EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0859*
SENATE BILL 859
Q3, Q7 5lr2255
SB 766/24 – B&T CF HB 1014
By: Senators Hettleman, Benson, Rosapepe, Lewis Young, and M. Washington
Introduced and read first time: January 28, 2025
Assigned to: Budget and Taxation
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
requiring certain corporations to compute Maryland taxable income using a certain 27
method; requiring, subject to regulations adopted by the Comptroller, certain groups 28
of corporations to file a combined income tax return reflecting the aggregate income 29
tax liability of all the members of the group; requiring the Comptroller to adopt 30
certain regulations consistent with certain regulations adopted by the Multistate 31 2 SENATE BILL 859
Tax Commission; requiring the Comptroller to assess interest and penalties under 1
certain circumstances; and generally relating to Maryland estate tax and income tax. 2
BY repealing and reenacting, without amendments, 3
Article – Tax – General 4
Section 7–309(a) and (b)(1), (2), and (9) and 10–310 5
Annotated Code of Maryland 6
(2022 Replacement Volume and 2024 Supplement) 7
BY repealing and reenacting, with amendments, 8
Article – Tax – General 9
Section 7–309(b)(3), 10–104(5), (6), and (8), 10–105(a), 10–108(a) and (c), 10
10–210.1(b)(2), 10–402(d), 10–704, 10–751, and 10–811 11
Annotated Code of Maryland 12
(2022 Replacement Volume and 2024 Supplement) 13
BY adding to 14
Article – Tax – General 15
Section 10–102.2, 10–102.3, and 10–402.1 16
Annotated Code of Maryland 17
(2022 Replacement Volume and 2024 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Tax – General 20
Section 10–104(5), (6), and (8) 21
Annotated Code of Maryland 22
(2022 Replacement Volume and 2024 Supplement) 23
(As enacted by Section 3 of this Act) 24
BY repealing and reenacting, with amendments, 25
Article – Tax – General 26
Section 10–751 27
Annotated Code of Maryland 28
(2022 Replacement Volume and 2024 Supplement) 29
(As enacted by Section 2 of this Act) 30
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 31
That the Laws of Maryland read as follows: 32
Article – Tax – General 33
7–309. 34
(a) Notwithstanding an Act of Congress that repeals or reduces the federal credit 35
under § 2011 of the Internal Revenue Code, the provisions of this subtitle in effect before 36
the passage of the Act of Congress shall apply with respect to a decedent who dies after the 37
effective date of the Act of Congress so as to continue the Maryland estate tax in force 38 SENATE BILL 859 3
without reduction in the same manner as if the federal credit had not been repealed or 1
reduced. 2
(b) (1) Except as provided in paragraphs (2) through (9) of this subsection and 3
subsection (c) of this section, after the effective date of an Act of Congress described in 4
subsection (a) of this section, the Maryland estate tax shall be determined using: 5
(i) the federal credit allowable by § 2011 of the Internal Revenue 6
Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 7
Congress; and 8
(ii) other provisions of federal estate tax law as in effect on the date 9
of the decedent’s death. 10
(2) Except as provided in paragraphs (3) through (9) of this subsection and 11
subsection (c) of this section, if the federal estate tax is not in effect on the date of the 12
decedent’s death, the Maryland estate tax shall be determined using: 13
(i) the federal credit allowable by § 2011 of the Internal Revenue 14
Code as in effect before the reduction or repeal of the federal credit pursuant to the Act of 15
Congress; and 16
(ii) other provisions of federal estate tax law as in effect on the date 17
immediately preceding the effective date of the repeal of the federal estate tax. 18
(3) (i) Notwithstanding any increase in the unified credit allowed 19
against the federal estate tax for decedents dying after 2003, the unified credit used for 20
determining the Maryland estate tax for a decedent may not exceed the applicable credit 21
amount corresponding to an applicable exclusion amount, within the meaning of § 2010(c) 22
of the Internal Revenue Code, of: 23
1. $1,000,000 for a decedent dying before January 1, 2015; 24
2. $1,500,000 for a decedent dying on or after January 1, 25
2015, but before January 1, 2016; 26
3. $2,000,000 for a decedent dying on or after January 1, 27
2016, but before January 1, 2017; 28
4. $3,000,000 for a decedent dying on or after January 1, 29
2017, but before January 1, 2018; 30
5. $4,000,000 for a decedent dying on or after January 1, 31
2018, but before January 1, 2019; [and] 32
6. $5,000,000 for a decedent dying on or after January 1, 33
2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 34 4 SENATE BILL 859
amount calculated in accordance with paragraph (9) of this subsection; AND 1
7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 2
JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 3
CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 4
(ii) The Maryland estate tax shall be determined without regard to 5
any deduction for State death taxes allowed under § 2058 of the Internal Revenue Code. 6
(iii) Unless the federal credit allowable by § 2011 of the Internal 7
Revenue Code is in effect on the date of the decedent’s death, the federal credit used to 8
determine the Maryland estate tax may not exceed 16% of the amount by which the 9
decedent’s taxable estate, as defined in § 2051 of the Internal Revenue Code, exceeds: 10
1. $1,000,000 for a decedent dying before January 1, 2015; 11
2. $1,500,000 for a decedent dying on or after January 1, 12
2015, but before January 1, 2016; 13
3. $2,000,000 for a decedent dying on or after January 1, 14
2016, but before January 1, 2017; 15
4. $3,000,000 for a decedent dying on or after January 1, 16
2017, but before January 1, 2018; 17
5. $4,000,000 for a decedent dying on or after January 1, 18
