	831	(a) (1) In this section the following words have the meanings indicated. 15
832	832
833	833	(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 16
834	834
835	835	(i) is a dependent for purposes of § 152 of the Internal Revenue Code 17
836	836	in effect on December 31, 2024; and 18
837	837
838	838	(ii) [1.] is under the age of [6] 18 years[; or 19
839	839
840	840	2. A. is under the age of 17 years; and 20
841	841
842	842	B. is a child with a disability, as defined under § 8–401 of the 21
843	843	Education Article]. 22
844	844
845	845	(3) “Taxpayer” means: 23
846	846
847	847	(i) an individual filing an income tax return; or 24
848	848
849	849	(ii) a married couple filing a joint income tax return. 25
850	850
851	851	(b) [A] SUBJECT TO SUBSECTION (D) OF THIS SECTION, A taxpayer who is a 26
852	852	resident [and has federal adjusted gross income for the taxable year of $15,000 or less] may 27
853	853	claim a credit against the State income tax for each qualified child in an amount equal to: 28
854	854
855	855	(1) $750, IF THE QUALIFIED CHI LD IS UNDER THE AGE OF 6 YEARS; OR 29
856	856
857	857	(2) $500, IF THE QUALIFIED CHI LD IS AT LEAST 6 YEARS OLD. 30 SENATE BILL 859 19
858	858
859	859
860	860
861	861	(C) (1) FOR EACH TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1
862	862	2028, THE AMOUNTS SPECIFIE D IN SUBSECTION (B) OF THIS SECTION SHAL L BE 2
863	863	INCREASED BY AN AMOU NT EQUAL TO THE PROD UCT OF MULTIPLYING T HE 3
864	864	AMOUNTS BY THE COST –OF–LIVING ADJUSTMENT SP ECIFIED IN THIS SUBS ECTION. 4
865	865
866	866	(2) FOR THE PURPOSES OF T HIS SUBSECTION , THE COST–OF–LIVING 5
867	867	ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE MEANING OF § 6
868	868	1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR IN WHICH THE 7
869	869	TAXABLE YEAR BEGINS , AS DETERMINED BY THE COMPTROLLER , BY SUBSTITUTING 8
870	870	“CALENDAR YEAR 2027” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) OF THE 9
871	871	INTERNAL REVENUE CODE. 10
872	872
873	873	(3) IF ANY INCREASE DETER MINED UNDER PARAGRAP H (1) OF THIS 11
874	874	SUBSECTION IS NOT A MULTIPLE OF $50, THE INCREASE SHALL B E ROUNDED DOWN 12
875	875	TO THE NEXT LOWEST M ULTIPLE OF $50. 13
876	876
877	877	(D) THE AMOUNT OF THE CRE DIT ALLOWED UNDER SU BSECTION (B) OF 14
878	878	THIS SECTION FOR A Q UALIFIED CHILD SHALL BE REDUCED, BUT NOT BELOW ZERO , 15
879	879	BY $50 FOR EACH $1,000, OR FRACTION THEREOF , BY WHICH THE TAXPAYE R’S 16
880	880	FEDERAL ADJUSTED GRO SS INCOME EXCEEDS : 17
881	881
882	882	(1) $65,000 IN THE CASE OF A MAR RIED COUPLE FILING A JOINT 18
883	883	RETURN OR A SURVIVING SPOUS E OR HEAD OF HOUSEHO LD AS DEFINED IN § 2 OF 19
884	884	THE INTERNAL REVENUE CODE FILING AN INCOME TAX RETURN; 20
885	885
886	886	(2) $32,500 IN THE CASE OF A MAR RIED INDIVIDUAL FILI NG 21
887	887	SEPARATELY; OR 22
888	888
889	889	(3) $45,000 IN THE CASE OF ANY O THER INDIVIDUAL . 23
