Primary and Secondary Education - Education Savings Account Program - Establishment

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1204*

HOUSE BILL 1204
F5, Q3 6lr2635
HB 704/24 – APP
By: Delegates Wivell, Baker, Hinebaugh, Miller, and Valentine
Introduced and read first time: February 11, 2026
Assigned to: Ways and Means

A BILL ENTITLED

AN ACT concerning 1

Primary and Secondary Education – Education Savings Account Program – 2
Establishment 3

FOR the purpose of establishing the Education Savings Account Program in the State 4
administered by the State Department of Education; allowing a subtraction 5
modification under the State income tax for deposits into an education savings 6
account; and generally relating to the Education Savings Account Program. 7

BY adding to 8
Article – Education 9
Section 9.12–101 through 9.12–106 to be under the new title “Title 9.12. Education 10
Savings Account Program” 11
Annotated Code of Maryland 12
(2022 Replacement Volume and 2025 Supplement) 13

BY repealing and reenacting, without amendments, 14
Article – Tax – General 15
Section 10–208(a) 16
Annotated Code of Maryland 17
(2022 Replacement Volume and 2025 Supplement) 18

BY adding to 19
Article – Tax – General 20
Section 10–208(dd) 21
Annotated Code of Maryland 22
(2022 Replacement Volume and 2025 Supplement) 23

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 24
That the Laws of Maryland read as follows: 25

Article – Education 26
2 HOUSE BILL 1204

TITLE 9.12. EDUCATION SAVINGS ACCOUNT PROGRAM. 1

9.12–101. 2

(A) IN THIS TITLE THE FOL LOWING WORDS HAVE TH E MEANINGS 3
INDICATED. 4

(B) “ACCOUNT” MEANS AN EDUCATION SAVINGS ACCOUNT OPENED WITH A 5
PRIVATE FINANCIAL MANAGEMENT FIRM OR SIMILAR ENTITY THAT IS QUALIFIED BY 6
THE DEPARTMENT UNDER THIS TITLE. 7

(C) (1) “ELIGIBLE STUDENT” MEANS A STUDENT WHO: 8

(I) IS ELIGIBLE TO ENROLL IN A PUBLIC SCHOOL IN THE STATE; 9
AND 10

(II) ATTENDED A PUBLIC SCHOOL, CHARTER SCHOOL, OR HOME 11
SCHOOL IN THE STATE FOR NOT LESS TH AN 100 DAYS DURING THE IMME DIATELY 12
PRECEDING FISCAL YEAR. 13

(2) “ELIGIBLE STUDENT” INCLUDES A STUDENT OF AN ACTIVE DUTY 14
MILITARY MEMBER STATIONED IN THE STATE, REGARDLESS OF THE AT TENDANCE 15
REQUIREMENTS UNDER PARAGRAPH (1) OF THIS SUBSECTION. 16

(D) “PARENT” MEANS A LEGAL RESIDENT OF THE STATE WHO IS A PARENT, 17
A GUARDIAN, A CUSTODIAN, OR ANY OTHER PERSON WITH AUTHORITY TO ACT ON 18
BEHALF OF THE ELIGIBLE STUDENT. 19

(E) “PRIVATE TUTORING ” MEANS TUTORING SERVI CES PROVIDED BY A 20
TUTOR WHO: 21

(1) IS A TEACHER LICENSED IN ANY STATE; 22

(2) IS A SUBJECT MATTER EXPERT; OR 23

(3) IS OTHERWISE APPROVED BY THE DEPARTMENT. 24

(F) “PROGRAM” MEANS THE EDUCATION SAVINGS ACCOUNT PROGRAM 25
ESTABLISHED UNDER THIS TITLE. 26

(G) (1) “QUALIFYING SCHOOL ” MEANS ANY NONPUBLIC SCHOOL THAT 27
PROVIDES INSTRUCTION TO PRIMARY OR SECONDARY STUDENTS AND HAS NOTIFIED 28
HOUSE BILL 1204 3

