2022 End of Session Wrap-Up: Taxes and Revenues

The segments below provide a brief overview of MACo’s work on tax policy in the 2022 General Assembly. 

The General Assembly routinely considers proposals to change tax structures, often seeking to stimulate economic growth, encourage beneficial activities, or attract and retain residents. These proposals sometimes focus exclusively on the state’s tax structure but sometimes extend to local revenues.

In general, MACo stands for local self-determination. Counties, led by their elected leaders who are directly accountable within the community, are best positioned to make decisions on local affairs – ranging from land use to budget priorities. MACo steadfastly guards this local autonomy and frequently advocates against statewide solutions that mandate county compliance or override local decision-making.

The unique circumstances surrounding the 444th legislative session, including necessary health and safety measures, posed a challenge for lawmakers and advocates alike. Yet, despite the unusual circumstances, MACo’s advocacy still led to more positive outcomes for its members.

Follow these links for more coverage on our Conduit Street blog and Legislative Database


Income Taxes

MACo opposed HB 420 / SB 405. This bill would have created a subtraction modification against the State and local income tax for 100% of the income received by an individual who (1) is receiving old age or survivor Social Security benefits or (2) is at least age 65 and is not employed full time. As introduced, counties would have lost $608.8 million in annual revenue by fiscal 2027.

Instead, MACo advocated for this relief in the form of state income tax credits, which provide a similar benefit to residents without unnecessarily constraining local budgets. As such, the General Assembly amended to provide specified individuals at least 65 years old to claim a $1,000 State income tax credit. The bill passed the General Assembly (with a minimal impact on county budgets) and awaits the Governor’s signature.

Conduit Street Coverage: Governor, Presiding Officers Announce $1.86 Billion Tax Relief Plan

 

MACo opposed dozens of subtraction modification bills, as subtraction modifications (income tax reductions) affect the taxable income base, which flows through to county revenues. Instead, MACo advocates for state income tax credits, which provide a similar benefit to residents without unnecessarily constraining local budgets. As a result, only one subtraction modification bill passed the General Assembly, with a negligible fiscal impact on county governments.

Visit MACo’s Legislative Tracking Database for more information on subtraction modification legislation.

 

MACo opposed SB 693 / HB 841. This bill would have allowed certain businesses to increase expensing by conforming the State income tax to the maximum aggregate expensing costs allowed under Section 179 of the Internal Revenue Code (IRC). The bill would have cost counties up to $15.2 million in annual revenue by fiscal 2027. SB 693 / HB 841 – Income Tax – Expensing of Business Property – Recoupling With Federal Law (Maryland Manufacturing Tax Relief Act of 2022) was withdrawn and did not advance in the 2022 session.

Bill Information I MACo Coverage

 


Property Taxes

MACo supported HB 1104 with amendments. This bill would have required the Department of Housing and Community Development, to the extent practicable, to reserve 2.5% of certain community development block grant funds for affordable housing land trusts in nonentitlement areas. In addition, the bill would exempt from taxation property owned by an affordable housing land trust and not subject to an affordable housing land trust agreement. While the bill’s overall impact was unclear, counties requested amendments to authorize rather than mandate the property tax exemption or follow the more common path and authorize tax credits to effect the desired reduction in tax burden without distortion of the underlying tax base. HB 1104 – Affordable Housing Land Trusts – Funding and Property Tax Exemption was referred to interim study by the House Ways and Means Committee.

Bill Information I MACo Coverage

 

MACo supported HB 76 / SB 264 with amendments. This bill exempts a community solar generating system from local energy and personal property taxes under specified circumstances. Counties requested a “local option amendment” to allow each jurisdiction that chooses to enact these incentives flexibility to meet specific local needs and priorities. This bill was amended to limit the scope of the credits to properties that apply for the exemption before December 31, 2024. HB 76 / SB 264 – Community Solar Energy Generating Systems – Exemption From Energy and Property Taxes passed the General Assembly and awaits the Governor’s signature.