890	890
891	891	[(c)] (E) If the credit allowed under this section in any taxable year exceeds the 24
892	892	State income tax for that taxable year, the taxpayer may claim a refund in the amount of 25
893	893	the excess. 26
894	894
895	895	SECTION 6. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 27
896	896	as follows: 28
897	897
898	898	Article – Tax – General 29
899	899
900	900	10–402.1. 30
901	901
902	902	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 31
903	903	INDICATED. 32 20 SENATE BILL 859
904	904
905	905
906	906
907	907	(2) “COMBINED GROUP ” MEANS A GROUP OF COR PORATIONS: 1
908	908
909	909	(I) THAT IS ENGAGED IN A UNITARY BUSINESS ; 2
910	910
911	911	(II) IN WHICH MORE THAN 50% OF THE VOTING STOCK OF EACH 3
912	912	MEMBER IS DIRECTLY O R INDIRECTLY OWNED B Y: 4
913	913
914	914	1. A COMMON OWNER OR CO MMON OWNERS , EITHER 5
915	915	CORPORATE OR NONCORP ORATE; OR 6
916	916
917	917	2. ONE OR MORE MEMBER C ORPORATIONS OF THE 7
918	918	GROUP; 8
919	919
920	920	(III) THE MEMBERS OF WHICH ARE SUBJECT TO THE I NCOME TAX 9
921	921	OR WOULD BE SUBJECT TO THE INCOME TAX IF DOING BUSINESS IN TH E STATE; AND 10
922	922
923	923	(IV) CONSISTING OF ANY OT HER MEMBERS UNDER TH E 11
924	924	CIRCUMSTANCES AND TO THE EXTENT PROVIDED IN REGULATIONS ADOPT ED BY 12
925	925	THE COMPTROLLER TO PREVEN T THE AVOIDANCE OF T AX OR TO REFLECT C LEARLY 13
926	926	THE INCOME OF ANY ME MBER OF THE COMBINED GROUP FOR ANY PERIOD . 14
927	927
928	928	(3) “COMBINED RETURN ” MEANS A TAX RETURN F OR THE COMBINED 15
929	929	GROUP CONTAINING INF ORMATION AS PROVIDED IN THIS SECTION OR O THERWISE 16
930	930	REQUIRED BY THE COMPTROLLER . 17
931	931
932	932	(4) “UNITARY BUSINESS ” MEANS A SINGLE ECONO MIC ENTERPRISE 18
933	933	THAT IS MADE EITHER OF SEPARATE PARTS OF A SINGLE BUSINESS EN TITY OR OF A 19
934	934	COMMONLY CONTROLLED GROUP OF BUSINESS EN TITIES THAT ARE SUFF ICIENTLY 20
935	935	INTERDEPENDENT , INTEGRATED, AND INTERRELATED THR OUGH THEIR ACTIVITIE S 21
936	936	SO AS TO PROVIDE MUTUAL BENEF IT THAT PRODUCES A S HARING OR EXCHANGE O F 22
937	937	VALUE AMONG THEM AND A SIGNIFICANT FLOW O F VALUE TO THE SEPAR ATE PARTS. 23
938	938
939	939	(B) (1) THE TERM “UNITARY BUSINESS ” SHALL BE CONSTRUED T O THE 24
940	940	BROADEST EXTENT ALLO WED UNDER THE U.S. CONSTITUTION. 25
941	941
942	942	(2) A BUSINESS CONDUCTED D IRECTLY OR INDIRECTL Y BY ONE 26
943	943	CORPORATION IS A UNI TARY BUSINESS WITH R ESPECT TO THAT PORTI ON OF A 27
944	944	BUSINESS CONDUCTED B Y ANOTHER CORPORATIO N THROUGH ITS DIRECT OR 28
945	945	INDIRECT INTEREST IN A PARTNERSHIP IF THE REQUIREMENTS OF SUBS ECTION 29
946	946	(A)(4) OF THIS SECTION ARE SATISFIED, INCLUDING IF THERE I S SYNERGY AND AN 30
947	947	EXCHANGE AND FLOW OF VALUE BETWEEN THE TW O PARTS OF THE BUSIN ESS AND 31
948	948	THE TWO CORPORATIONS ARE MEMBERS OF THE S AME COMMONLY CONTROL LED 32