2018, but before January 1, 2019; [and] 19
6. $5,000,000 for a decedent dying on or after January 1, 20
2019, BUT BEFORE JANUARY 1, 2026, plus any deceased spousal unused exclusion 21
amount calculated in accordance with paragraph (9) of this subsection; AND 22
7. $2,000,000 FOR A DECEDENT DYING ON OR AFTER 23
JANUARY 1, 2026, PLUS ANY DECEASED SP OUSAL UNUSED EXCLUSI ON AMOUNT 24
CALCULATED IN ACCORD ANCE WITH PARAGRAPH (9) OF THIS SUBSECTION . 25
(9) (i) In this paragraph, “deceased spousal unused exclusion amount” 26
means the applicable exclusion amount in effect at the time of the death of the last 27
predeceased spouse of the decedent under paragraph (3) of this subsection reduced by the 28
taxable estate of the last predeceased spouse: 29
1. as reported on a Maryland estate tax return filed with the 30
Comptroller; or 31
2. as reported on a federal estate tax return, if: 32
SENATE BILL 859 5
A. the last predeceased spouse was not a Maryland resident 1
and no property with a Maryland estate tax situs was includible in the gross estate of the 2
last predeceased spouse; or 3
B. the last predeceased spouse died before January 1, 2019, 4
and no Maryland estate tax return was required to be filed with respect to the predeceased 5
spouse’s estate. 6
(ii) The deceased spousal unused exclusion amount may not be taken 7
into account under paragraph (3) of this subsection unless: 8
1. if the last predeceased spouse died on or after January 1, 9
2019, a Maryland estate tax return is timely filed for the last predeceased spouse, on which 10
the deceased spousal unused exclusion amount is calculated and an irrevocable election is 11
made that the deceased spousal unused exclusion amount may be taken into account; or 12
2. if the last predeceased spouse died before January 1, 2019, 13
or was not a Maryland resident and no property with a Maryland estate tax situs was 14
includible in the gross estate of the last predeceased spouse, an election was made under § 15
2010(c) of the Internal Revenue Code on the federal estate tax return of the last 16
predeceased spouse. 17
(iii) 1. Notwithstanding any other provision of this article, the 18
Comptroller may examine a Maryland estate tax return of a predeceased spouse after the 19
time for assessing a tax under this title has expired under § 13–1101 of this article solely 20
for the purposes of determining the validity of the deceased spousal unused exclusion 21
election and the amount to be taken into account under paragraph (3) of this subsection. 22
2. This subparagraph may not be construed to authorize the 23
assessment of any additional tax with respect to the predeceased spouse’s Maryland estate 24
tax return if the period of limitation under § 13–1101 of this article has expired. 25
10–108. 26
(a) Except as provided in subsection (c) of this section and unless expressly 27
provided otherwise by law, an amendment of the Internal Revenue Code that affects the 28
determination of federal adjusted gross income or federal taxable income, does not affect 29
the determination of Maryland taxable income under this title for: 30
(1) any taxable year that begins in the calendar year in which the 31
amendment is enacted; [or] 32
(2) THE TAXABLE YEAR THA T BEGINS IN THE CALE NDAR YEAR THAT 33
IMMEDIATELY FOLLOWS THE CALENDAR YEAR IN WHICH THE AMENDMENT IS 34
ENACTED; OR 35
6 SENATE BILL 859
[(2)] (3) any taxable year that precedes the calendar year in which the 1
amendment is enacted. 2
(c) Subsection (a) of this section does not apply to an amendment of the Internal 3
Revenue Code if the Comptroller determines that the impact of the amendment on State 4
income tax revenue is less than $5,000,000 for: 5
(1) the fiscal year that begins during the calendar year in which the 6
amendment is enacted; [or] 7
(2) THE FISCAL YEAR THAT BEGINS DURING THE CA LENDAR YEAR 8
IMMEDIATELY FOLLOWIN G THE CALENDAR YEAR IN WHICH THE AMENDMEN T IS 9
ENACTED; OR 10
[(2)] (3) any fiscal year that precedes the calendar year in which the 11
amendment is enacted. 12
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
as follows: 14
Article – Tax – General 15
10–751. 16
(a) (1) In this section the following words have the meanings indicated. 17
(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 18
(i) is a dependent for purposes of § 152 of the Internal Revenue Code 19
IN EFFECT ON DECEMBER 31, 2024; and 20
(ii) 1. is under the age of 6 years; or 21
2. A. is under the age of 17 years; and 22
B. is a child with a disability, as defined under § 8–401 of the 23
Education Article. 24
(3) “Taxpayer” means: 25
(i) an individual filing an income tax return; or 26
(ii) a married couple filing a joint income tax return. 27
SENATE BILL 859 7
(b) A taxpayer who is a resident and has federal adjusted gross income for the 1
taxable year of $15,000 or less may claim a credit against the State income tax for each 2
qualified child in an amount equal to $500. 3
(c) If the credit allowed under this section in any taxable year exceeds the State 4
income tax for that taxable year, the taxpayer may claim a refund in the amount of the 5
excess. 6
SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 7
as follows: 8
Article – Tax – General 9
10–102.2. 10
(A) IN THIS SECTION , “PASS–THROUGH ENTITY ” AND “PASS–THROUGH 11
ENTITY’S TAXABLE INCOME ” HAVE THE MEANINGS ST ATED IN § 10–102.1 OF THIS 12
SUBTITLE. 13
(B) IN ADDITION TO THE STATE INCOME TAX IMPOSED UNDER THIS 14
SUBTITLE, FOR A TAXABLE YEAR B EGINNING AFTER DECEMBER 31, 2026, BUT 15
BEFORE JANUARY 1, 2033, EACH CORPORATION AND PASS–THROUGH ENTITY SHALL 16
PAY A BUSINESS TRANS PORTATION FEE IN ACC ORDANCE WITH THIS SE CTION. 17
(C) THE BUSINESS TRANSPOR TATION FEE IMPOSED UNDER THIS SECTION 18
SHALL EQUAL 2.5% OF THE AMOUNT OF THE CORPORATION ’S MARYLAND TAXABLE 19
INCOME OR PASS –THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS 20
