Understanding the Maryland Senior Income Tax Credit
For residents who are at least 65 years old by the last day of the tax year, Maryland provides a nonrefundable income tax credit. The amount of this credit depends on your filing status and federal adjusted gross income (FAGI).
Income Tax Credit Eligibility Requirements:
- Age: Must be 65 or older on the last day of the tax year.
- Filing Status & FAGI Limit:
- Single, Married Filing Separately: FAGI must not exceed $100,000.
- Married Filing Jointly, Head of Household, Qualifying Widow(er): FAGI must not exceed $150,000.
Credit Amount:
- $1,000: For single filers or couples where only one spouse is age 65 or older.
- $1,750: For married couples filing jointly where both spouses are 65 or older.
To claim this credit, you must complete Part M of Maryland Form 502CR and attach it to your main income tax return (Form 502).
Property Tax Relief for Seniors
In addition to income tax benefits, Maryland seniors can also find significant relief through property tax credits, which can be offered at both the state and county level.
State Homeowners' Property Tax Credit (HOTC)
The HOTC program, originally established for the elderly, now helps homeowners of all ages who meet certain income and net worth requirements. Seniors over 65 who qualify for this credit can benefit from a limit on their property tax based on their household income.
Key HOTC qualifications include:
- You must own and reside in your home for at least six months of the year.
- Combined household income must not exceed $60,000, though some counties have higher limits.
- Net worth, excluding the value of your principal home and certain retirement savings, must be less than $200,000.
County-Specific Senior Property Tax Credits
Many Maryland counties offer their own supplementary property tax credits for seniors, which are often automatically considered when you apply for the state HOTC. For example:
- Montgomery County: Provides a senior tax credit that is a percentage of the combined state and county homeowners' tax credits.
- Howard County: Offers a senior tax credit to those 65 or older with household income and net worth limits.
- Prince George's County: Has an Elderly Property Tax Credit that offers up to a 20% credit on the county portion of property taxes for qualifying long-term residents.
Elderly and Disabled Tax Deferral
Some counties offer a program for property owners aged 65 or older to defer the increase in their county property tax bill. This is not a permanent reduction and must be repaid later, for instance, when the property is sold. It requires an annual application.
Maryland Pension Exclusions and Exemptions
Maryland law provides valuable subtractions and exclusions for retirement income, which can further reduce a senior's tax burden.
Pension Exclusion
Residents aged 65 or older (or who are disabled or whose spouse is disabled) can subtract a significant amount of taxable pension and retirement annuity income from their FAGI. The subtraction amount for 2024 is up to $39,500, but it is reduced by any Social Security or Railroad Retirement benefits received, as these are already exempt from Maryland tax. This exclusion applies to income from sources like 401(k), 403(b), and pension plans, but typically does not apply to IRA distributions.
Military Retirement Income Subtraction
Maryland offers a special subtraction for retired military members and their spouses. For tax year 2024, those aged 55 or older can subtract up to $20,000 of their military retirement income. Those under 55 can subtract up to $12,500.
Additional Personal Exemptions
For those aged 65 or older, Maryland offers an additional $1,000 personal exemption on top of the standard exemption. This is also available for taxpayers who are blind. In the case of a dependent who is 65 or older, an extra exemption of up to $3,200 may be claimed.
How to Apply for Maryland Senior Tax Credits
Navigating the process to claim these benefits is crucial for receiving the financial relief you deserve. While specific steps vary depending on the credit, here are some general guidelines.
- For the Senior Income Tax Credit: Use Maryland Form 502CR (Credit for Individuals) when filing your state income taxes with Form 502. The forms are updated annually, so ensure you have the correct year's version.
- For Property Tax Credits (HOTC): File the Homeowners' Property Tax Credit Application with the Maryland State Department of Assessments and Taxation (SDAT). For tax year 2025, applications are accepted through October 1, 2025. This one application considers you for both state and supplemental county property tax credits. You can find forms and more information on the Maryland OneStop website.
- For Pension/Retirement Subtractions: The subtractions are typically taken directly on your Maryland income tax return (Form 502). The Maryland Resident Tax Booklet provides specific instructions for line items related to pension and military retirement subtractions.
Comparison of Major Maryland Senior Tax Programs
| Program | Eligibility (Age/Status) | Income Requirement | Benefit Type | Application Method |
|---|---|---|---|---|
| Senior Tax Credit (Income) | Resident, 65+ | FAGI up to $100k (single) or $150k (joint) | Nonrefundable Income Tax Credit ($1,000/$1,750) | Form 502CR (with Form 502) |
| Pension Exclusion | Resident, 65+ or Disabled | Up to $39,500 (reduced by Social Security) | Subtraction from Income | Form 502 |
| Military Retirement Subtraction | Resident, 55+ or <55 | Dependent on age ($12.5k or $20k) | Subtraction from Income | Form 502 |
| Homeowners' Tax Credit (HOTC) | Homeowner, all ages | Household income up to $60k (state) | Property Tax Credit | SDAT Application |
| County Senior Property Credit | Homeowner, 65+ (often) | Varies by county | Property Tax Credit (supplements HOTC) | SDAT Application (generally) |
Conclusion
For Maryland's senior residents, several avenues exist to significantly reduce their tax liabilities. From income tax credits and pension exclusions to valuable property tax programs, understanding your eligibility for these different benefits is key. By carefully reviewing the state and county guidelines, and seeking professional advice if needed, seniors can ensure they are maximizing all available tax relief. Resources from the Maryland Comptroller and the Department of Assessments and Taxation are the best places to find the most current and accurate information for the upcoming tax year.
About the Author
This article was written by a content expert on senior finance and healthy aging, leveraging official government and authoritative resources to provide accurate and comprehensive information for Maryland seniors.
