MarylandSB 02782025 Regular SessionSenateWALLET

Tax Relief and State Personnel Equality for Service Members Act

Sponsored By: Bryan W. Simonaire (Republican)

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- PandemicsHealth -see also- COVID19; EnvHlth; MedCon; etc.Local Government MandatesRevenue and Taxes -see also- (specific tax)Rules and RegulationsState EmployeesVeterans

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Bill Overview

Analyzed Economic Effects

14 provisions identified: 13 benefits, 1 costs, 0 mixed.

Returning service members keep public job rights

The law generally takes effect July 1, 2025, and protects eligible State employees returning from uniformed service, excluding temporary employees. Counties, towns, school boards, and other covered local employers must provide the same return-to-work rights. Applications are generally due within 90 days after discharge; qualifying reservists returning from training have 31 days after release. Returning employees receive service credit toward seniority, benefits, and retirement, subject to federal service requirements. Employers must provide a qualified, comparable job where possible when a service-connected disability prevents return to the former job.

Income tax forgiven after covered service deaths

Maryland forgives income tax when uniformed-services members die while serving in combat zones or public health emergency response areas. Deaths from wounds, disease, or injuries incurred while serving there also qualify. Members and federal civilian employees also qualify for deaths from injuries, disease, or wounds incurred outside the United States in covered actions. Those actions include public health emergency responses, terroristic actions, and military actions. Forgiveness covers the same tax years and has the same effect as federal relief under Internal Revenue Code section 692.

Disabled military homeowners lose tax protections

The law repeals a home property tax exemption for qualifying disabled active-duty service members, disabled veterans, and certain surviving spouses. It also repeals a separate local property tax credit authority for qualifying disabled veterans' homes. Households that relied on these provisions can face higher property tax bills. The supplied provisions do not state household tax amounts.

Paid military leave for State workers

The Secretary can authorize up to 30 days of paid military leave per taxable year for State employees. The leave covers uniformed-services training or active duty in a reserve component or organized militia. It is available only when the Secretary establishes it by regulation.

Disabled renters gain property tax relief access

Renter property tax relief includes permanently and totally disabled renters who qualify for benefits under a federal service-member law. Renters must occupy a home in which they hold a lease. The relief formula subtracts an income-based amount from assumed property tax. That amount is 0% of the first $4,000, 2.5% of the next $4,000, and 5.5% above $8,000 of combined income. Local-option relief depends on local law.

Eligible homeowners can delay property taxes

Counties and municipalities can authorize delayed property tax payments on an owner's main home. At least one owner must have lived there for five straight years and meet applicable income requirements. The disability category includes permanently and totally disabled owners who qualify for benefits under a federal service-member law. Local approval is required. Delaying payment does not erase the tax.

Landlord tax credits support reduced rents

Local governments can give landlords property tax credits for charging reduced rent to qualifying disabled tenants. The expanded tenant group includes people who are permanently and totally disabled and qualify for federal service-member benefits. Baltimore City, a county, or a municipality must authorize the credit by law. The supplied provisions do not set a credit amount.

Local homeowner credits cover more military families

Local governments can authorize property tax credits for retired service members age 65 or older. Surviving spouses of retired service members qualify at age 65 or older if they have not remarried. Active-duty, retired, or honorably discharged service members with service-connected disabilities can also qualify under local disability definitions. Their surviving spouses can qualify if they have not remarried. Credits cover qualifying homes for up to two families; local law determines availability and the credit amount.

Veterans and spouses gain State hiring help

State hiring tests award 10 extra points to eligible veterans and spouses of full-time active service members. Spouses of veterans with service-connected disabilities and surviving spouses of deceased veterans also qualify. Former prisoners of war receive 2 additional points; current State employees and veterans convicted of crimes after service are ineligible. Appointing authorities can also select veterans with a permanent uniformed-services disability rating of at least 30%. A compensable service-connected disability rating of at least 30% from Veterans Affairs also qualifies; appointment is not guaranteed.

Military retirement income gets tax relief

Maryland residents under age 55 can subtract up to $12,500 of qualifying military retirement income. The limit is $20,000 for people age 55 or older, based on age at year-end. Income must be included in federal adjusted gross income; eligible death benefits also count. Covered service includes specified armed-forces service and active duty in the Public Health Service, NOAA, or Coast and Geodetic Survey. These limits reduce taxable income, not taxes dollar for dollar.

Overseas military pay gets income tax relief

Maryland residents can subtract up to $15,000 of overseas active-duty military pay included in federal adjusted gross income. The subtraction falls $1 for each $1 of qualifying pay above $15,000 and reaches zero at $30,000. This reduces income taxed, not the tax bill dollar for dollar. The law's Section 2 tax rules apply to tax years beginning after December 31, 2024. Section 3 tax rules apply to tax years beginning after June 30, 2025.

Tax relief for public safety volunteers

Qualifying public safety volunteers can subtract $7,000 from income used to calculate Maryland income tax. Reserve-component members on official active-duty orders during the tax year can meet the specified service requirement. They must still qualify as public safety volunteers. The $7,000 reduces taxable income; it is not a $7,000 tax refund.

Veterans gain local government hiring help

Local civil-service and merit-system rules must give veterans special exam credit after five years of continuous Maryland residency before testing. The law does not set the number of points. Local units can also waive age requirements for war veterans or health-emergency veterans under age 55. Health emergencies include specified national, federal disaster, federal public-health, and Maryland catastrophic-health declarations. The age waiver is optional for local units.

Veterans groups get sales tax relief

Qualifying nationally organized and recognized veterans groups, auxiliaries, and units can make purchases without Maryland sales and use tax. Groups must qualify for federal tax-exempt status under section 501(c)(4) or 501(c)(19). Food or meals served by qualifying groups or auxiliaries are also tax-exempt when eaten only on the premises. Meal proceeds must support the organization, auxiliary, or a unit.

Sponsors & Cosponsors

Sponsor

Bryan W. Simonaire
Republican • Senate

Cosponsors

Jack Bailey
Republican • Senate
Joanne C. Benson
Democratic • Senate
Paul D. Corderman
Republican • Senate
Jason C. Gallion
Republican • Senate
Guy Guzzone
Democratic • Senate
Katie Fry Hester
Democratic • Senate
Shelly Hettleman
Democratic • Senate
J.B. Jennings
Republican • Senate
Nancy J. King
Democratic • Senate
Karen Lewis Young
Democratic • Senate
M. Jackson
Affiliation unavailable
Johnny Mautz
Republican • Senate
Cory V. McCray
Democratic • Senate
Jim Rosapepe
Democratic • Senate
Johnny Ray Salling
Republican • Senate
Craig J. Zucker
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 184 • No: 0

House vote • 4/7/2025

Third Reading Passed

Yes: 137 • No: 0 • Other: 3

Senate vote • 3/14/2025