$10,000,000. 21
(D) RETURNS AND PAYMENTS OF THE BUSINESS TRAN SPORTATION FEE 22
SHALL BE DUE AND P AYABLE IN THE SAME M ANNER AS RETURNS AND PAYMENTS OF 23
THE STATE INCOME TAX UNDE R SUBTITLES 8 AND 9 OF THIS TITLE. 24
(E) NOTWITHSTANDING ANY O THER PROVISION OF LA W, A TAXPAYER MAY 25
NOT CLAIM ANY CREDIT AGAINST THE BUSINESS TRANSPORTATION FEE I MPOSED 26
UNDER THI S SECTION EXCEPT FOR CREDITS FOR INSTALLM ENT PAYMENTS , 27
ESTIMATED PAYMENTS M ADE WITH A REQUEST F OR AN EXTENSION OF T IME FOR 28
FILING A RETURN , OR OVERPAYMENTS FROM PRIOR PERIODS . 29
(F) THE COMPTROLLER SHALL DIS TRIBUTE REVENUE FROM THE BUSINESS 30
TRANSPORTATION FEE IMPOSED UNDER TH IS SECTION TO THE TRANSPORTATION 31
TRUST FUND ESTABLISHED UNDE R § 3–216 OF THE TRANSPORTATION ARTICLE. 32
(G) THE COMPTROLLER SHALL ADO PT REGULATIONS TO IM PLEMENT THIS 33 8 SENATE BILL 859
SECTION. 1
10–104. 2
The income tax does not apply to the income of: 3
(5) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 4
subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 5
(6) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 6
subtitle and § 10–304(3) of this title, an S corporation; 7
(8) except as provided in [§ 10–102.1] §§ 10–102.1 AND 10–102.2 of this 8
subtitle, a limited liability company as defined under Title 4A of the Corporations and 9
Associations Article to the extent that the company is taxable as a partnership, as defined 10
in § 761 of the Internal Revenue Code. 11
SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 12
as follows: 13
Article – Tax – General 14
10–210.1. 15
(b) In addition to the modifications under §§ 10–204 through 10–210 of this 16
subtitle, to determine Maryland adjusted gross income of an individual: 17
(2) an amount is added to or subtracted from federal adjusted gross income 18
to determine the net operating loss deduction allowed under § 172 of the Internal Revenue 19
Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a 20
carryback period of up to 5 years, PROVIDED THAT ONLY T HE FIRST $500,000 OF NET 21
OPERATING LOSSES MAY BE ALLOWED FOR A TAX ABLE YEAR BEGINNING AFTER 22
DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2032; 23
10–310. 24
In addition to the modifications under §§ 10–305 through 10–309 of this subtitle, to 25
determine Maryland modified income the federal taxable income of a corporation shall be 26
adjusted as provided for an individual under § 10–210.1 of this title. 27
10–402. 28
(d) (1) (i) In this paragraph: 29
1. “manufacturing corporation” means a domestic or foreign 30
corporation which is primarily engaged in activities that, in accordance with the North 31 SENATE BILL 859 9
American Industrial Classification System (NAICS), United States Manual, United States 1
Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 2
33; and 3
2. “manufacturing corporation” does not include a refiner, as 4
defined in § 10–101 of the Business Regulation Article. 5
(ii) If a manufacturing corporation carries on its trade or business 6
within and outside the State and the trade or business is a unitary business, the part of the 7
corporation’s Maryland modified income derived from or reasonably attributable to trade 8
or business carried on in the State shall be determined using a single sales factor 9
apportionment formula, by multiplying its Maryland modified income by 100% of the sales 10
factor. 11
(iii) In filing its tax return for each year, a manufacturing corporation 12
shall certify that the NAICS Code reported on its Maryland return is consistent with that 13
reported to other government agencies. 14
(iv) If the Comptroller determines that a corporation has submitted 15
information that incorrectly classifies the corporation as a manufacturing corporation 16
under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation 17
in an appropriate manner. 18
(2) Except as provided in paragraphs (1) and (3) of this subsection: 19
(i) for a taxable year beginning after December 31, 2017, but before 20
January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s 21
Maryland modified income derived from or reasonably attributable to trade or business 22
carried on in the State shall be determined using a 3–factor apportionment fraction: 23
1. the numerator of which is the sum of the property factor, 24
the payroll factor, and 3 times the sales factor; and 25
2. the denominator of which is 5; 26
(ii) for a taxable year beginning after December 31, 2018, but before 27
January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s 28
Maryland modified income derived from or reasonably attributable to trade or business 29
carried on in the State shall be determined using a 3–factor apportionment fraction: 30
1. the numerator of which is the sum of the property factor, 31
the payroll factor, and 4 times the sales factor; and 32
2. the denominator of which is 6; 33
(iii) for a taxable year beginning after December 31, 2019, but before 34
January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s 35 10 SENATE BILL 859
Maryland modified income derived from or reasonably attributable to trade or business 1
carried on in the State shall be determined using a 3–factor apportionment fraction: 2
1. the numerator of which is the sum of the property factor, 3
the payroll factor, and 5 times the sales factor; and 4
2. the denominator of which is 7; 5
(iv) for a taxable year beginning after December 31, 2020, but before 6
January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s 7
Maryland modified income derived from or reasonably attributable to trade or business 8
carried on in the State shall be determined using a 3–factor apportionment fraction: 9
1. the numerator of which is the sum of the property factor, 10
the payroll factor, and 6 times the sales factor; and 11
2. the denominator of which is 8; and 12
(v) for a taxable year beginning after December 31, 2021, if the trade 13