949	949	GROUP. 33 SENATE BILL 859 21
950	950
951	951
952	952
953	953	(3) A BUSINESS CONDUCTED B Y A PARTNERS HIP SHALL BE TREATED 1
954	954	AS CONDUCTED BY ITS PARTNERS, WHETHER DIRECTLY HEL D OR INDIRECTLY HELD 2
955	955	THROUGH A SERIES OF PARTNERSHIPS , TO THE EXTENT OF THE PARTNER’S 3
956	956	DISTRIBUTIVE SHARE O F THE PARTNERSHIP ’S INCOME, REGARDLESS OF THE 4
957	957	PERCENTAGE OF THE PA RTNER’S OWNERSHIP INTEREST OR ITS DISTRIBUTIVE OR 5
958	958	ANY OTHER SHARE OF P ARTNERSHIP INCOME . 6
959	959
960	960	(C) (1) EXCEPT AS PROVIDED BY AND SUBJECT TO REGUL ATIONS 7
961	961	ADOPTED BY THE COMPTROLLER , FOR ALL TAXABLE YEAR S BEGINNING AFTER 8
962	962	DECEMBER 31, 2028, A CORPORATION ENGAGE D IN A UNITARY BUSINESS SHALL 9
963	963	FILE A COMBINED RETU RN, REPORTING AND PAYING TAX ON WORLDWIDE TAX ABLE 10
964	964	INCOME AS A COMBINED GROUP, REFLECTING THE AGGRE GATE INCOME TAX 11
965	965	LIABILITY OF ALL MEM BERS OF THE COMBINED GROUP THAT ARE ENGAG ED IN A 12
966	966	UNITARY BUSINESS . 13
967	967
968	968	(2) THE TAXABLE I NCOME OF A CORPORATI ON REQUIRED TO FILE 14
969	969	UNDER § 10–811(A)(2) OF THIS TITLE IS EQU AL TO THE COMBINED G ROUP’S 15
970	970	MARYLAND MODIFIED INC OME AS ADJUSTED UNDE R SUBSECTION (D)(3) OF THIS 16
971	971	SECTION. 17
972	972
973	973	(D) (1) THE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP 18
974	974	EQUALS THE PRODUCT OF: 19
975	975
976	976	(I) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND 20
977	977	MODIFIED INCOME , AS DETERMINED UNDER PARAGRAPH (2) OF THIS SUBSECTION 21
978	978	AND ADJUSTED UNDER P ARAGRAPH (3) OF THIS SUBSECTION ; AND 22
979	979
980	980	(II) THE COMBINED GROUP ’S MARYLAND APPORTIONMEN T 23
981	981	FACTOR, AS DETERMINED UNDER PAR AGRAPH (4) OF THIS SUBSECTION . 24
982	982
983	983	(2) (I) SUBJECT TO SUBPARAGRA PHS (II) THROUGH (IV) OF THIS 25
984	984	PARAGRAPH , THE APPORTIONABLE MARYLAND MODIFIED INC OME OF THE 26
985	985	COMBINED GROUP EQUAL S THE SUM OF THE COR PORATION’S AND EACH MEMBER ’S 27
986	986	MARYLAND MOD IFIED INCOME. 28
987	987
988	988	(II) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 29
989	989	SUBPARAGRAPH , FOR ANY MEMBER INCOR PORATED IN THE UNITED STATES OR 30
990	990	INCLUDED IN A CONSOL IDATED FEDERAL CORPO RATE INCOME TAX RETU RN, THE 31
991	991	INCOME TO BE INCLUDE D IN THE TOTAL APPOR TIONABLE INCOME OF THE 32
992	992	COMBINED GROUP IS TH E MARYLAND MODIFIED INC OME AS CALCULATED UN DER § 33
993	993	10–304 OF THIS TITLE. 34
994	994
995	995	2. THE INCOME OF EACH ME MBER SHALL BE 35 22 SENATE BILL 859
996	996
997	997
998	998	CALCULATED ON A SEPA RATE RETURN BASIS AS IF THE MEMBER WERE N OT 1
999	999	CONSOLIDATED FOR FED ERAL INCOME TAX PURP OSES. 2
1000	1000
1001	1001	(III) 1. FOR ANY MEMBER NOT IN CLUDED UNDER 3
1002	1002	SUBPARAGRAPH (II) OF THIS PARAGRAPH , THE INCOME TO BE INC LUDED IN THE 4
1003	1003	TOTAL INCOME OF THE COMBINED GROUP IS DE TERMINED AS PROVIDED UNDER 5