THE DEPARTMENT OF ITS INT ENTION TO PA RTICIPATE IN THE PROGRAM AND 1
COMPLY WITH THE PROGRAM’S REQUIREMENTS. 2

(2) “QUALIFYING SCHOOL” DOES NOT INCLUDE A HOME SCHOOL. 3

(H) “RESIDENT SCHOOL DISTR ICT” MEANS THE SCHOOL SYS TEM IN THE 4
COUNTY IN WHICH THE STUDENT RESIDES. 5

9.12–102. 6

(A) (1) THERE IS AN EDUCATION SAVINGS ACCOUNT PROGRAM IN THE 7
STATE. 8

(2) THE DEPARTMENT SHALL ADMINISTER THE PROGRAM. 9

(B) THE PURPOSE OF THE PROGRAM IS TO PROVIDE STATE GRANTS TO THE 10
ACCOUNT OF THE PAREN T OF AN ELIGIBLE STU DENT TO PROVIDE FOR THE 11
EDUCATION OF THE ELIGIBLE STUDENT. 12

(C) A PARENT OF AN ELIGIBLE STUDENT SHALL BE QUALIFIED FOR A STATE 13
GRANT UNDER THE PROGRAM IF THE PARENT SIGNS AN AGREEMENT W ITH THE 14
DEPARTMENT AGREEING: 15

(1) TO PROVIDE AN EDUCATION FOR THE ELIGIBLE STUDENT IN, AT A 16
MINIMUM, READING, GRAMMAR, SOCIAL STUDIES, AND SCIENCE THAT CON FORMS 17
TO EDUCATIONAL REQUIREMENTS FOR THE ELIGIBLE STUDENT’S GRADE LEVEL AS 18
ESTABLISHED BY THE DEPARTMENT; 19

(2) TO ENROLL THE ELIGIBLE STUDENT IN AN EDUCATION PROGRAM 20
THAT MEETS REGULAR SCHOOL ATTENDANCE REQUIREMENTS; 21

(3) TO ENSURE THAT THE EL IGIBLE STUDENT WILL TAKE ALL 22
ASSESSMENTS REQUIRED UNDER STATE LAW; 23

(4) TO RELEASE THE RESIDE NT SCHOOL DISTRICT F ROM ALL 24
OBLIGATIONS TO EDUCATE THE ELIGIBLE STUDENT; 25

(5) TO NOT ENROLL THE ELIGIBLE STUDENT IN A PUBLIC SCHOOL OR 26
PUBLIC CHARTER SCHOO L EXCEPT FOR CONTRAC TED SERVICES UNDER 27
SUBSECTION (E) OF THIS SECTION; 28

(6) TO USE ALL FUNDS RECE IVED UNDER THIS TITL E EXCLUSIVELY 29
FOR THE ELIGIBLE STU DENT’S EDUCATION EXPENSES UNDER SUBSECTION (E) OF 30
4 HOUSE BILL 1204

THIS SECTION IN KINDERGARTEN THROUGH GRADE 12; 1

(7) TO NOT TRANSFER ANY FUNDS RECEIVED UNDER THIS TITLE TO A 2
BENEFICIARY THAT IS NOT THE ELIGIBLE STU DENT OR THE PARENT O F THE 3
ELIGIBLE STUDENT, OR OTHERWISE TAKE PO SSESSION OF FUNDS TO WHICH THE 4
ELIGIBLE STUDENT OR PARENT OF THE ELIGIBLE STUDENT IS NOT ENTITLED; 5

(8) TO NOT RECEIVE ANY OT HER PUBLIC SUBSIDY F OR THE 6
EDUCATION OF THE ELIGIBLE STUDENT UNLESS ANY FUNDS RECEIVED UNDER THE 7
PROGRAM ARE REDUCED BY THE AMOUNT OF THE SUBSIDY; 8