or business is a unitary business, the part of the corporation’s Maryland modified income 14
derived from or reasonably attributable to trade or business carried on in the State shall 15
be determined using a single sales factor apportionment formula, by multiplying its 16
Maryland modified income by 100% of the sales factor. 17
(3) (i) Each year a worldwide headquartered company that filed a 18
federal corporate income tax return for the taxable year may elect to calculate its Maryland 19
modified income derived from or reasonably attributable to trade or business carried on in 20
the State using a 3–factor apportionment fraction: 21
1. the numerator of which is the sum of the property factor, 22
the payroll factor, and twice the sales factor; and 23
2. the denominator of which is 4. 24
(ii) To determine under subparagraph (i) of this paragraph the 25
Maryland modified income of a corporation or group of corporations that is a worldwide 26
headquartered company that filed a federal corporate income tax return for the taxable 27
year, gross income from intangible investments, including dividends, interest, royalties, 28
and capital gains from the sale of intangible property, shall be included in the calculation 29
of the numerator based on the average of the property and payroll factors. 30
(4) The property factor under paragraphs (2) and (3) of this subsection shall 31
include: 32
(i) rented and owned real property; and 33
(ii) tangible personal property located in the State and used in the 34 SENATE BILL 859 11
trade or business. 1
(5) (I) FOR A TAXABLE YEAR BE GINNING AFTER DECEMBER 31, 2
2026, SALES OF TANGIBLE PE RSONAL PROPERTY SHAL L BE INCLUDED IN THE 3
NUMERATOR OF THE SAL ES FACTOR UNDER PARA GRAPH (1), (2), OR (3) OF THIS 4
SUBSECTION IF: 5
1. THE PROPERTY IS DELI VERED OR SHIPPED TO A 6
PURCHASER WITHIN THE STATE, REGARDLESS OF THE FR EE ON BOARD (F.O.B.) 7
POINT OR OTHER CONDI TIONS OF THE SALE ; OR 8
2. THE PROPERTY IS SHIP PED FROM AN OFFICE , A 9
STORE, A WAREHOUSE , A FACTORY, OR ANY OTHER PLACE O F STORAGE IN THE 10
STATE AND THE CORPORATION IS NOT TAXABLE IN THE S TATE OF THE PURCHASE R. 11
(II) FOR PURPOSES OF SUBPA RAGRAPH (I) OF THIS 12
PARAGRAPH , A CORPORATION IS TAX ABLE IN A STATE IF: 13
1. IN THAT STATE THE CO RPORATION IS SUBJECT TO A 14
NET INCOME TAX , FRANCHISE TAX MEASUR ED BY NET INCOME , FRANCHISE TAX FOR 15
THE PRIVILEGE OF DOI NG BUSINESS, OR CORPORATE STOCK T AX; OR 16
2. THAT STATE HAS JURIS DICTION TO SUBJECT T HE 17
TAXPAYER TO A NET IN COME TAX, REGARDLESS OF WHETHE R, IN FACT, THE STATE 18
IMPOSES A TAX. 19
SECTION 5. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 20
as follows: 21
Article – Tax – General 22
10–102.3. 23
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 24
INDICATED. 25
(2) “MEMBER” MEANS: 26
(I) A SHAREHOLDER OF AN S CORPORATION ; 27
(II) A GENERAL OR LIMITED PARTNER O F A PARTNERSHIP , 28
LIMITED PARTNERSHIP , OR LIMITED LIABILITY PARTNERSHIP ; 29
(III) A MEMBER OF A LIMITE D LIABILITY COMPANY ; OR 30 12 SENATE BILL 859
(IV) A BENEFICIARY OF A B USINESS TRUST OR STA TUTORY 1
TRUST. 2
(3) “PASS–THROUGH ENTITY ” MEANS: 3
(I) AN S CORPORATION ; 4
(II) A PARTNERSHIP ; 5
(III) A LIMITED LIABILITY COMPANY THAT IS NOT TAXED AS A 6
CORPORATION UNDER TH IS TITLE; OR 7
(IV) A BUSINESS TRUST OR STATUTORY TRUST THAT IS NOT 8
TAXED AS A CORPORATI ON UNDER THIS TITLE . 9
(B) THIS SECTION DOES N OT APPLY TO THE INCO ME OF A PASS–THROUGH 10
ENTITY THAT IS A SOL E PROPRIETORSHIP . 11
(C) (1) IN ADDITION TO ANY OT HER TAX IMPOSED UNDE R THIS TITLE, A 12
TAX IS IMPOSED ON TH E DISTRIBUTIVE SHARE OR PRO RATA SHARE OF INCOME 13
DISTRIBUTED TO A MEM BER OF A PASS –THROUGH ENTITY FROM THE 14
PASS–THROUGH ENTITY ’S TAXABLE INCOME THA T EXCEEDS $1,000,000. 15
(2) THE RATE OF THE TAX I MPOSED UNDER PARAGRA PH (1) OF THIS 16
SUBSECTION IS 8.25%. 17
10–104. 18
The income tax does not apply to the income of: 19
(5) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 20
this subtitle, a partnership, as defined in § 761 of the Internal Revenue Code; 21
(6) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 22
this subtitle and § 10–304(3) of this title, an S corporation; 23
(8) except as provided in §§ 10–102.1 [and], 10–102.2, AND 10–102.3 of 24
this subtitle, a limited liability company as defined under Title 4A of the Corporations and 25
Associations Article to the extent that the company is taxable as a partnership, as defined 26
in § 761 of the Internal Revenue Code. 27
10–105. 28
(a) (1) For an individual other than an individual described in paragraph (2) 29 SENATE BILL 859 13
of this subsection, the State income tax rate is: 1
(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 2
INCOME DOES NOT EXCE ED $250,001: 3
[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 4
[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 5
[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 6
[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 7
$100,000; 8
[(v)] 5. 5% of Maryland taxable income of $100,001 through 9
$125,000; 10
[(vi)] 6. 5.25% of Maryland taxable income of $125,001 through 11
$150,000; AND 12
[(vii)] 7. 5.5% of Maryland taxable income of $150,001 through 13
$250,000; [and] 14
[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 15
MARYLAND TAXABLE INCO ME IS AT LEAST $250,001 BUT DOES NOT EXCEED 16
$500,000, 6% of Maryland taxable income [in excess of $250,000]; 17
(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 18
INCOME IS AT LEAST $500,001 BUT DOES NOT EXCEED $1,000,000, 6.5% OF 19
MARYLAND TAXABLE INCO ME; AND 20
(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 21
INCOME IS AT LEAST $1,000,001, 7% OF MARYLAND TAXABLE INCO ME. 22
(2) For spouses filing a joint return or for a surviving spouse or head of 23
household as defined in § 2 of the Internal Revenue Code, the State income tax rate is: 24