1004	1004	THIS SUBPARAGRAPH . 6
1005	1005
1006	1006	2. A PROFIT AND LOSS STAT EMENT SHALL BE PREPA RED 7
1007	1007	FOR EACH FOREIGN BRANCH OR CORPORATION IN THE C URRENCY IN WHICH THE 8
1008	1008	BOOKS OF ACCOUNT OF THE BRANCH OR CORPOR ATION ARE REGULARLY 9
1009	1009	MAINTAINED. 10
1010	1010
1011	1011	3. THE PROFIT AND LOSS S TATEMENT SHALL BE 11
1012	1012	ADJUSTED TO CONFORM TO GENERALLY ACCEPTE D ACCOUNTING PRINCIP LES AS 12
1013	1013	ADOPTED B Y THE U.S. FINANCIAL ACCOUNTING STANDARDS BOARD FOR THE 13
1014	1014	PREPARATION OF THE P ROFIT AND LOSS STATE MENTS, EXCEPT AS MODIFIED B Y 14
1015	1015	REGULATION . 15
1016	1016
1017	1017	4. EXCEPT AS OTHERWISE P ROVIDED BY REGULATIO N, 16
1018	1018	THE PROFIT AND LOSS STATEMENT OF EACH ME MBER OF THE COMBINED GROUP, 17
1019	1019	AND THE APPORTIONMEN T FACTORS RELATED TO EACH STATEMENT , WHETHER 18
1020	1020	UNITED STATES OR FOREIGN , SHALL BE TRANSLATED INTO THE CURRENCY IN 19
1021	1021	WHICH THE PARENT COM PANY MAINTAINS ITS B OOKS AND RECORDS . 20
1022	1022
1023	1023	5. INCOME APPORTIONED TO THE STATE SHALL BE 21
1024	1024	EXPRESSED IN UNITED STATES DOLLARS . 22
1025	1025
1026	1026	(IV) IF A UNITARY BUSINESS INCLUDES INCOME FROM A 23
1027	1027	PARTNERSHIP , THE INCOME TO BE INC LUDED IN THE TOTAL I NCOME OF THE 24
1028	1028	COMBINED GROUP EQUAL S THE DIRECT AND IND IRECT DISTRIBUTIVE S HARE OF 25
1029	1029	THE PARTNERSHIP ’S UNITARY BUSINESS I NCOME ALLOCA TED TO ANY MEMBER OF 26
1030	1030	THE COMBINED GROUP . 27
1031	1031
1032	1032	(3) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND MODIFIED 28
1033	1033	INCOME SHALL BE ADJU STED TO ELIMINATE IN TERCOMPANY TRANSACTI ONS AS 29
1034	1034	DETERMINED UNDER THE INTERNAL REVENUE CODE. 30
1035	1035
1036	1036	(4) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , THE 31
1037	1037	COMBINED GROUP ’S MARYLAND APPORTIONMEN T FACTOR IS A FRACTI ON: 32
1038	1038
1039	1039	1. THE NUMERATOR OF WHI CH IS THE SUM OF THE 33
1040	1040	CORPORATION ’S AND EACH MEMBER ’S MARYLAND FACTORS UNDE R § 10–402 OF 34
1041	1041	THIS SUBTITLE; AND 35 SENATE BILL 859 23
1042	1042
1043	1043
1044	1044
1045	1045	2. THE DENOMINATOR OF W HICH IS THE SUM OF THE 1
1046	1046	CORPORATION ’S AND EACH MEMBER ’S FACTORS UNDER § 10–402 OF THIS SUBTITLE. 2
1047	1047
1048	1048	(II) THE APPORTIONMENT FAC TORS OF PASS –THROUGH 3
1049	1049	ENTITY MEMBERS ARE I NCLUDED IN THE NUMER ATOR UNDER SUBPARAGR APH (I)1 4
1050	1050	OF THIS PARAGRAPH AN D THE DENOMINATOR UN DER SUBPARA GRAPH (I)2 OF THIS 5
1051	1051	PARAGRAPH TO THE EXT ENT OF THE CORPORATI ON’S DIRECT AND INDIREC T 6
1052	1052	DISTRIBUTIVE SHARE O F THAT ENTITY. 7
1053	1053
1054	1054	(E) (1) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 8
1055	1055	NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 9
1056	1056
1057	1057	(2) THE REGULATIONS ADOPTED BY THE COMPTROLLER SHALL BE 10
