Earned Income Tax Credit - Individuals Without Qualifying Children - Eligibility

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0377*

SENATE BILL 377
Q3 6lr2419
SB 668/25 – B&T CF HB 542
By: Senator Guzzone
Introduced and read first time: January 27, 2026
Assigned to: Budget and Taxation

A BILL ENTITLED

AN ACT concerning 1

Earned Income Tax Credit – Individuals Without Qualifying Children – 2
Eligibility 3

FOR the purpose of expanding eligibility for the Maryland earned income tax credit for 4
individuals without qualifying children by alt ering the income thresholds at which 5
the credit phases out; providing that, after a certain taxable year, the income 6
threshold and phase–out amounts are adjusted annually for inflation; and generally 7
relating to the Maryland earned income tax credit. 8

BY repealing and reenacting, with amendments, 9
Article – Tax – General 10
Section 10–704 11
Annotated Code of Maryland 12
(2022 Replacement Volume and 2025 Supplement) 13

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14
That the Laws of Maryland read as follows: 15

Article – Tax – General 16

10–704. 17

(a) (1) In this section the following words have the meanings indicated. 18

(2) “Applicable county income tax rate” means: 19

(i) if a county imposes a marginal income tax rate, the county’s 20
lowest marginal income tax rate for the taxable year; or 21

(ii) if a county imposes one or more flat income tax rates, the county 22
income tax rate for the taxable year that is applicable to the taxpayer’s income level and 23
2 SENATE BILL 377

filing status as established by the county. 1

(3) “Taxpayer” means: 2

(i) an individual filing an income tax return; or 3

(ii) a married couple filing a joint income tax return. 4

(b) (1) A resident who is a taxpayer may claim a credit against the State 5
income tax for a taxable year in the amount determined under subsection (c) of this section 6
for earned income. 7

(2) A resident who is a taxpayer may claim a credit against the county 8
income tax for a taxable year in the amount determined under subsection (d) of this section 9
for earned income. 10

(c) (1) Except as provided in paragraphs (2) and (3) of this subsection and 11
subject to subsection (e) of this section, the credit allowed against the State income tax 12
under subsection (b)(1) of this section is the lesser of: 13

(i) 50% of the earned income credit allowable for the taxable year 14
under § 32 of the Internal Revenue Code or that would have been allowable but for the 15
limitation under § 32(m) of the Internal Revenue Code; or 16

(ii) the State income tax for the taxable year. 17

(2) (i) Subject to subparagraph (iii) of this paragraph and subsection (e) 18
of this section, a resident may claim a refund in the amount, if any, by which the applicable 19
percentage specified in subparagraph (ii) of this paragraph of the earned income credit 20
allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State 21
income tax for the taxable year. 22

(ii) Subject to subparagraph (iii) of this paragraph, the applicable 23
percentage of the earned income credit allowable under § 32 of the Internal Revenue Code 24
to be used for purposes of determining the refund provided under this paragraph is: 25

1. 25% for a taxable year beginning after December 31, 2013, 26
but before January 1, 2015; 27

2. 25.5% for a taxable year beginning after December 31, 28
2014, but before January 1, 2016; 29

3. 26% for a taxable year beginning after December 31, 2015, 30
but before January 1, 2017; 31

4. 27% for a taxable year beginning after December 31, 2016, 32
but before January 1, 2018; 33
SENATE BILL 377 3

5. 28% for a taxable year beginning after December 31, 2017, 1
but before January 1, 2020; and 2

6. 45% for a taxable year beginning after December 31, 2019. 3

(iii) For purposes of determining the refund provided under this 4
paragraph, the earned income credit allowable under § 32 of the Internal Revenue Code is 5
calculated without regard to the limitation under § 32(m) of the Internal Revenue Code. 6

(3) (i) For purposes of this section for an individual without a qualifying 7
child, the credit allowable for a taxable year under § 32 of th e Internal Revenue Code is 8
calculated without regard to: 9

1. the minimum age requirement under § 32(c)(1)(A)(ii)(II) of 10
the Internal Revenue Code; or 11

2. the limitation under § 32(m) of the Internal Revenue Code. 12

(ii) [Subject to subparagraph (iii) of this paragraph, the] THE credit 13
allowed against the State income tax under subsection (b)(1) of this section for an individual 14
without a qualifying child is: 15

1. equal to 100% of the earned income credit allowable for a 16
taxable year under § 32 of the Internal Revenue Code; AND 17