(I) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 25
INCOME DOES NOT EXCE ED $300,001: 26
[(i)] 1. 2% of Maryland taxable income of $1 through $1,000; 27
[(ii)] 2. 3% of Maryland taxable income of $1,001 through $2,000; 28
[(iii)] 3. 4% of Maryland taxable income of $2,001 through $3,000; 29 14 SENATE BILL 859
[(iv)] 4. 4.75% of Maryland taxable income of $3,001 through 1
$150,000; 2
[(v)] 5. 5% of Maryland taxable income of $150,001 through 3
$175,000; 4
[(vi)] 6. 5.25% of Maryland taxable income of $175,001 through 5
$225,000; AND 6
[(vii)] 7. 5.5% of Maryland taxable income of $225,001 through 7
$300,000; [and] 8
[(viii)] (II) [5.75%] WITH RESPECT TO TAXP AYERS WHOSE 9
MARYLAND TAXABLE INCO ME IS AT LEAST $300,001 BUT DOES NOT EXCEED 10
$600,000, 6% of Maryland taxable income [in excess of $300,000]; 11
(III) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 12
INCOME IS AT LEAST $600,001 BUT DOES NOT EXCEED $1,200,000, 6.5% OF 13
MARYLAND TAXABLE INCO ME; AND 14
(IV) WITH RESPECT TO TAXP AYERS WHOSE MARYLAND TAXABLE 15
INCOME IS AT LEAST $1,200,001, 7% OF MARYLAND TAXABLE INCO ME. 16
(3) (I) IN THIS PARAGRAPH , “NET INVESTMENT INCOM E” HAS THE 17
MEANING STATED UNDER § 1411(C) OF THE INTERNAL REVENUE CODE, EXCLUDING 18
THE NET GAIN ATTRIBU TABLE TO THE DISPOSI TION OF PARCELS OF P ROPERTY, OR 19
PORTIONS THEREOF , THAT ARE AGRICULTURAL LAND AN D BUILDINGS. 20
(II) IN ADDITION TO THE TA X CALCULATED UNDER P ARAGRAPH 21
(1) OR (2) OF THIS SUBSECTION , FOR AN INDIVIDUAL WI TH FEDERAL ADJUSTED 22
GROSS INCOME IN EXCE SS OF $350,000, A TAX IS IMPOSED ON THE NET INVESTMENT 23
INCOME OF THE IND IVIDUAL AT A RATE OF 1%. 24
(III) FOR AN INDIVIDUAL WHO IS NOT A RESIDENT OF THE STATE 25
FOR THE ENTIRE TAXAB LE YEAR, THE TAX UNDER THIS P ARAGRAPH SHALL BE 26
CALCULATED AS IF THE INDIVIDUAL IS A RESI DENT OF THE STATE, MULTIPLIED BY 27
A FRACTION IN WHICH : 28
1. THE NUMERATOR IS NET INVESTMENT INCOME 29
ALLOCABLE TO THE STATE; AND 30
2. THE DENOMINATOR IS T HE TOTAL OF NET 31
INVESTMENT INCOME FO R THE TAXABLE YEAR . 32 SENATE BILL 859 15
10–704. 1
(a) In this section, “taxpayer” means: 2
(1) an individual filing an income tax return; or 3
(2) a married couple filing a joint income tax return. 4
(b) (1) A resident who is a taxpayer may claim a credit against the State 5
income tax for a taxable year in the amount determined under subsection (c) of this section 6
for earned income. 7
(2) A resident who is a taxpayer may claim a credit against the county 8
income tax for a taxable year in the amount determined under subsection (d) of this section 9
for earned income. 10
(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 11
subject to subsection (e) of this section, the credit allowed against the State income tax 12
under subsection (b)(1) of this section is the lesser of: 13
(i) 50% of the earned income credit allowable for the taxable year 14
under § 32 of the Internal Revenue Code or that would have been allowable but for the 15
limitation under § 32(m) of the Internal Revenue Code; or 16
(ii) the State income tax for the taxable year. 17
(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 18
of this section, a resident may claim a refund in the amount, if any, by which the applicable 19
percentage specified in subparagraph (ii) of this paragraph of the earned income credit 20
allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 21
income tax for the taxable year. 22
(ii) Subject to subparagraph (iii) of this paragraph, the applicable 23
percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 24
to be used for purposes of determining the refund provided under this paragraph is: 25
1. 25% for a taxable year beginning after December 31, 2013, 26
but before January 1, 2015; 27
2. 25.5% for a taxable year beginning after December 31, 28
2014, but before January 1, 2016; 29
3. 26% for a taxable year beginning after December 31, 2015, 30
but before January 1, 2017; 31
16 SENATE BILL 859
4. 27% for a taxable year beginning after December 31, 2016, 1
but before January 1, 2018; 2
5. 28% for a taxable year beginning after December 31, 2017, 3
but before January 1, 2020; and 4
6. 45% for a taxable year beginning after December 31, 2019. 5
(iii) For purposes of determining the refund provided under this 6
paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 7
calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 8
(3) (i) For purposes of this section for an individual without a qualifying 9
child, the credit allowable for a taxable year under § 32 of the Internal Revenue Code is 10
calculated without regard to: 11
1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 12
the Internal Revenue Code; or 13
2. the limitation under § 32(m) of the Internal Revenue Code. 14
(ii) [Subject to subparagraph (iii) of this paragraph, the] THE credit 15
allowed against the State income tax under subsection (b)(1) of this section for an individual 16
without a qualifying child is: 17
1. equal to 100% of the earned income credit allowable for a 18
taxable year under § 32 of the Internal Revenue Code; AND 19
2. CALCULATED BY SUBSTI TUTING: 20
A. $7,840 FOR THE EARNED INCOM E AMOUNT IN § 21
32(B)(2)(A) OF THE INTERNAL REVENUE CODE; AND 22
B. $19,160 FOR THE PHASE –OUT AMOUNT IN § 23
32(B)(2)(A) OF THE INTERNAL REVENUE CODE. 24
[(iii) For a taxable year beginning after December 31, 2019, but before 25
January 1, 2023, the tax credit allowed under this paragraph may not exceed $530 for a 26
taxable year.] 27
(III) 1. FOR EACH TAXABLE YEAR BEGINNING AFTER 28
DECEMBER 31, 2028, THE EARNED INCOME AM OUNT AND PHASE –OUT AMOUNT IN 29
SUBPARAGRAPH (II)2 OF THIS PARA GRAPH SHALL BE INCRE ASED BY AN AMOUNT 30
EQUAL TO THE PRODUCT OF MULTIPLYING EACH AMOUNT BY THE COST –OF–LIVING 31
ADJUSTMENT SPECIFIED IN SUBSUBPARAGRAPH 2 OF THIS SUBPARAGRAPH . 32 SENATE BILL 859 17
2. FOR THE PURPOSES OF T HIS SUBPARAGRAPH , THE 1
