The State of Maryland offers the Homeowners’ Property Tax Credit Program, designed to provide relief to homeowners whose property taxes exceed a fixed percentage of their gross income. This program ensures that property taxes remain manageable for Maryland residents by setting an income-based limit on the amount of property taxes a homeowner must pay.
Understanding “Income” for the Program
To determine eligibility, gross income—the total income earned before any deductions—must be reported. This includes income from all household members, except:
- Dependents, or
- Individuals paying rent or room and board.
All sources of income must be reported, even those excluded from Federal and State income tax calculations, such as:
- Nontaxable retirement benefits (e.g., Social Security and Railroad Retirement).
Eligibility is based on the total income received by all members of the applicant’s household during the year.
Basic Eligibility Requirements
Before your income is considered, you must meet these four criteria:
- Property Ownership: You must own or have a legal interest in the property.
- Principal Residence: The property must be your primary residence, where you live at least six months per year (including July 1), unless health issues or special care needs prevent this.
- Net Worth: Your net worth must be below $200,000, excluding the value of your home and qualified retirement savings (e.g., IRAs).
- Income Cap: Your combined gross household income cannot exceed $60,000.
How Is the Tax Credit Calculated?
The credit is determined by the amount your property taxes exceed a percentage of your gross income, following this formula:
- 0% of the first $8,000 of income.
- 4% of the next $4,000 of income.
- 6.5% of the next $4,000 of income.
- 9% of all income over $16,000.
The chart below is printed in $1,000 increments to show you the specific tax limit for each income level.
| 2021 Household Income | Tax Limit |
| $1 – 8,000 | $0 |
| 9,000 | 40 |
| 10,000 | 80 |
| 11,000 | 120 |
| 12,000 | 160 |
| 13,000 | 225 |
| 14,000 | 290 |
| 15,000 | 355 |
| 16,000 | 420 |
| 17,000 | 510 |
| 18,000 | 600 |
| 19,000 | 690 |
| 20,000 | 780 |
| 21,000 | 870 |
| 22,000 | 960 |
| 23,000 | 1050 |
| 24,000 | 1140 |
| 25,000 | 1230 |
| 26,000 | 1320 |
| 27,000 | 1410 |
| 28,000 | 1500 |
| 29,000 | 1590 |
| 30,000 | 1,680 |
| and up to a maximum of $60,000 |
* |
*For every additional $1,000 of income above $30,000, $90 is added to a base tax limit of $1,680.
Example Calculation:
- Household income: $16,000
- Tax limit: $420
- Actual property tax: $990
- Tax credit: $570 (the difference between the actual tax bill and the tax limit).
Important Limitations
- Assessed Value Cap: The credit applies only to taxes from the first $300,000 of a property’s assessed value.
- Excluded Charges: Fixed charges like water and sewer services are not covered.
- Land Use Restrictions: For properties with large acreage, the credit applies only to the home lot.
- Mixed-Use Properties: For homes with commercial or business uses, only the residential portion qualifies for the credit.
How to Apply for the Credit
- Deadline:
- April 15: Apply by this date to see the credit directly on your tax bill.
- October 1: Late applicants will receive a revised tax bill or a refund if taxes were already paid.
- Payment Tip: To benefit from early payment discounts offered in some areas, don’t delay paying your property taxes while waiting for the credit.
If You’re Found Ineligible
Applicants who don’t qualify will receive a written explanation detailing:
- The reason for denial.
- Next steps for addressing questions.
- Instructions for appealing to the local Property Tax Assessments Appeals Board.
The Homeowners’ Property Tax Credit Program can be a valuable tool for reducing property tax burdens. If you meet the requirements, be sure to apply before the deadline to maximize your savings!
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