The Maryland General Assembly has passed legislation that would expand an existing military retirement income tax subtraction modification from $5,000 to $10,000 for military retirees at least 65 years of age. SB 592, one of Governor Hogan’s legislative priorities for the 2015 General Assembly Session, achieved final passage on the last day of the session.

As introduced, SB 592 would have fully exempted military retirement income from the State income tax over a four year time frame. MACo raised objections with the bill in this form as it would have resulted in significant loss in local revenue during the phase-in period without any local action or input. MACo would prefer approaches that provide local governments the autonomy to determine the best way to provide tax incentives, rather than mandate reductions in local revenue sources.

SB 592 as amended and passed by the General Assembly, expands the existing subtraction modification from $5,000 to $10,000 for those 65 years of age and older.  This offers a more reasonable approach for addressing this issue and minimizes the revenue loss to the State and local governments. Accordingly, MACo withdrew its previous opposition, and took NO POSITION on SB 592 as amended.

MACo Original Testimony SB 592

Letter on SB 592 as Amended