COST–OF–LIVING ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE 2
MEANING OF § 1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR 3
IN WHICH THE TAXABLE YEAR BEGINS, AS DETERMINED BY THE COMPTROLLER BY 4
SUBSTITUTING “CALENDAR YEAR 2022” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) 5
OF THE INTERNAL REVENUE CODE. 6
3. IF ANY INCREASE DETER MINED UNDER 7
SUBSUBPARAGRAPH 1 OF THIS SUBPARAGRAPH IS NOT A MULTIPLE OF $10, THE 8
INCREASE SHALL BE RO UNDED DOWN TO THE NE XT LOWEST MULTIPLE O F $10. 9
(iv) If the tax credit allowed under this paragraph in any taxable year 10
exceeds the total tax otherwise payable by the individual without a qualifying child for that 11
taxable year, the individual may claim a refund in the amount of the excess. 12
(d) (1) Except as provided in paragraph (2) of this subsection and subject to 13
subsection (e) of this section, the credit allowed against the county income tax under 14
subsection (b)(2) of this section is the lesser of: 15
(i) the earned income credit allowable for the taxable year under § 16
32 of the Internal Revenue Code or that would have been allowable but for the limitation 17
under § 32(m) of the Internal Revenue Code multiplied by 10 times the county income tax 18
rate for the taxable year; or 19
(ii) the county income tax for the taxable year. 20
(2) (i) A county may provide, by law, for a refundable county earned 21
income credit as provided in this paragraph. 22
(ii) If a county provides for a refundable county earned income credit 23
under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 24
which it is applicable, the county shall give the Comptroller notice of the refundable county 25
earned income credit. 26
(iii) If a county provides for a refundable county earned income credit 27
under this paragraph, a resident may claim a refund of the amount, if any, by which the 28
product of multiplying the credit allowable for the taxable year under § 32 of the Internal 29
Revenue Code or that would have been allowable but for the limitation under § 32(m) of 30
the Internal Revenue Code by 5 times the county income tax rate for the taxable year 31
exceeds the county income tax for the taxable year. 32
(iv) The amount of any refunds payable under a refundable county 33
earned income credit operates to reduce the income tax revenue from individuals 34
attributable to the county income tax for that county. 35
18 SENATE BILL 859
(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 1
resident of the State for only a part of the year, the amount of the credit or refund allowed 2
under this section shall be determined based on the part of the earned income credit 3
allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 4
to Maryland, determined by multiplying the federal earned income credit by a fraction: 5
(i) the numerator of which is the Maryland adjusted gross income of 6
the individual; and 7
(ii) the denominator of which is the federal adjusted gross income of 8
the individual. 9
(2) For purposes of determining the amount of the credit or refund under 10
paragraph (1) of this subsection, the part of the earned income credit allowable for the 11
taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 12
limitation under § 32(m) of the Internal Revenue Code. 13
10–751. 14
(a) (1) In this section the following words have the meanings indicated. 15
(2) “Qualified child” means a dependent of a taxpayer, if the dependent: 16
(i) is a dependent for purposes of § 152 of the Internal Revenue Code 17
in effect on December 31, 2024; and 18
(ii) [1.] is under the age of [6] 18 years[; or 19
2. A. is under the age of 17 years; and 20
B. is a child with a disability, as defined under § 8–401 of the 21
Education Article]. 22
(3) “Taxpayer” means: 23
(i) an individual filing an income tax return; or 24
(ii) a married couple filing a joint income tax return. 25
(b) [A] SUBJECT TO SUBSECTION (D) OF THIS SECTION, A taxpayer who is a 26
resident [and has federal adjusted gross income for the taxable year of $15,000 or less] may 27
claim a credit against the State income tax for each qualified child in an amount equal to: 28
(1) $750, IF THE QUALIFIED CHI LD IS UNDER THE AGE OF 6 YEARS; OR 29
(2) $500, IF THE QUALIFIED CHI LD IS AT LEAST 6 YEARS OLD. 30 SENATE BILL 859 19
(C) (1) FOR EACH TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1
2028, THE AMOUNTS SPECIFIE D IN SUBSECTION (B) OF THIS SECTION SHAL L BE 2
INCREASED BY AN AMOU NT EQUAL TO THE PROD UCT OF MULTIPLYING T HE 3
AMOUNTS BY THE COST –OF–LIVING ADJUSTMENT SP ECIFIED IN THIS SUBS ECTION. 4
(2) FOR THE PURPOSES OF T HIS SUBSECTION , THE COST–OF–LIVING 5
ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WI THIN THE MEANING OF § 6
1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR IN WHICH THE 7
TAXABLE YEAR BEGINS , AS DETERMINED BY THE COMPTROLLER , BY SUBSTITUTING 8
“CALENDAR YEAR 2027” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) OF THE 9
INTERNAL REVENUE CODE. 10
(3) IF ANY INCREASE DETER MINED UNDER PARAGRAP H (1) OF THIS 11
SUBSECTION IS NOT A MULTIPLE OF $50, THE INCREASE SHALL B E ROUNDED DOWN 12
TO THE NEXT LOWEST M ULTIPLE OF $50. 13
(D) THE AMOUNT OF THE CRE DIT ALLOWED UNDER SU BSECTION (B) OF 14
THIS SECTION FOR A Q UALIFIED CHILD SHALL BE REDUCED, BUT NOT BELOW ZERO , 15
BY $50 FOR EACH $1,000, OR FRACTION THEREOF , BY WHICH THE TAXPAYE R’S 16
FEDERAL ADJUSTED GRO SS INCOME EXCEEDS : 17
(1) $65,000 IN THE CASE OF A MAR RIED COUPLE FILING A JOINT 18
RETURN OR A SURVIVING SPOUS E OR HEAD OF HOUSEHO LD AS DEFINED IN § 2 OF 19
THE INTERNAL REVENUE CODE FILING AN INCOME TAX RETURN; 20
(2) $32,500 IN THE CASE OF A MAR RIED INDIVIDUAL FILI NG 21
SEPARATELY; OR 22
(3) $45,000 IN THE CASE OF ANY O THER INDIVIDUAL . 23
[(c)] (E) If the credit allowed under this section in any taxable year exceeds the 24
