Income Tax - Energy Efficient Home Improvement Credit

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0087*

HOUSE BILL 87
Q3 6lr1271
(PRE–FILED)
By: Delegate Vogel
Requested: October 21, 2025
Introduced and read first time: January 14, 2026
Assigned to: Ways and Means

A BILL ENTITLED

AN ACT concerning 1

Income Tax – Energy Efficient Home Improvement Credit 2

FOR the purpose of allowing a credit against the State income tax for certain costs paid or 3
incurred by an individual for certain energy efficient home improvements made to 4
the individual’s residence during the taxable year, subject to certain limitations; and 5
generally relating to a credit against the State income tax for energy efficient home 6
improvements. 7

BY adding to 8
Article – Tax – General 9
Section 10–758 10
Annotated Code of Maryland 11
(2022 Replacement Volume and 2025 Supplement) 12

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14

Article – Tax – General 15

10–758. 16

(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 17
INDICATED. 18

(2) “ENERGY EFFICIENT HOME IMPROVEMENT” MEANS: 19

(I) A HOME ENERGY AUDIT; 20

(II) A QUALIFIED ENERGY EFFICIENCY IMPROVEMENT; OR 21
2 HOUSE BILL 87

(III) A RESIDENTIAL ENERGY PROPERTY EXPENDITURE. 1

(3) “HOME ENERGY AUDIT”, “QUALIFIED ENERGY EFFICIENCY 2
IMPROVEMENT”, AND “RESIDENTIAL ENERGY PROPERTY EXPENDITURE” HAVE THE 3
MEANINGS STATED IN § 25C OF THE INTERNAL REVENUE CODE. 4

(B) (1) SUBJECT TO THE LIMITATIONS OF THIS SECTION, AN INDIVIDUAL 5
MAY CLAIM A CREDIT A GAINST THE STATE INCOME TAX FOR UP TO 30% OF THE 6
COSTS PAID OR INCURR ED BY THE INDIVIDUAL, NOT TO EXCEED $3,200 IN THE 7
AGGREGATE, FOR ENERGY EFFICIENT HOME IMPROVEMENT S MADE TO THE 8
INDIVIDUAL’S RESIDENCE IN THE TAXABLE YEAR. 9

(2) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , A 10
CREDIT ALLOWED UNDER THIS SUBSECTION MAY NOT EXCEED: 11

1. $150 FOR A HOME ENERGY AUDIT; 12

2. $600 FOR A RESIDENTIAL ENERGY P ROPERTY 13
EXPENDITURE OTHER THAN AN EXPENDITURE DESCRIBED UNDER PARAGRAPH (3) 14
OF THIS SUBSECTION; 15

3. $600 TOTAL FOR EXTERIOR WINDOWS AND EXTERIOR 16
SKYLIGHTS; OR 17

4. $500 TOTAL FOR ALL EXTERIOR DOORS AT A RATE OF 18
UP TO $250 PER DOOR. 19

(II) THE AGGREGATE AMOUNT OF THE CREDIT ALLOWE D 20
UNDER THIS SECTION FOR ENERGY EFFICIENT HOME IMPROVEMENTS DESCRIBED 21
UNDER SUBPARAGRAPH (I) OF THIS PARAGRAPH MA Y NOT EXCEED $1,200 FOR A 22
TAXABLE YEAR. 23

(3) A CREDIT ALLOWED UNDER THIS SECTION FOR A RESIDENTIAL 24
ENERGY PROPERTY EXPENDITURE MAY NOT EXCEED $2,000 FOR A TAXABLE YEAR 25
FOR THE PURCHASE OR INSTALLATION OF: 26

(I) A HEAT PUMP; 27

(II) A HEAT PUMP WATER HEATER; OR 28

(III) A BIOMASS STOVE OR BIOMASS BOILER. 29

HOUSE BILL 87 3

(C) (1) AN INDIVIDUAL MAY CLAIM A CREDIT U NDER THIS SECTION IF 1
THE ENERGY EFFICIENT HOME IMPROVEMENT: 2

(I) WAS MADE TO THE RESIDENCE OF THE TAXPAYER; AND 3

(II) WAS ORIGINALLY PLACED IN SERVICE BY THE TAXPAYER. 4

(2) (I) AN INDIVIDUAL MAY CLAIM AN EXPENDI TURE ON AN 5
ENERGY EFFICIENT HOME IMPROVEMENT THAT WAS MADE TO MULTIPLE DWELLING 6
UNITS. 7

(II) THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SECTION 8
FOR AN ENERGY EFFICI ENT HOME IMPROVEMENT THAT WAS MADE TO MUL TIPLE 9
DWELLING UNITS SHALL BE COMPUTED SEPARATE LY WITH RESPECT TO T HE 10
AMOUNT OF THE EXPENDITURE FOR EACH DWELLING UNIT. 11

