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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0987*
SENATE BILL 987
Q3, J1 6lr3577
By: Senator Lewis Young
Introduced and read first time: February 15, 2026
Assigned to: Rules
A BILL ENTITLED
AN ACT concerning 1
Corporate Income Tax – Addition Modification – Direct–to–Consumer 2
Pharmaceutical Advertising 3
FOR the purpose of providing an addition modification under the corporate income tax for 4
the amount of certain direct –to–consumer advertising expenses for certain covered 5
drugs paid or incurred during the taxable year that are deducted under the Internal 6
Revenue Code; providing for the distribution of revenue attributable to the addition 7
modification; and generally relating to an addition modification for 8
direct–to–consumer advertising expenses. 9
BY repealing and reenacting, without amendments, 10
Article – Insurance 11
Section 31–107(a) 12
Annotated Code of Maryland 13
(2017 Replacement Volume and 2025 Supplement) 14
BY repealing and reenacting, with amendments, 15
Article – Insurance 16
Section 31–107(e)(2) 17
Annotated Code of Maryland 18
(2017 Replacement Volume and 2025 Supplement) 19
BY adding to 20
Article – Insurance 21
Section 31–107(g)(6) 22
Annotated Code of Maryland 23
(2017 Replacement Volume and 2025 Supplement) 24
BY adding to 25
Article – Tax – General 26
Section 2–605.4 and 10–305(e) 27
2 SENATE BILL 987
Annotated Code of Maryland 1
(2022 Replacement Volume and 2025 Supplement) 2
BY repealing and reenacting, with amendments, 3
Article – Tax – General 4
Section 2–606(a) 5
Annotated Code of Maryland 6
(2022 Replacement Volume and 2025 Supplement) 7
BY repealing and reenacting, without amendments, 8
Article – Tax – General 9
Section 10–305(a) 10
Annotated Code of Maryland 11
(2022 Replacement Volume and 2025 Supplement) 12
BY repealing and reenacting, with amendments, 13
Article – Insurance 14
Section 31–107(g)(6) 15
Annotated Code of Maryland 16
(2017 Replacement Volume and 2025 Supplement) 17
(As enacted by Section 1 of this Act) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – Insurance 21
31–107. 22
(a) There is a Maryland Health Benefit Exchange Fund. 23
(e) The Fund consists of: 24
(2) all revenue deposited into the Fund that is received from the 25
distribution of: 26
(I) the premium tax under § 6–103.2 of this article; AND 27
(II) THE INCOME TAX UNDER § 2–605.4(2) OF THE TAX – 28
GENERAL ARTICLE; 29
(g) (6) (I) FUNDS RECEIVED FROM T HE DISTRIBUTION OF T HE 30
INCOME TAX REVENUE UNDER § 2–605.4(2) OF THE TAX – GENERAL ARTICLE MAY 31
BE USED ONLY FOR THE PURPOSE OF FUNDING H EALTH INSURANCE SUBS IDY 32
PROGRAMS, INCLUDING THE STATE–BASED HEALTH INSURANCE SUBSIDIES 33
SENATE BILL 987 3
PROGRAM AND THE STATE–BASED YOUNG ADULT HEALTH INSURANCE SUBSIDIES 1
PROGRAM. 2
(II) IN ORDER TO IMPROVE T HE AFFORDABILITY OF HEALTH 3
INSURANCE COVERAGE , THE BOARD OF TRUSTEES OF THE MARYLAND HEALTH 4
BENEFIT EXCHANGE SHALL ALLOCATE FUNDS RECEIVED FROM THE DISTRIBUTION 5
OF THE INCOME TAX RE VENUE UNDER § 2–605.4(2) OF THE TAX – GENERAL 6
ARTICLE BETWEEN HEALTH INSURANCE SUBSIDY PROGRAMS. 7
Article – Tax – General 8
2–605.4. 9
AFTER MAKING THE DIST RIBUTIONS REQUIRED U NDER §§ 2–604, 2–605, 10
2–605.1, 2–605.2, AND 2–605.3 OF THIS SUBTITLE, FROM THE REMAINING I NCOME 11
TAX REVENUE FROM IND IVIDUALS, THE COMPTROLLER SHALL DIS TRIBUTE THE 12
REVENUE ATTRIBUTABLE TO THE ADDITION MODIFICATION UNDER § 10–305(E) OF 13
THIS ARTICLE AS FOLLOWS: 14
(1) THE FIRST $5,000,000 TO THE MARYLAND DEPARTMENT OF 15
HEALTH TO BE USED FOR MEDICAID ELIGIBILITY OPERATIONS; AND 16
(2) THE REMAINING REVENUE TO THE MARYLAND HEALTH BENEFIT 17
EXCHANGE FUND ESTABLISHED UNDER § 31–107 OF THE INSURANCE ARTICLE. 18
2–606. 19