2. CALCULATED BY SUBSTITUTING: 18

A. $7,840 FOR THE EARNED INCOM E AMOUNT IN § 19
32(B)(2)(A) OF THE INTERNAL REVENUE CODE; AND 20

B. $19,160 FOR THE PHASE –OUT AMOUNT IN § 21
32(B)(2)(A) OF THE INTERNAL REVENUE CODE. 22

[(iii) For a taxable year beginning after December 31, 2019, but before 23
January 1, 2023, the tax credit allowed under this paragraph may not exceed $530 for a 24
taxable year.] 25

(III) 1. FOR EACH TAXABLE YEAR BEGINNING AFTER 26
DECEMBER 31, 2025, THE EARNED INCOME AMOUNT AND PH ASE–OUT AMOUNT IN 27
SUBPARAGRAPH (II)2 OF THIS PARAGRAPH SH ALL BE INCREASED BY AN AMOUNT 28
EQUAL TO THE PRODUCT OF MULTIPLYING EACH AMOUNT BY THE COST–OF–LIVING 29
ADJUSTMENT SPECIFIED IN SUBSUBPARAGRAPH 2 OF THIS SUBPARAGRAPH. 30

2. FOR THE PURPOSES OF THIS SUB PARAGRAPH, THE 31
4 SENATE BILL 377

COST–OF–LIVING ADJUSTMENT IS THE COST–OF–LIVING ADJUSTMENT WITHIN THE 1
MEANING OF § 1(F)(3) OF THE INTERNAL REVENUE CODE FOR THE CALENDAR YEAR 2
IN WHICH THE TAXABLE YEAR BEGINS, AS DETERMINED BY THE COMPTROLLER BY 3
SUBSTITUTING “CALENDAR YEAR 2022” FOR “CALENDAR YEAR 2016” IN § 1(F)(3)(A) 4
OF THE INTERNAL REVENUE CODE. 5

3. IF ANY INCREASE DETER MINED UNDER 6
SUBSUBPARAGRAPH 1 OF THIS SUBPARAGRAPH IS NOT A MULTIPLE OF $10, THE 7
INCREASE SHALL BE ROUNDED DOWN TO THE NEXT LOWEST MULTIPLE OF $10. 8

(iv) If the tax credit allowed under this paragraph in any taxable year 9
exceeds the total tax otherwise payable by the individual without a qualifying child for that 10
taxable year, the individual may claim a refund in the amount of the excess. 11

(d) (1) Except as provided in paragraph (2) of this subsection and subject to 12
subsection (e) of this section, the credit allowed against the county income tax under 13
subsection (b)(2) of this section is the lesser of: 14

(i) the earned income credit allowable for the taxable year under § 15
32 of the Internal Revenue Code or that would have been allowable but for the limitation 16
under § 32(m) of the Internal Revenue Code multiplied by 10 times the applicable county 17
income tax rate for the taxable year; or 18

(ii) the county income tax for the taxable year. 19

(2) (i) A county may provide, by law, for a refundable county earned 20
income credit as provided in this paragraph. 21

(ii) If a county provides for a refundable county earned income credit 22
under this paragraph, on or before July 1 prior to the beginning of the first taxable year for 23
which it is applicable, the county shall give the Comptroller notice of the refundable county 24
earned income credit. 25

(iii) If a county provides for a refundable county earned income credit 26
under this paragraph, a resident may claim a refund of the amount, if any, by which the 27
product of multiplying the credit allowable for the taxable year under § 32 of the Internal 28
Revenue Code or that would have been allowable but for the limitation under § 32(m) of 29
the Internal Revenue Code by 5 times the applicable county income tax rate for the taxable 30
year exceeds the county income tax for the taxable year. 31

(iv) The amount of any refunds payable under a refundable county 32
earned income credit operates to reduce the income tax revenue from individuals 33
attributable to the county income tax for that county. 34

(e) (1) Subject to paragraph (2) of this subsection, for an individual who is a 35
resident of the State for only a part of the year, the amount of the credit or refund allowed 36
SENATE BILL 377 5

under this section shall be determined based on the part of the earned income credit 1
allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable 2
to Maryland, determined by multiplying the federal earned income credit by a fraction: 3

(i) the numerator of which is the Maryland adjusted gross income of 4
the individual; and 5

(ii) the denominator of which is the federal adjusted gross income of 6
the individual. 7

(2) For purposes of determining the amount of the credit or refund under 8
paragraph (1) of this subsection, the part of the earned income credit allowable for the 9
taxable year under § 32 of the Internal Revenue Code is calculated without regard to the 10
limitation under § 32(m) of the Internal Revenue Code. 11

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 12
1, 2026, and shall be applicable to all taxable years beginning after December 31, 2025. 13