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MACo took no position on SB 567 as amended because the bill passed the senate with MACo’s amendments. The House amended the bill to require a study on agricultural use assessments, with input from appropriate stakeholders — including local governments. HB 1282 / SB 567 – Property Tax – Agricultural Accessory Use Improvements – Study and Report passed the General Assembly and awaits the Governor’s signature.

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MACo opposed HB 480. This bill would have opened up property tax savings under the Homestead Property Tax Credit to be “transferrable” to first-time Maryland homebuyers. This dramatically undermines the longstanding policy purpose of the credit – to ensure stability in tax bills after purchase. The legislation subverts the primary policy goal of this longstanding and successful homeowner program and could potentially cost counties millions of dollars in revenue needed for essential local services. HB 480 – Homestead Property Tax Credit – Calculation of Credit for Dwelling Purchased by First-Time Homebuyer did not advance in the 2022 session.

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MACo opposed HB 677. This bill would have opened up property tax savings under the Homestead Property Tax Credit to be “portable” for specified homeowners. This dramatically undermines the longstanding policy purpose of the credit – to ensure stability in tax bills after the time of purchase. HB 677 – Homestead Property Tax Credit – Portability of Value to New Dwelling did not advance in the 2022 session.

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MACo opposed HB 215. This bill would have conformed Maryland’s personal property depreciation schedule with federal law, allowing taxpayers to fully depreciate the value of specified personal property. This bill would have drastically undermined county revenue structures and depleted limited local funds for public health, schools, public safety, roadway maintenance, and other essential public services for Maryland families. HB 215 – Personal Property Tax – Depreciation of Assessed Value did not advance in the 2022 session.

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MACo supported HB 1039 with amendments. This bill generally grants broad tax exemptions for specified community solar energy generating systems. However, MACo expressed concerns with the carryover county fiscal effects and requested amendments to enable counties to determine the best way to provide tax incentives, rather than mandate reductions in local revenue sources. HB 1039 – Property Tax – Community Solar Energy Generating Systems – Agrivoltaics passed the General Assembly (without MACo’s amendments) and awaits the Governor’s signature.

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MACo supported HB 445 / SB 543. By updating the antiquated, inefficient, and confusing constant yield tax law, this bill would have provided shared constituents with a more efficient, accurate, and transparent overview of local policy decisions and deliberations. The House Ways and Means Committee referred HB 445 / SB 543 – Property Tax – Constant Yield Tax Rate – Notice Requirements to interim study.

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MACo supported HB 508. This bill would have made necessary and timely changes to outmoded provisions of Maryland’s constant yield tax law, which would allow local governments to better serve and react to community needs. HB 508 – Property Tax – Constant Yield Tax Rate – Notification Requirement did not advance in the 2022 session. However, the House Ways and Means Committee referred the policy issue to an interim study.

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MACo supported SB 901. This bill alters a local property tax credit for specified elderly individuals and veterans by authorizing local governments to determine the amount and duration of the property tax credit. The bill ensures that local governments have flexibility in enacting local policies designed to serve and react to community needs. SB 901 – Property Tax – Elderly Individuals and Veterans Tax Credit – Amount and Duration passed the General Assembly and awaits the Governor’s signature.

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MACo supported HB 268 / SB 274. This bill delivers meaningful tax relief for small and home-based businesses amidst pandemic-driven economic uncertainty. Strengthening Maryland’s small businesses contributes directly to the growth of local, state, and national economies. This, in turn, creates jobs, contributes to enhancing quality of life, and expands the local tax base – enabling counties to better provide core services for Maryland families and businesses. HB 268 / SB 274 – Property Tax – Exemptions for Business Personal Property – Alterations passed the General Assembly and awaits the Governor’s signature.

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MACo opposed SB 491. This bill would have generally exempted all personal property from taxation, other than operating personal property of a railroad or a public utility and other specified property. In addition, the bill would have set an arbitrary cap on county and municipal personal property tax rates. SB 491 – Property Tax – Taxation of Business Property – Tax Rates, Exemptions, and Credits did not advance in the 2022 session.