(9) TO NOT BILL AN INSURA NCE COMPANY, MEDICAID, OR ANY 9
OTHER AGENCY FOR THE SAME SERVICES FOR WHICH FUNDS RECEIVED UNDER THIS 10
TITLE ARE USED; AND 11

(10) TO RETURN ANY UNUSED FUNDS TO THE STATE: 12

(I) WHEN THE STUDENT ACHI EVES A HIGH SCHOOL D IPLOMA 13
OR ITS EQUIVALENT; OR 14

(II) ON THE STUDENT’S REMOVAL FROM A QUALIFYING SCHOOL 15
IN THE STATE. 16

(D) (1) SUBJECT TO PARAGRAPH (5) OF THIS SUBSECTION , ON A 17
QUARTERLY BASIS THE STATE SHALL DEPOSIT I NTO AN ACCOUNT OF AN ELIGIBLE 18
STUDENT AN AMOUNT EQUIVALENT TO: 19

(I) FOR STUDENTS FROM FAM ILIES WHOSE INCOME IS LESS 20
THAN OR EQUAL TO 500% OF THE FEDERAL POVERTY LEVEL FOR THE IMMEDIATELY 21
PRECEDING CALENDAR Y EAR, 75% OF THE PER PUPIL AMO UNT OF STATE AND 22
LOCAL FUNDS FOR EACH EDUCATION PROGRAM IN THE RESIDENT SCHOOL DISTRICT 23
FOR WHICH THE ELIGIB LE STUDENT WOULD BE INC LUDED IN THE ENROLLM ENT 24
COUNT FOR THE CALCULATIONS UNDER TITLE 5, SUBTITLE 2 OF THIS ARTICLE; AND 25

(II) FOR STUDENTS FROM FAM ILIES WHOSE INCOME I S 26
GREATER THAN 500% OF THE FEDERAL POVER TY LEVEL FOR THE IMM EDIATELY 27
PRECEDING CALENDAR YEAR, 50% OF THE PER PUPIL AMO UNT OF STATE AND 28
LOCAL FUNDS FOR EACH EDUCATION PROGRAM IN THE RESIDENT SCHOOL DISTRICT 29
FOR WHICH THE ELIGIB LE STUDENT WOULD BE INCLUDED IN THE ENRO LLMENT 30
COUNT FOR THE CALCULATIONS UNDER TITLE 5, SUBTITLE 2 OF THIS ARTICLE. 31

(2) (I) THE ELIGIBLE STUDENT SHALL BE COUNTED IN THE 32
ENROLLMENT COUNT USE D FOR PURPOSES OF CA LCULATING THE STATE AND 33
HOUSE BILL 1204 5

LOCAL FUNDING FOR THE EDUCATION PROGRAMS UNDER TITLE 5, SUBTITLE 2 OF 1
THIS ARTICLE. 2

(II) THE COUNTY SHALL REIM BURSE THE STATE FOR TH E 3
LOCAL FUNDING REQUIRED UNDER TITLE 5, SUBTITLE 2 OF THIS ARTICLE THAT IS 4
PROVIDED UNDER PARAGRAPH (1) OF THIS SUBSECTION. 5

(3) THE AMOUNT DEPOSITED UNDER PARAGRAPH (1) OF THIS 6
SUBSECTION SHALL BE DEDUCTED FROM THE AMOUNT OF STATE AND LOCAL FUNDS 7
PROVIDED TO THE RESIDENT S CHOOL DISTRICT UNDER TITLE 5, SUBTITLE 2 OF 8
THIS ARTICLE. 9

(4) A PARENT OF AN ELIGIBL E STUDENT MAY DEPOSI T ADDITIONAL 10
FUNDS TO AN ACCOUNT ON A PRE–TAX BASIS AS PROVIDED UNDER § 10–208(DD) OF 11
THE TAX – GENERAL ARTICLE. 12

