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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0880*
HOUSE BILL 880
Q3 6lr1258
By: Delegate Palakovich Carr
Introduced and read first time: February 4, 2026
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Maryland Income Tax – Decoupling From Amendments to the Internal Revenue 2
Code – Depreciation and Business Interest Expenses 3
FOR the purpose of providing certain modifications to the federal adjusted gross income of 4
an individual or f ederal taxable income of a corporation for Maryland income tax 5
purposes relating to certain deductions under the federal income tax for the 6
depreciation of certain prop erty and certain business interest expenses ; and 7
generally relating to the effect of amendments to the Internal Revenue Code on the 8
Maryland income tax. 9
BY repealing and reenacting, with amendments, 10
Article – Tax – General 11
Section 10–210.1 12
Annotated Code of Maryland 13
(2022 Replacement Volume and 2025 Supplement) 14
BY repealing and reenacting, without amendments, 15
Article – Tax – General 16
Section 10–310 17
Annotated Code of Maryland 18
(2022 Replacement Volume and 2025 Supplement) 19
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 20
That the Laws of Maryland read as follows: 21
Article – Tax – General 22
10–210.1. 23
(a) (1) In this section the following words have the meanings indicated. 24
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(2) “Depreciation” includes any deduction allowed under § 179 of the 1
Internal Revenue Code. 2
(3) “Heavy duty SUV” means a 4–wheeled vehicle that: 3
(i) is manufactured primarily for use on public streets, roads, and 4
highways; 5
(ii) is rated at more than 6,000 but not more than 14,000 pounds 6
gross vehicle weight; and 7
(iii) would be a passenger automobile as defined in § 280F of the 8
Internal Revenue Code if it were rated at 6,000 pounds gross vehicle weight or less. 9
(4) (i) “Manufacturing entity” means a person conducting or operating 10
a trade or business that is primarily engaged in activities that, in accordance with the 11
North American Industrial Classification System (NAICS), United States Manual, United 12
States Office of Management and Budget, 2012 Edition, would be included in Sector 31, 32, 13
or 33. 14
(ii) “Manufacturing entity” does not include a refiner, as defined in 15
§ 10–101 of the Business Regulation Article. 16
(b) In addition to the modifications under §§ 10 –204 through 10 –210 of this 17
subtitle, to determine Maryland adjusted gross income of an individual: 18
(1) (i) except as provided in item (ii) of this item, an amount is added to 19
or subtracted from federal adjusted gross income to reflect the determination of the 20
depreciation deduction provided under § 167(a) of the Internal Revenue Code and the 21
adjusted basis of property without regard to the additional allowance under § 168(k) of the 22
Internal Revenue Code; and 23
(ii) item (i) of this item does not apply to property placed in service 24
by a manufacturing entity on or after January 1, 2019; 25
(2) AN AMOUNT IS ADDED T O OR SUBTRACTED FROM FEDERAL 26
ADJUSTED GROSS INCOM E TO RE FLECT THE DETERMINAT ION OF THE 27
DEPRECIATION DEDUCTI ON PROVIDED UNDER § 167(A) OF THE INTERNAL 28
REVENUE CODE AND THE ADJUSTED BASIS OF PROPERTY WITHOUT REGARD TO THE 29
ADDITIONAL ALLOWANCE UNDER § 168(N) OF THE INTERNAL REVENUE CODE; 30
(3) an amount is added to or subtracted from federal adjusted gross income 31
to determine the net operating loss deduction allowed under § 172 of the Internal Revenue 32
Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a 33
carryback period of up to 5 years; 34
HOUSE BILL 880 3
[(3)] (4) (i) except as provided in item (ii) of this item, an amount is 1
added to or subtracted from federal adjusted gross income to reflect the determination of 2
the maximum aggregate costs that the taxpayer may treat as an expense under § 179 of 3
the Internal Revenue Code for any taxable year without regard to any changes made to 4
that section after December 31, 2002: 5
1. increasing above $25,000 the dollar limitation set forth in 6
§ 179(b)(1) of the Internal Revenue Code; or 7
2. increasing above $200,000 the phase –out threshold set 8
forth in § 179(b)(2) of the Internal Revenue Code; and 9
(ii) item (i) of this item does not apply to property that is placed in 10
service by a manufacturing entity on or after January 1, 2019; 11
[(4)] (5) an amount is added to or subtracted from federal adjusted gross 12
income to reflect the recognition of income from discharge of indebtedness and the 13
allowance of any deduction with respect to original issue discount without regard to § 108(i) 14
of the Internal Revenue Code; [and] 15
[(5)] (6) an amount is added to or subtracted from federal adjusted gross 16
income to reflect the determination of the depreciation deduction with respect to any heavy 17
duty SUV as if the heavy duty SUV were subject to the limitations of § 280F of the Internal 18
Revenue Code in the same manner as it would be if the vehicle were rated at 6,000 pounds 19
gross vehicle weight or less; AND 20
(7) AN AMOUNT IS ADDED T O OR SUBTRACTED FROM FEDERAL 21
ADJUSTED GROSS INCOME TO DETERMINE THE DEDUCTION FOR INTEREST UNDER § 22
163 OF THE INTERNAL REVENUE CODE WITHOUT REGARD T O CHANGES TO THE 23
LIMITATION UNDER § 163(J) OF THE INTERNAL REVENUE CODE MADE ON OR AFTER 24
JULY 4, 2025. 25
10–310. 26
In addition to the modifications under §§ 10–305 through 10–309 of this subtitle, to 27
determine Maryland modified income the federal taxable income of a corporation shall be 28
adjusted as provided for an individual under § 10–210.1 of this title. 29
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 30
1, 2026, and shall be applicable to all taxable years beginning after December 31, 2025. 31