1058	1058	CONSISTENT WITH THE “PRINCIPLES FOR DETERMINING THE EXISTENCE OF A 11
1059	1059	UNITARY BUSINESS” (REG. IV.1.(B)) OF THE MODEL GENERAL ALLOCATION AND 12
1060	1060	APPORTIONMENT REGULATIONS, AS ADOPTED BY THE MULTISTATE TAX 13
1061	1061	COMMISSION. 14
1062	1062
1063	1063	10–811. 15
1064	1064
1065	1065	(A) (1) [Each member of] EXCEPT AS PROVIDED BY AND SUBJECT TO 16
1066	1066	REGULATIONS ADOPTED BY THE COMPTROLLER , an affiliated group of corporations 17
1067	1067	[shall file a separate income tax return] ENGAGED IN A UNITARY BUSINESS SHALL FILE 18
1068	1068	A COMBINED INCOME TA X RETURN REFLEC TING THE AGGREGATE I NCOME TAX 19
1069	1069	LIABILITY OF ALL THE MEMBERS OF THE AFFIL IATED GROUP THAT ARE ENGAGED IN 20
1070	1070	A UNITARY BUSINESS . 21
1071	1071
1072	1072	(2) THE RETURN REQUIRED U NDER PARAGRAPH (1) OF THIS 22
1073	1073	SUBSECTION SHALL INC LUDE THE INCOME AND APPORTIONMENT FACTOR S 23
1074	1074	DETERMINED UNDER § 10–402.1(D) OF THIS TITLE, AND ANY OTHER INFORM ATION 24
1075	1075	REQUIRED BY THE COMPTROLLER , FOR ALL MEMBERS OF T HE COMBINED GROUP 25
1076	1076	WHEREVER LOCATED OR DOING BUSINESS . 26
1077	1077
1078	1078	(3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 27
1079	1079	PARAGRAPH , THE COMBINED RETURN SHALL BE FILED UNDER THE NA ME AND 28
1080	1080	FEDERAL EMPLOYER IDE NTIFICATION NUMBER O F THE PARENT CORPORA TION IF 29
1081	1081	THE PARENT IS A MEMB ER OF THE COMBINED G ROUP. 30
1082	1082
1083	1083	(II) IF THERE IS NO PARENT CORPORATION OR IF TH E PARENT 31
1084	1084	IS NOT A MEMBER OF T HE COMBINED GROUP , THE MEMBERS OF THE COMBINED 32
1085	1085	GROUP SHALL CHOOSE A MEMBER TO FILE THE R ETURN. 33
1086	1086
1087	1087	(III) THE FILING MEMBER UND ER SUBPARAGRAPH (I) OR (II) OF 34 24 SENATE BILL 859
1088	1088
1089	1089
1090	1090	THIS PARAGRAPH SHALL CONTINUE TO FILE THE COMBINED RETURN UNLE SS THE 1
1091	1091	FILING MEMBER IS NO LONGER THE PARENT CO RPORATION OR NO LONG ER A 2
1092	1092	MEMBER OF THE COMBIN ED GROUP. 3
1093	1093
1094	1094	(4) THE RETURN SHALL BE S IGNED BY A RESPONSIB LE OFFICER OF 4
1095	1095	THE FILING MEMBER ON BEHALF OF THE COMBIN ED GROUP MEMBERS . 5
1096	1096
1097	1097	(5) MEMBERS OF THE COMBIN ED GROUP ARE JOINTLY AND 6
1098	1098	SEVERALLY LIABLE FOR THE TAX LIABILITY OF THE COMBI NED GROUP INCLUDED 7
1099	1099	IN THE COMBINED RETU RN. 8
1100	1100
1101	1101	(B) (1) THE COMPTROLLER MAY , BY REGULATION , REQUIRE THAT THE 9
1102	1102	COMBINED RETURN INCL UDE THE INCOME AND A SSOCIATED APPORTIONM ENT 10
1103	1103	FACTORS OF ENTITIES THAT ARE NOT INCLUDE D IN THE COMBINED RE PORT BUT 11
1104	1104	THAT ARE MEMBERS OF A UNITARY BUSINES S IN ORDER TO REFLEC T PROPER 12
1105	1105	APPORTIONMENT OF INC OME OF THE ENTIRE UN ITARY BUSINESS. 13
1106	1106
1107	1107	(2) IF THE COMPTROLLER DETERMINE S THAT THE REPORTED 14
1108	1108	INCOME OR LOSS OF A TAXPAYER ENGAGED IN A UNITARY BUSINESS W ITH A MEMBER 15