State income tax for that taxable year, the taxpayer may claim a refund in the amount of 25
the excess. 26
SECTION 6. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 27
as follows: 28
Article – Tax – General 29
10–402.1. 30
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 31
INDICATED. 32 20 SENATE BILL 859
(2) “COMBINED GROUP ” MEANS A GROUP OF COR PORATIONS: 1
(I) THAT IS ENGAGED IN A UNITARY BUSINESS ; 2
(II) IN WHICH MORE THAN 50% OF THE VOTING STOCK OF EACH 3
MEMBER IS DIRECTLY O R INDIRECTLY OWNED B Y: 4
1. A COMMON OWNER OR CO MMON OWNERS , EITHER 5
CORPORATE OR NONCORP ORATE; OR 6
2. ONE OR MORE MEMBER C ORPORATIONS OF THE 7
GROUP; 8
(III) THE MEMBERS OF WHICH ARE SUBJECT TO THE I NCOME TAX 9
OR WOULD BE SUBJECT TO THE INCOME TAX IF DOING BUSINESS IN TH E STATE; AND 10
(IV) CONSISTING OF ANY OT HER MEMBERS UNDER TH E 11
CIRCUMSTANCES AND TO THE EXTENT PROVIDED IN REGULATIONS ADOPT ED BY 12
THE COMPTROLLER TO PREVEN T THE AVOIDANCE OF T AX OR TO REFLECT C LEARLY 13
THE INCOME OF ANY ME MBER OF THE COMBINED GROUP FOR ANY PERIOD . 14
(3) “COMBINED RETURN ” MEANS A TAX RETURN F OR THE COMBINED 15
GROUP CONTAINING INF ORMATION AS PROVIDED IN THIS SECTION OR O THERWISE 16
REQUIRED BY THE COMPTROLLER . 17
(4) “UNITARY BUSINESS ” MEANS A SINGLE ECONO MIC ENTERPRISE 18
THAT IS MADE EITHER OF SEPARATE PARTS OF A SINGLE BUSINESS EN TITY OR OF A 19
COMMONLY CONTROLLED GROUP OF BUSINESS EN TITIES THAT ARE SUFF ICIENTLY 20
INTERDEPENDENT , INTEGRATED, AND INTERRELATED THR OUGH THEIR ACTIVITIE S 21
SO AS TO PROVIDE MUTUAL BENEF IT THAT PRODUCES A S HARING OR EXCHANGE O F 22
VALUE AMONG THEM AND A SIGNIFICANT FLOW O F VALUE TO THE SEPAR ATE PARTS. 23
(B) (1) THE TERM “UNITARY BUSINESS ” SHALL BE CONSTRUED T O THE 24
BROADEST EXTENT ALLO WED UNDER THE U.S. CONSTITUTION. 25
(2) A BUSINESS CONDUCTED D IRECTLY OR INDIRECTL Y BY ONE 26
CORPORATION IS A UNI TARY BUSINESS WITH R ESPECT TO THAT PORTI ON OF A 27
BUSINESS CONDUCTED B Y ANOTHER CORPORATIO N THROUGH ITS DIRECT OR 28
INDIRECT INTEREST IN A PARTNERSHIP IF THE REQUIREMENTS OF SUBS ECTION 29
(A)(4) OF THIS SECTION ARE SATISFIED, INCLUDING IF THERE I S SYNERGY AND AN 30
EXCHANGE AND FLOW OF VALUE BETWEEN THE TW O PARTS OF THE BUSIN ESS AND 31
THE TWO CORPORATIONS ARE MEMBERS OF THE S AME COMMONLY CONTROL LED 32
GROUP. 33 SENATE BILL 859 21
(3) A BUSINESS CONDUCTED B Y A PARTNERS HIP SHALL BE TREATED 1
AS CONDUCTED BY ITS PARTNERS, WHETHER DIRECTLY HEL D OR INDIRECTLY HELD 2
THROUGH A SERIES OF PARTNERSHIPS , TO THE EXTENT OF THE PARTNER’S 3
DISTRIBUTIVE SHARE O F THE PARTNERSHIP ’S INCOME, REGARDLESS OF THE 4
PERCENTAGE OF THE PA RTNER’S OWNERSHIP INTEREST OR ITS DISTRIBUTIVE OR 5
ANY OTHER SHARE OF P ARTNERSHIP INCOME . 6
(C) (1) EXCEPT AS PROVIDED BY AND SUBJECT TO REGUL ATIONS 7
ADOPTED BY THE COMPTROLLER , FOR ALL TAXABLE YEAR S BEGINNING AFTER 8
DECEMBER 31, 2028, A CORPORATION ENGAGE D IN A UNITARY BUSINESS SHALL 9
FILE A COMBINED RETU RN, REPORTING AND PAYING TAX ON WORLDWIDE TAX ABLE 10
INCOME AS A COMBINED GROUP, REFLECTING THE AGGRE GATE INCOME TAX 11
LIABILITY OF ALL MEM BERS OF THE COMBINED GROUP THAT ARE ENGAG ED IN A 12
UNITARY BUSINESS . 13
(2) THE TAXABLE I NCOME OF A CORPORATI ON REQUIRED TO FILE 14
UNDER § 10–811(A)(2) OF THIS TITLE IS EQU AL TO THE COMBINED G ROUP’S 15
MARYLAND MODIFIED INC OME AS ADJUSTED UNDE R SUBSECTION (D)(3) OF THIS 16
SECTION. 17
(D) (1) THE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP 18
EQUALS THE PRODUCT OF: 19
(I) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND 20
MODIFIED INCOME , AS DETERMINED UNDER PARAGRAPH (2) OF THIS SUBSECTION 21
AND ADJUSTED UNDER P ARAGRAPH (3) OF THIS SUBSECTION ; AND 22
(II) THE COMBINED GROUP ’S MARYLAND APPORTIONMEN T 23
FACTOR, AS DETERMINED UNDER PAR AGRAPH (4) OF THIS SUBSECTION . 24
(2) (I) SUBJECT TO SUBPARAGRA PHS (II) THROUGH (IV) OF THIS 25
PARAGRAPH , THE APPORTIONABLE MARYLAND MODIFIED INC OME OF THE 26
COMBINED GROUP EQUAL S THE SUM OF THE COR PORATION’S AND EACH MEMBER ’S 27
MARYLAND MOD IFIED INCOME. 28
(II) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 29
SUBPARAGRAPH , FOR ANY MEMBER INCOR PORATED IN THE UNITED STATES OR 30
INCLUDED IN A CONSOL IDATED FEDERAL CORPO RATE INCOME TAX RETU RN, THE 31
INCOME TO BE INCLUDE D IN THE TOTAL APPOR TIONABLE INCOME OF THE 32
COMBINED GROUP IS TH E MARYLAND MODIFIED INC OME AS CALCULATED UN DER § 33
10–304 OF THIS TITLE. 34
2. THE INCOME OF EACH ME MBER SHALL BE 35 22 SENATE BILL 859
CALCULATED ON A SEPA RATE RETURN BASIS AS IF THE MEMBER WERE N OT 1
CONSOLIDATED FOR FED ERAL INCOME TAX PURP OSES. 2
(III) 1. FOR ANY MEMBER NOT IN CLUDED UNDER 3
SUBPARAGRAPH (II) OF THIS PARAGRAPH , THE INCOME TO BE INC LUDED IN THE 4
TOTAL INCOME OF THE COMBINED GROUP IS DE TERMINED AS PROVIDED UNDER 5
THIS SUBPARAGRAPH . 6
2. A PROFIT AND LOSS STAT EMENT SHALL BE PREPA RED 7
FOR EACH FOREIGN BRANCH OR CORPORATION IN THE C URRENCY IN WHICH THE 8
BOOKS OF ACCOUNT OF THE BRANCH OR CORPOR ATION ARE REGULARLY 9
MAINTAINED. 10
3. THE PROFIT AND LOSS S TATEMENT SHALL BE 11
ADJUSTED TO CONFORM TO GENERALLY ACCEPTE D ACCOUNTING PRINCIP LES AS 12
ADOPTED B Y THE U.S. FINANCIAL ACCOUNTING STANDARDS BOARD FOR THE 13
PREPARATION OF THE P ROFIT AND LOSS STATE MENTS, EXCEPT AS MODIFIED B Y 14
REGULATION . 15
4. EXCEPT AS OTHERWISE P ROVIDED BY REGULATIO N, 16
THE PROFIT AND LOSS STATEMENT OF EACH ME MBER OF THE COMBINED GROUP, 17
AND THE APPORTIONMEN T FACTORS RELATED TO EACH STATEMENT , WHETHER 18
UNITED STATES OR FOREIGN , SHALL BE TRANSLATED INTO THE CURRENCY IN 19
WHICH THE PARENT COM PANY MAINTAINS ITS B OOKS AND RECORDS . 20
5. INCOME APPORTIONED TO THE STATE SHALL BE 21
EXPRESSED IN UNITED STATES DOLLARS . 22
(IV) IF A UNITARY BUSINESS INCLUDES INCOME FROM A 23
PARTNERSHIP , THE INCOME TO BE INC LUDED IN THE TOTAL I NCOME OF THE 24
COMBINED GROUP EQUAL S THE DIRECT AND IND IRECT DISTRIBUTIVE S HARE OF 25
THE PARTNERSHIP ’S UNITARY BUSINESS I NCOME ALLOCA TED TO ANY MEMBER OF 26