(5) THE FUNDS IN AN ACCOUNT MAY BE USED ONLY FOR EDUCATION 13
EXPENSES UNDER SUBSE CTION (E) OF THIS SECTION AND AS APPROVED BY THE 14
DEPARTMENT. 15

(E) PARENTS OF AN ELIGIBL E STUDENT MAY USE TH E FUNDS IN THE 16
ACCOUNT ONLY FOR THE FOLLOWING EXPENSES: 17

(1) TUITION AND FEES AT A QUALIFYING SCHOOL; 18

(2) TEXTBOOKS OR UNIFORMS REQUIRED BY A QUALIFYING SCHOOL; 19

(3) PAYMENT FOR PRIVATE TUTORING; 20

(4) PAYMENT FOR PURCHASE OF CURRICULAR MATERI ALS, ANY 21
SUPPLEMENTAL MATERIA LS REQUIRED FOR THE CURRICULUM, AND 22
INSTRUCTIONAL MATERIALS; 23

(5) TUITION OR FEES FOR A NONPUBLIC ONLINE LEA RNING 24
PROGRAM; 25

(6) FEES FOR NATIONAL NOR M–REFERENCED EXAMINATI ONS, 26
ADVANCED PLACEMENT EXAMINATIONS OR SIMILAR COURSES, ANY EXAMINATIONS 27
RELATED TO POSTSECONDARY ADMISSION, AND TECHNICAL EDUCATION COURSES; 28

(7) EDUCATION SERVICES FR OM A LICENSED OR ACC REDITED 29
PROVIDER FOR ELIGIBLE STUDENTS WITH DISABILITIES OR WITH SPECIAL NEEDS; 30

6 HOUSE BILL 1204

(8) CONTRACTED EDUCATION SERVICES PROVIDED AT A PUBLIC 1
SCHOOL OR WITHIN A LOCAL SCHOOL SYSTEM; 2

(9) IF APPLICABLE: 3

(I) INTERNET SERVICE PROVIDER FEES; OR 4

(II) ONLINE LEARNING FEES; AND 5

(10) ANY OTHER EDUCATION E XPENSES APPROVED BY THE 6
DEPARTMENT. 7

(F) A QUALIFYING SCHOOL , A PRIVATE TUTORING P ROVIDER, OR ANY 8
OTHER EDUCATION PROV IDER MAY NOT REFUND , REBATE, OR SHARE THE GRANT 9
PROVIDED UNDER THIS TITLE WITH A PARENT OR AN ELIGIBLE STUDENT. 10

(G) THE DEPARTMENT SHALL PROVIDE WRITTEN NOTICE TO PARENTS ON: 11

(1) THE ELIGIBLE USES OF ACCOUNT FUNDS; 12

(2) THE RESPONSIBILITIES OF THE PARENT; AND 13

(3) THE DUTIES OF THE DEPARTMENT. 14

9.12–103. 15

(A) (1) THE DEPARTMENT SHALL QUAL IFY PRIVATE FINANCIA L 16
MANAGEMENT FIRMS OR SIMILAR ENTITIES TO MANAGE ACCOUNTS. 17

(2) THE DEPARTMENT SHALL ESTABLISH REASONABLE FEES BASED 18
ON MARKET RATES. 19

(B) (1) (I) THE DEPARTMENT MAY CONDUCT OR CONTRACT FOR THE 20
AUDITING OF ACCOUNTS. 21

(II) AT A MINIMUM, A RANDOM SAMPLING OF ACCOUNTS SHALL 22
BE AUDITED ANNUALLY. 23

(2) THE DEPARTMENT MAY DETERM INE A PARENT INELIGI BLE FOR 24
THE PROGRAM IF SUBSTANTIAL MISUSE OF ACCOUNT FUNDS OCCURS. 25

(3) THE DEPARTMENT MAY REFER ANY SUBSTANTIAL MISU SE OF 26
ACCOUNT FUNDS TO THE ATTORNEY GENERAL FOR FURTHER INVESTIGATION. 27
HOUSE BILL 1204 7

