MarylandHB 06912025 Regular SessionHouseWALLET

Tax Relief and State Personnel Equality for Service Members Act

Sponsored By: Edith J. Patterson (Democratic)

Signed by Governor

State Government - Agencies, Offices, and OfficialsState Government - Pensions and RetirementState Government - PersonnelLocal Government - GenerallyTaxes - Sales and UseTaxes - IncomeTaxes - PropertyArmed Forces -see also- Military Department; VeteransEmergencies -see also- PandemicsExemptionsHealth -see also- COVID19; EnvHlth; MedCon; etc.Income TaxLocal Government MandatesMilitary FamiliesProperty TaxPublic Employees -see also- State EmployeesRevenue and Taxes -see also- (specific tax)Rules and RegulationsState EmployeesVeterans

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Bill Overview

Analyzed Economic Effects

15 provisions identified: 14 benefits, 1 costs, 0 mixed.

Local home tax credits for veterans

For tax years beginning after June 30, 2025, the law updates eligibility for local home property tax credits. Categories include retired service members age 65 or older and their unremarried surviving spouses age 65 or older. They also include active, retired, or honorably discharged service members with service-connected disabilities, as defined locally. Their unremarried surviving spouses are also included. Counties, Baltimore City, and municipalities must authorize credits locally; the provision sets no credit amount.

Stronger job protections after uniformed service

Beginning July 1, 2025, Maryland extends State job-return rights to qualifying uniformed service; temporary employees are excluded. These rights protect reinstatement, seniority, benefits, and pension and retirement rights. Employees whose service-related disability prevents their former work must get a comparable job they can perform. Applications generally are due within 90 days after release, or 31 days after certain reservist training releases following satisfactory service. Local governments, school boards, and other covered public bodies must provide the same rights.

Overseas military pay gets tax relief

For tax years beginning after December 31, 2024, Maryland updates which overseas military pay qualifies for an income subtraction. Maryland residents can subtract up to $15,000 earned from qualifying active military service outside the United States. The subtraction falls by $1 for each $1 of qualifying pay above $15,000 and reaches zero at $30,000. Maryland National Guard membership is excluded from qualifying activities for this subtraction. The subtraction lowers taxable income, not taxes dollar for dollar.

Tax forgiveness after qualifying service deaths

For tax years beginning after December 31, 2024, Maryland expands income tax forgiveness for qualifying service-related deaths. It covers uniformed-service deaths in combat zones or public-health response areas, including deaths from wounds, illness, or injury incurred there. It also covers specified deaths of service members and federal civilian employees from qualifying injuries or illness incurred outside the United States. Those outside-U.S. cases include public-health emergency response and terroristic or military actions; covered tax years follow Internal Revenue Code Section 692. Qualifying health emergencies include specified presidential emergencies, federal disasters, federal public-health emergencies, and Maryland catastrophic health emergencies.

Tax relief for military retirement income

For tax years beginning after December 31, 2024, Maryland updates qualifying service for its military retirement income subtraction. Maryland residents can subtract up to $12,500 if under age 55, or $20,000 if age 55 or older. Age is measured on the tax year's last day, and qualifying income includes death benefits. Qualifying service includes active or reserve armed-forces membership and specified active-duty service in federal commissioned corps. Those corps include the Public Health Service, National Oceanic and Atmospheric Administration, and Coast and Geodetic Survey.

Disabled veterans lose property tax breaks

For tax years beginning after June 30, 2025, Maryland ends a home property tax exemption. It covered disabled active-duty service members, disabled veterans, and certain surviving spouses. The law also repeals authority for a separate local property tax credit for disabled veterans meeting disability and income requirements. That former credit depended on local adoption. Affected homeowners lose these tax breaks; the provisions do not state the added tax amounts.

Paid service leave for State employees

Beginning July 1, 2025, the law authorizes up to 30 days of paid leave for qualifying State employees. The leave covers uniformed-services training or active duty in a reserve component or the organized militia. The Secretary of Budget and Management must establish the leave through regulations before employees can use it.