THE COMBINED GROUP . 27
(3) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND MODIFIED 28
INCOME SHALL BE ADJU STED TO ELIMINATE IN TERCOMPANY TRANSACTI ONS AS 29
DETERMINED UNDER THE INTERNAL REVENUE CODE. 30
(4) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , THE 31
COMBINED GROUP ’S MARYLAND APPORTIONMEN T FACTOR IS A FRACTI ON: 32
1. THE NUMERATOR OF WHI CH IS THE SUM OF THE 33
CORPORATION ’S AND EACH MEMBER ’S MARYLAND FACTORS UNDE R § 10–402 OF 34
THIS SUBTITLE; AND 35 SENATE BILL 859 23
2. THE DENOMINATOR OF W HICH IS THE SUM OF THE 1
CORPORATION ’S AND EACH MEMBER ’S FACTORS UNDER § 10–402 OF THIS SUBTITLE. 2
(II) THE APPORTIONMENT FAC TORS OF PASS –THROUGH 3
ENTITY MEMBERS ARE I NCLUDED IN THE NUMER ATOR UNDER SUBPARAGR APH (I)1 4
OF THIS PARAGRAPH AN D THE DENOMINATOR UN DER SUBPARA GRAPH (I)2 OF THIS 5
PARAGRAPH TO THE EXT ENT OF THE CORPORATI ON’S DIRECT AND INDIREC T 6
DISTRIBUTIVE SHARE O F THAT ENTITY. 7
(E) (1) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 8
NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 9
(2) THE REGULATIONS ADOPTED BY THE COMPTROLLER SHALL BE 10
CONSISTENT WITH THE “PRINCIPLES FOR DETERMINING THE EXISTENCE OF A 11
UNITARY BUSINESS” (REG. IV.1.(B)) OF THE MODEL GENERAL ALLOCATION AND 12
APPORTIONMENT REGULATIONS, AS ADOPTED BY THE MULTISTATE TAX 13
COMMISSION. 14
10–811. 15
(A) (1) [Each member of] EXCEPT AS PROVIDED BY AND SUBJECT TO 16
REGULATIONS ADOPTED BY THE COMPTROLLER , an affiliated group of corporations 17
[shall file a separate income tax return] ENGAGED IN A UNITARY BUSINESS SHALL FILE 18
A COMBINED INCOME TA X RETURN REFLEC TING THE AGGREGATE I NCOME TAX 19
LIABILITY OF ALL THE MEMBERS OF THE AFFIL IATED GROUP THAT ARE ENGAGED IN 20
A UNITARY BUSINESS . 21
(2) THE RETURN REQUIRED U NDER PARAGRAPH (1) OF THIS 22
SUBSECTION SHALL INC LUDE THE INCOME AND APPORTIONMENT FACTOR S 23
DETERMINED UNDER § 10–402.1(D) OF THIS TITLE, AND ANY OTHER INFORM ATION 24
REQUIRED BY THE COMPTROLLER , FOR ALL MEMBERS OF T HE COMBINED GROUP 25
WHEREVER LOCATED OR DOING BUSINESS . 26
(3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 27
PARAGRAPH , THE COMBINED RETURN SHALL BE FILED UNDER THE NA ME AND 28
FEDERAL EMPLOYER IDE NTIFICATION NUMBER O F THE PARENT CORPORA TION IF 29
THE PARENT IS A MEMB ER OF THE COMBINED G ROUP. 30
(II) IF THERE IS NO PARENT CORPORATION OR IF TH E PARENT 31
IS NOT A MEMBER OF T HE COMBINED GROUP , THE MEMBERS OF THE COMBINED 32
GROUP SHALL CHOOSE A MEMBER TO FILE THE R ETURN. 33
(III) THE FILING MEMBER UND ER SUBPARAGRAPH (I) OR (II) OF 34 24 SENATE BILL 859
THIS PARAGRAPH SHALL CONTINUE TO FILE THE COMBINED RETURN UNLE SS THE 1
FILING MEMBER IS NO LONGER THE PARENT CO RPORATION OR NO LONG ER A 2
MEMBER OF THE COMBIN ED GROUP. 3
(4) THE RETURN SHALL BE S IGNED BY A RESPONSIB LE OFFICER OF 4
THE FILING MEMBER ON BEHALF OF THE COMBIN ED GROUP MEMBERS . 5
(5) MEMBERS OF THE COMBIN ED GROUP ARE JOINTLY AND 6
SEVERALLY LIABLE FOR THE TAX LIABILITY OF THE COMBI NED GROUP INCLUDED 7
IN THE COMBINED RETU RN. 8
(B) (1) THE COMPTROLLER MAY , BY REGULATION , REQUIRE THAT THE 9
COMBINED RETURN INCL UDE THE INCOME AND A SSOCIATED APPORTIONM ENT 10
FACTORS OF ENTITIES THAT ARE NOT INCLUDE D IN THE COMBINED RE PORT BUT 11
THAT ARE MEMBERS OF A UNITARY BUSINES S IN ORDER TO REFLEC T PROPER 12
APPORTIONMENT OF INC OME OF THE ENTIRE UN ITARY BUSINESS. 13
(2) IF THE COMPTROLLER DETERMINE S THAT THE REPORTED 14
INCOME OR LOSS OF A TAXPAYER ENGAGED IN A UNITARY BUSINESS W ITH A MEMBER 15
NOT INCLUDED IN THE COMBINED GROUP REPRESEN TS AN AVOIDANCE OR E VASION 16
OF TAX, THE COMPTROLLER MAY , ON A CASE–BY–CASE BASIS, REQUIRE THAT ALL 17
OR PART OF THE INCOM E AND ASSOCIATED APP ORTIONMENT FACTORS O F THE 18
MEMBER BE INCLUDED I N THE TAXPAYER ’S COMBINED RETURN . 19
(3) THE COMPTROLLER MAY REQUIRE : 20
(I) THE EXCLUSION OF ONE OR MORE FACTORS , THE 21
INCLUSION OF ONE OR MORE ADDITIONAL FACT ORS, OR THE EMPLOYMENT OF ANY 22
OTHER METHOD THAT WI LL FAIRLY REPRESENT THE TAXPAYER ’S BUSINESS IN THE 23
STATE; OR 24
(II) THE EMPLOYMENT OF AN Y OTHER METHOD TO EF FECTUATE 25
A PROPER REFLECTION OF THE TOTAL AMOUNT OF INCOME SUBJECT TO 26
APPORTIONMENT AND AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE 27
COMBINED GROUP ’S OR ITS MEMBERS ’ INCOME. 28
(C) THE COMPTROLLER SHALL ADO PT REG ULATIONS THAT ARE 29
NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 30
SECTION 7. AND BE IT FURTHER ENACTED, That, for a taxable year beginning 31
after December 31, 2026, but before January 1, 2028, notwithstanding §§ 13–602 and 32
13–702 of the Tax – General Article, the Comptroller shall assess interest and penalties 33
under §§ 13–602 and 13–702 of the Tax – General Article if a corporation pays estimated 34
income tax for the taxable year in an amount less than 90% of the tax required to be shown 35 SENATE BILL 859 25
on the corporation’s income tax return for the taxable year. 1
SECTION 8. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 2
applicable to all taxable years beginning after December 31, 2024. 3
SECTION 9. AND BE IT FURTHER ENACTED, That Section 3 of this Ac t shall take 4
effect July 1, 2026. 5
SECTION 10. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall 6
take effect July 1, 2027, and shall be applicable to all taxable years beginning after 7
December 31, 2026. 8
SECTION 11. AND BE IT FURTHER ENACTED, T hat Section 5 of this Act shall 9
take effect July 1, 2028, and shall be applicable to all taxable years beginning after 10
December 31, 2027. 11
SECTION 12. AND BE IT FURTHER ENACTED, That Section 6 of this Act shall 12
take effect July 1, 2028, and shall be applicable to all taxable years beginning after 13
December 31, 2028. 14
SECTION 13. AND BE IT FURTHER ENACTED, That, except as provided in 15
Sections 9 through 12 of this Act, this Act shall take effect July 1, 2025. 16