9.12–104. 1

(A) A QUALIFYING SCHOOL SHALL: 2

(1) COMPLY WITH APPLICABL E HEALTH AND SAFETY LAWS OR 3
CODES; 4

(2) HOLD A VALID OCCUPANCY PERMIT IF REQUIRED; 5

(3) CERTIFY COMPLIANCE WI TH NONDISCRIMINATION POLICIES 6
UNDER TITLE 42 OF THE UNITED STATES CODE; 7

(4) CONDUCT CRIMINAL BACKGROUND CHECKS ON EMPLOYEES; 8

(5) REFUSE TO EMPLOY INDIVIDUALS WHO: 9

(I) ARE INELIGIBLE FOR EMPLOYMENT UNDER STATE LAW; OR 10

(II) POSE A THREAT TO THE SAFETY OF STUDENTS; 11

(6) OFFER ALL APPROPRIATE STANDARDIZED ASSESSMENTS; 12

(7) HAVE NO RECORD OF FRAUD OR ABUSE; 13

(8) ON REQUEST , PROVIDE PARENTS OF P ROSPECTIVE STUDENTS 14
DETAILS ABOUT THE SC HOOL’S PROGRAMS , QUALIFICATIONS, EXPERIENCE, AND 15
CAPACITY TO SERVE STUDENTS; AND 16

(9) BE EITHER: 17

(I) AN APPROVED NONPUBLIC SCHOOL; OR 18

(II) A NONPUBLIC SCHOOL WITH PROVISIONAL APPROVAL. 19

(B) TO ENSURE APPROPRIATE EXPENDITURE OF FUNDS , A QUALIFYING 20
SCHOOL SHALL PROVIDE PARENTS WITH A RECEIPT FOR ALL QU ALIFYING 21
EXPENDITURES. 22

9.12–105. 23

THE RESIDENT SCHOOL DISTRICT SHALL PROVIDE A QUALIFYING SCHOOL OR 24
PROVIDER THAT HAS ADMITTED AN ELIGIBLE STUDENT WITH A COMPLETE COPY OF 25
8 HOUSE BILL 1204

THE STUDENT ’S SCHOOL RECORD IN C OMPLIANCE WITH THE FEDERAL FAMILY 1
EDUCATIONAL RIGHTS AND PRIVACY ACT. 2

9.12–106. 3

THE DEPARTMENT SHALL ADOPT REGULATIONS NECESSARY TO CARRY OUT 4
THIS TITLE. 5

SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 6
as follows: 7

Article – Tax – General 8

10–208. 9

(a) In addition to the modification under § 10 –207 of this subtitle, the amounts 10
under this section are subtracted from the federal adjusted gross income of a resident to 11
determine Maryland adjusted gross income. 12

(DD) (1) (I) IN THIS SUBSECTION THE FOLLOWING WORDS HAVE THE 13
MEANINGS INDICATED. 14

(II) “ACCOUNT” HAS THE MEANING STAT ED IN § 9.12–101 OF 15
THE EDUCATION ARTICLE. 16

(III) “PARENT” HAS THE MEANING STATED IN § 9.12–101 OF THE 17
EDUCATION ARTICLE. 18

(IV) “PROGRAM” MEANS THE EDUCATION SAVINGS ACCOUNT 19
PROGRAM ESTABLISHED UNDER TITLE 9.12 OF THE EDUCATION ARTICLE. 20

(2) THE SUBTRACTION UNDER SUBSECTION (A) OF THIS SECTION 21
INCLUDES THE AMOUNT DEPOSITED INTO AN AC COUNT ESTABLISHED UNDER THE 22
PROGRAM BY A PARENT DURING THE TAXABLE YEAR. 23

SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 24
1, 2026, and Section 2 of this Act shall be applicable to all taxable years beginning after 25
December 31, 2025. 26