1109	1109	NOT INCLUDED IN THE COMBINED GROUP REPRESEN TS AN AVOIDANCE OR E VASION 16
1110	1110	OF TAX, THE COMPTROLLER MAY , ON A CASE–BY–CASE BASIS, REQUIRE THAT ALL 17
1111	1111	OR PART OF THE INCOM E AND ASSOCIATED APP ORTIONMENT FACTORS O F THE 18
1112	1112	MEMBER BE INCLUDED I N THE TAXPAYER ’S COMBINED RETURN . 19
1113	1113
1114	1114	(3) THE COMPTROLLER MAY REQUIRE : 20
1115	1115
1116	1116	(I) THE EXCLUSION OF ONE OR MORE FACTORS , THE 21
1117	1117	INCLUSION OF ONE OR MORE ADDITIONAL FACT ORS, OR THE EMPLOYMENT OF ANY 22
1118	1118	OTHER METHOD THAT WI LL FAIRLY REPRESENT THE TAXPAYER ’S BUSINESS IN THE 23
1119	1119	STATE; OR 24
1120	1120
1121	1121	(II) THE EMPLOYMENT OF AN Y OTHER METHOD TO EF FECTUATE 25
1122	1122	A PROPER REFLECTION OF THE TOTAL AMOUNT OF INCOME SUBJECT TO 26
1123	1123	APPORTIONMENT AND AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE 27
1124	1124	COMBINED GROUP ’S OR ITS MEMBERS ’ INCOME. 28
1125	1125
1126	1126	(C) THE COMPTROLLER SHALL ADO PT REG ULATIONS THAT ARE 29
1127	1127	NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 30
1128	1128
1129	1129	SECTION 7. AND BE IT FURTHER ENACTED, That, for a taxable year beginning 31
1130	1130	after December 31, 2026, but before January 1, 2028, notwithstanding §§ 13–602 and 32
1131	1131	13–702 of the Tax – General Article, the Comptroller shall assess interest and penalties 33
1132	1132	under §§ 13–602 and 13–702 of the Tax – General Article if a corporation pays estimated 34
1133	1133	income tax for the taxable year in an amount less than 90% of the tax required to be shown 35 SENATE BILL 859 25
1134	1134
1135	1135
1136	1136	on the corporation’s income tax return for the taxable year. 1
1137	1137
1138	1138	SECTION 8. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 2
1139	1139	applicable to all taxable years beginning after December 31, 2024. 3
1140	1140
1141	1141	SECTION 9. AND BE IT FURTHER ENACTED, That Section 3 of this Ac t shall take 4
1142	1142	effect July 1, 2026. 5
1143	1143
1144	1144	SECTION 10. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall 6
1145	1145	take effect July 1, 2027, and shall be applicable to all taxable years beginning after 7
1146	1146	December 31, 2026. 8
1147	1147
1148	1148	SECTION 11. AND BE IT FURTHER ENACTED, T hat Section 5 of this Act shall 9
1149	1149	take effect July 1, 2028, and shall be applicable to all taxable years beginning after 10
1150	1150	December 31, 2027. 11
1151	1151
1152	1152	SECTION 12. AND BE IT FURTHER ENACTED, That Section 6 of this Act shall 12
1153	1153	take effect July 1, 2028, and shall be applicable to all taxable years beginning after 13
1154	1154	December 31, 2028. 14
1155	1155
1156	1156	SECTION 13. AND BE IT FURTHER ENACTED, That, except as provided in 15
1157	1157	Sections 9 through 12 of this Act, this Act shall take effect July 1, 2025. 16
1158	1158