More disabled renters qualify for relief

For tax years beginning after June 30, 2025, Maryland expands its renter property tax relief eligibility. The added category covers permanently and totally disabled renters qualifying for benefits under a federal act for service members. Renters must occupy the home under a lease during the calendar year for which they seek relief. Relief uses assumed property tax minus an income-based amount. That amount is 0% of the first $4,000, 2.5% of the next $4,000, and 5.5% above $8,000 in combined income.

Tax credits support reduced disability rents

For tax years beginning after June 30, 2025, Maryland expands eligibility supporting local tax credits for landlords charging reduced rent. The tenant must be permanently and totally disabled and qualify for benefits under a federal act for service members. The landlord must provide reduced rent to that tenant. A county, Baltimore City, or municipality must enact a local law granting the credit. The provision sets no credit amount.

Local hiring help for qualifying veterans

Beginning July 1, 2025, local civil-service and merit systems must grant veterans special credit on hiring exams. Veterans must have lived in Maryland for at least five years immediately before the exam. This exam-credit provision no longer separately requires honorable discharge or armed-forces service. Local hiring units may also waive job age limits for war or health-emergency veterans under age 55. Qualifying health emergencies include specified presidential emergencies, federal disasters, federal public-health emergencies, and Maryland catastrophic health emergencies.

State hiring points for military families

Beginning July 1, 2025, State hiring tests must give eligible veterans and spouses of full-time active service members 10 extra points. Spouses of eligible veterans with service-connected disabilities and surviving spouses of deceased eligible veterans also qualify. Eligible veterans include reserve veterans with honorable discharge or satisfactory service. Former prisoners of war can receive 2 additional points. Current State employees and veterans convicted of a crime after discharge or completion of service cannot receive the credit.

State job access for disabled veterans

Beginning July 1, 2025, State hiring authorities may select veterans through a disability-based appointment option. Applicants must meet Maryland's veteran definition. They must have at least a 30% rating on a uniformed-services permanent disability list or a compensable service-connected VA rating. The VA rating must also be at least 30%. Selection remains the hiring authority's choice.

Tax subtraction for qualifying active reservists

For tax years beginning after December 31, 2024, Maryland expands eligibility for the $7,000 public-safety volunteer income subtraction. The expanded category includes reserve-component members serving on official active-duty orders during the tax year. They must also meet the program's other public-safety volunteer requirements; active-duty orders alone do not establish eligibility. The $7,000 reduces taxable income, not the tax bill dollar for dollar.

More disabled homeowners qualify for deferrals

For tax years beginning after June 30, 2025, Maryland expands eligibility for county and municipal property tax payment delays. The updated benefit category includes benefits under any federal act for service members. The qualifying owner must be permanently and totally disabled and meet the program's income requirements. The home must be the owner's main residence, with at least one owner living there for five consecutive years. Each county or municipality must authorize its program by law; payment is delayed, not forgiven.

Sales tax relief for veterans groups

The law takes effect July 1, 2025; its tax provisions apply to tax years beginning after December 31, 2024. Covered purchases by bona fide, nationally organized and recognized veterans organizations, auxiliaries, and units are exempt from sales and use tax. The purchasing organization must qualify under federal tax code Section 501(c)(4) or 501(c)(19). Qualifying food and meal sales are also exempt when consumed only on the premises and proceeds support a qualifying group.

Sponsors & Cosponsors

Sponsor

Edith J. Patterson
Democratic • House

Cosponsors

Gabriel Acevero
Democratic • House
Nick Allen
Democratic • House
Attar
Affiliation unavailable
Jason C. Buckel
Republican • House
Jon S. Cardin
Democratic • House
Michele Guyton
Democratic • House
Susan K. McComas
Republican • House
Cheryl E. Pasteur
Democratic • House
N. Scott Phillips
Democratic • House
Andrew C. Pruski
Democratic • House
April Rose
Republican • House
Deni Taveras
Democratic • House
Nicole A. Williams
Democratic • House
Greg Wims
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 185 • No: 0

Senate vote • 4/3/2025

Third Reading Passed

Yes: 47 • No: 0

House vote • 3/17/2025