Bill InformationMACo Coverage

 

MACo supported HB 285 / SB 983 with amendments. This bill would have expanded eligibility for a local option property tax credit for a disabled law enforcement officer or rescue worker. MACo requested amendments to clarify that any expansion of an existing credit is subject to the discretion of the local governing body. While both the House and Senate accepted MACo’s amendments, the House Ways and Means Committee and Senate Budget and Taxation Committee disagreed on other provisions of the bill. HB 285 / SB 983 –  Property Tax Credit – Disabled Law Enforcement Officers and Rescue Workers – Federal Police and Criminal Investigators did not advance in the 2022 session.

Bill InformationMACo Coverage

 

MACo supported HB 1186 with amendments. As introduced, this bill would have altered the eligibility criteria of an existing local option property tax credit for specified residents by extending the maximum duration of the credit from five to ten years. MACo successfully advocated for amendments to grant counties broad flexibility to enact this credit by eliminating limitations on the duration and maximum value of the credit. HB 1186 – Property Tax Credit – Elderly Individuals, Veterans, and Surviving Spouses – Alterations passed the General Assembly and awaits the Governor’s signature.

Bill InformationMACo Coverage

 

MACo supported HB 103 / SB 85 with amendments. This bill would have required local governments to grant, by law, a prescriptive property tax credit for specified disabled veterans and surviving spouses. As introduced, this bill was a significant unfunded mandate on county governments. As such, MACo requested a “local option amendment” to relieve that mandate and allow each jurisdiction to weigh these costs appropriately. HB 103 / SB 85 – Property Tax Credit for Disabled Veterans – Established did not advance in the 2022 session.

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MACo opposed HB 224 / SB 148. This bill would have significantly expanded an existing property tax exemption for disabled veterans and surviving spouses. MACo expressed concerns with the carryover county fiscal effects of this legislation and prefers approaches that provide local autonomy to determine the best way to provide tax incentives, rather than those that mandate reductions in local revenue sources. HB 224 / SB 148 Property Tax Exemption – Disabled Veterans, did not advance in the 2022 session.

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MACo submitted a letter of information on SB 760, detailing the importance of horizontal tax equity. SB 760 Property Tax Exemption – Religious Group or Organization – Third-Party Leases failed to advance in the 2022 session.

Bill InformationMACo Coverage

 

MACo opposed HB 844. This bill would have required a costly and redundant notice requirement for the antiquated, inefficient, and confusing constant yield tax law. HB 844 Real Property Tax Rates – Notification to Real Property Taxpayers did not advance in the 2022 session.

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MACo supported HB 795 / SB 724 with amendments. This bill revisits a years-old compromise on local taxation of heavy equipment with two policy changes, each with hard-to-quantify effects on local revenues. Counties were willing to work toward a reasonable resolution on the administration of this tax, but urged the General Assembly to retain the central tenets of its prior compromise. HB 795 / SB 724 Gross Receipts Tax on Short-Term Lease or Rental of Heavy Equipment – Alterations passed the General Assembly (without MACo’s amendments) and awaits the Governor’s signature.

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Tax Sales

MACo supported HB 1196. This bill grants counties broad discretion to establish criteria for withholding properties from tax sale, which could help minimize tax collection costs, assist with the payment of overdue taxes, and ultimately allow homeowners to remain in their homes. HB 1196 – Tax Sales – Alternative Collection Programs passed the General Assembly and awaits the Governor’s signature.

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MACo supported HB 979. This bill would have required the State Department of Assessments and Taxation to automatically enroll eligible individuals in the Homeowner Protection Program. In addition, the bill required a one-time State appropriation of $20 million to ensure the program can deliver on its mission to divert homeowners from the private tax lien process, minimize tax collection costs, assist with the payment of overdue taxes, and ultimately allow homeowners to remain in their homes. HB 979 – Tax Sales – Homeowner Protection Program – Automatic Enrollment and Funding failed to advance in the 2022 session.

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More information on tax-related legislation tracked by MACo during the 2022 legislative session. 

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