(a) After making the distributions required under §§ 2 –604 through [2–605.3] 20
2–605.4 of this subtitle, from the remaining income tax revenue from individuals, the 21
Comptroller shall distribute to an unallocated individual revenue account the income tax 22
revenue: 23
(1) with respect to which an income tax return is not filed; and 24
(2) that is attributable to: 25
(i) income tax withheld from salary, wages, or other compensation 26
for personal services under Title 10 of this article; or 27
(ii) estimated income tax payments by individuals. 28
10–305. 29
4 SENATE BILL 987
(a) To the extent excluded from federal taxable income, the amounts under this 1
section are added to the federal taxable income of a corporation to determine Maryland 2
modified income. 3
(E) (1) (I) IN THIS SUBSECTION TH E FOLLOWING WORDS HA VE THE 4
MEANINGS INDICATED. 5
(II) “COVERED DRUG” MEANS: 6
1. A PRESCRIPTION DRUG PRODUCT AS DEFINED I N § 7
735 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT; OR 8
2. A DRUG COMPOUNDED IN ACCORDANCE WITH § 503A 9
OR § 503B OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT. 10
(III) “COVERED ENTITY” MEANS: 11
1. A SPONSOR OF A PRESC RIPTION DRUG PRODUCT AS 12
DEFINED IN § 735 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT; OR 13
2. A PERSON THAT , EITHER DIRECTLY OR I NDIRECTLY 14
THROUGH A SUBSIDIARY, OWNS AN OUTSOURCING FACILITY AS DEFINED IN § 503B 15
OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT. 16
(IV) 1. “DIRECT–TO–CONSUMER ADVERTISING” MEANS ANY 17
DISSEMINATION, BY OR ON BEHALF OF A COVERED ENTITY, OF AN ADVERTISEMENT 18
THAT IS IN REGARD TO A COVERED DRUG AND P RIMARILY TARGETED TO THE 19
GENERAL PUBLIC, INCLUDING THROUGH: 20
A. BROADCASTING THROUGH MEDIA SUCH AS RADIO , 21
TELEVISION, TELEPHONE COMMUNICAT ION SYSTEMS , DIRECT MAIL , AND 22
BILLBOARDS; AND 23
B. DISSEMINATION ON THE INTERNET OR THROUGH 24
DIGITAL PLATFORMS , INCLUDING SOCIAL MED IA, MOBILE MEDIA , WEB 25
APPLICATIONS, DIGITAL APPLICATIONS, MOBILE APPLICATIONS, AND ELECTRONIC 26
APPLICATIONS. 27
2. “DIRECT–TO–CONSUMER ADVERTISING ” DOES NOT 28
INCLUDE AN ADVERTISE MENT MADE THROUGH PU BLICATION IN JOURNAL S AND 29
OTHER PERIODICALS. 30
(2) THE ADDITION UNDER SU BSECTION (A) OF THIS SECTION 31
INCLUDES ANY EXPENSES PAID OR INCURRED DURING THE TAXABLE YEAR THAT ARE 32
SENATE BILL 987 5
DEDUCTED UNDER § 162 OF THE INTERNAL REVENUE CODE FOR 1
DIRECT–TO–CONSUMER ADVERTISING OF COVERED DRUGS. 2
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 3
as follows: 4
Article – Insurance 5
31–107. 6
(g) (6) (i) Funds received from the distribution of the income tax revenue 7
under § 2–605.4(2) of the Tax – General Article may be used only for the purpose of funding 8
health insurance subsidy programs, including [the State –Based Health Insurance 9
Subsidies Program and ] the State –Based Young Adult Health Insurance Subsidies 10
Program. 11
(ii) In order to improve the affordability of health insurance 12
coverage, the Board of Trustees of the Maryland Health Benefit Exchange shall allocate 13
funds received from the distribution of the income tax revenue under § 2 –605.4(2) of the 14
Tax – General Article between health insurance subsidy programs. 15
SECTION 3. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall take 16
effect on the taking effect of the termination provision specified in Section 2 or 3 of Chapter 17
468 of the Acts of the General Assembly of 2025. This Act may not be interpreted to have 18
any effect on that termination provision. 19
SECTION 4. AND BE IT FURTHER ENACTED, That, except as provided in Section 20
3 of this Act, this Act shall take effect July 1, 2026, and shall be applicable to all taxable 21
years beginning after December 31, 2025. 22