Last Friday at the Western Correctional Institution in Allegany County, Governor Larry Hogan announced that he plans to seek legislation this upcoming session to expand the Hometown Heroes state and local income tax breaks to retired correctional officers. He also said he wants to expand the tax break to cover all pension income, not just the first $15,000 – a move that could cost counties significant amounts in local income tax revenues.
Last session the General Assembly passed Senate Bill 597/House Bill 100, referred to colloquially as the “Hometown Heroes Act” and substantially similar to the Governor’s Senate Bill 322/House Bill 388 of that name. The Act provides for a subtraction modification for the first $15,000 of retirement income for individuals at least 55 years of age who are retired law enforcement officers or fire, rescue, or emergency services personnel. MACo opposed this legislation on the grounds that it would cause local revenues to decrease by $2.5 million in FY 2018 and by $2.8 million in FY 2022. After many years of consideration by the legislature, the bill passed this year and the Governor signed it – making the tax deduction available for the 2017 tax year. Bill Information | MACo Coverage
The 2017 legislation exempted retired law enforcement and fire, rescue, and emergency response personnel from state income taxes on a portion of their retirement income. The Hometown Heroes Act of 2018 will expand the previous law to include correctional officers who perform some of the most difficult jobs in the public safety sector. In addition, the bill will exempt all retirement income received from these occupations from state income taxes.
The Washington Post covers the story.