(3) IN THE CASE OF A DWELLING UNIT TO WHICH ENERGY EFFICIENT 12
HOME IMPROVEMENTS AR E MADE THAT IS JOINT LY OCCUPIED AND USED DURING 13
ANY CALENDAR YEAR AS A RESIDENCE BY TWO O R MORE INDIVIDUALS , THE 14
EXPENDITURES ALLOCATED TO AN INDIVIDUAL FOR THE TAXABLE YEAR SHALL BE 15
AN AMOUNT EQUAL TO THE LESSER OF: 16

(I) THE AMOUNT OF EXPENDITURES MADE BY THE INDIVIDUAL 17
TO THE DWELLING UNIT DURING THE CALENDAR YEAR; OR 18

(II) THE MAXIMUM AMOUNT O F EXPENDITURES MADE TO THE 19
DWELLING UNIT DURING THE CALENDAR YEAR MULTIPLIED BY A FRACTION: 20

1. THE NUMERATOR OF WHI CH IS THE AMOUNT OF 21
EXPENDITURES WITH RESPECT TO THE DWELLING UNIT MADE BY THE INDIVIDUAL 22
DURING THE CALENDAR YEAR; AND 23

2. THE DENOMINATOR OF W HICH IS THE TOTAL 24
EXPENDITURES MADE BY ALL INDIVIDUALS WITH RESPECT TO THE DWELLING UNIT 25
DURING THE CALENDAR YEAR. 26

(4) AN INDIVIDUAL WHO IS A TENANT –STOCKHOLDER OF A 27
COOPERATIVE HOUSING CORPORATION SHALL BE TREATED AS HAVING MA DE THE 28
INDIVIDUAL’S PROPORTIONATE SHAR E OF ANY EXPENDITURE S FOR AN ENERGY 29
EFFICIENT HOME IMPROVEMENT BY THE COOPERATIVE HOUSING CORPORATION. 30

(5) AN INDIVIDUAL WHO IS A MEMBER OF A CON DOMINIUM 31
MANAGEMENT ASSOCIATION, AS DEFINED UNDER § 25D(E)(6)(B) OF THE INTERNAL 32
4 HOUSE BILL 87

REVENUE CODE, SHALL BE TREATED AS HAVING MADE THE INDI VIDUAL’S 1
PROPORTIONATE SHARE OF ANY EXPENDITURES FOR AN ENERGY EFFICIENT HOME 2
IMPROVEMENT BY THE CONDOMINIUM MANAGEMENT ASSOCIATION WITH RESPECT 3
TO THE CONDOMINIUM THAT THE INDIVIDUAL OWNS. 4

(6) IF LESS THAN 80% OF THE USE OF AN ENE RGY EFFICIENT HOME 5
IMPROVEMENT IS FOR N ONBUSINESS PURPOSES, ONLY THE PORTION OF THE 6
EXPENDITURE FOR THE IMPROVEMENT ALLOCABLE FOR NONBUSINESS PU RPOSES 7
MAY BE CONSIDERED. 8

(7) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 9
PARAGRAPH, AN EXPENDITURE FOR A N ENERGY EFFICIENT H OME IMPROVEMENT 10
SHALL BE T REATED AS BEING MADE WHEN THE ORIGINAL IN STALLATION OF THE 11
IMPROVEMENT IS COMPLETED. 12

(II) FOR AN ENERGY EFFICIENT HOME IMPROVEMENT MADE IN 13
CONNECTION WITH CONS TRUCTION OR RECONSTR UCTION OF A RESIDENC E, THE 14
EXPENDITURE SHALL BE TREATED AS BEING MADE WHEN THE ORIGINAL USE OF THE 15
RESIDENCE BY THE TAXPAYER BEGINS. 16

(D) (1) IN THIS SUBSECTION, “SUBSIDIZED ENERGY FINANCING” MEANS 17
FINANCING PROVIDED U NDER A FEDERAL, STATE, OR LOCAL PROGRAM , A 18
PRINCIPAL PURPOSE OF WHICH IS TO PROVIDE SUBSIDIZED FINANCING FOR 19
PROJECTS DESIGNED TO CONSERVE OR PRODUCE ENERGY. 20

(2) AN INDIVIDUAL MAY NOT RECEIVE A CREDIT UND ER THIS 21
SECTION FOR AN ENERGY EFFICIENT HOME IMPROVEMENT THAT WAS PURCHASED 22
WITH SUBSIDIZED ENERGY FINANCING. 23

(E) AN INDIVIDUAL SHALL P ROVIDE ANY DOCUMENTS OR INFORMATION 24
REQUIRED BY THE COMPTROLLER TO RECEIVE A CREDIT ALLOWED UNDER THIS 25
SECTION. 26

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 27
1, 2026, and shall be applicable to all taxable years beginning after December 31, 2025. 28