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MarylandSB 08052026 Regular SessionSenateWALLET

Income Tax - Student Loan Debt Relief Tax Credit - Alterations

Sponsored By: Shelly Hettleman (Democratic)

Signed by Governor

Taxes - IncomeHigher EducationApplicants and ApplicationsDebt ManagementEvidenceFederal GovernmentHigher Education CommissionIncome TaxLoans -see also- Credit; Mortgages; Scholarships&SFAStudentsTax CreditsTime

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 2 benefits, 0 costs, 2 mixed.

Refundable $5,000 student loan credit

Maryland provides a refundable income tax credit up to $5,000 for student loan borrowers. You must have borrowed at least $20,000 total and still owe at least $5,000 when you apply. Apply to the Maryland Higher Education Commission by September 15 and promise to use the credit to repay your loans. The Commission certifies your amount by December 15, and you claim it for that tax year by attaching the certification to your return. The law applies to tax years that begin after December 31, 2025.

Priority credits for Maryland state employees

Maryland caps total credits at $9 million for tax year 2025 and $18 million each year after 2025. The Commission reserves $9 million first for State employees, with top priority for graduates of Maryland colleges where at least 40% of students are Pell‑eligible. Any unused reserved amount goes to other qualified borrowers. When demand is high, the Commission also uses factors like higher debt‑to‑income, graduating from a Maryland school, not getting the credit last year, and in‑state tuition eligibility.

Use credit in 3 years or repay

You must use your approved credit to repay your student loans within 3 years from the end of the tax year you claim it. Any unused amount is recaptured and becomes Maryland tax you must pay that year. The Commission can extend the 3‑year deadline if you were in forbearance due to SAVE plan litigation, could not switch income-driven plans because of federal understaffing, or were waiting on a PSLF buyback agreement. The Commission sets extension application procedures by October 1, 2026.

State outreach, reports, and program rules

The Commission runs outreach to tell eligible people about the credit and to prompt colleges to advise new grads, especially those entering public service, starting by September 1, 2024. Each year by January 1, the Commission reports on applicants, awards, and recipient demographics, and gives recommendations by January 1, 2026. The Commission also adopts rules to run the program.

Sponsors & Cosponsors

Sponsor

  • Shelly Hettleman

    Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 167 • No: 8

House vote • 4/13/2026

Third Reading Passed

Yes: 128 • No: 8 • Other: 4

Senate vote • 3/20/2026

Third Reading Passed

Yes: 39 • No: 0 • Other: 2

Actions Timeline

  1. Approved by the Governor - Chapter 755

    5/26/2026

  2. Returned Passed

    4/13/2026Senate

  3. Third Reading Passed (128-8)

    4/13/2026House

  4. Favorable Adopted Second Reading Passed

    4/11/2026House

  5. Favorable Report by Ways and Means

    4/11/2026House

  6. Hearing 4/02 at 1:00 p.m.

    3/25/2026House

  7. Referred Ways and Means

    3/23/2026House

  8. Third Reading Passed (39-0)

    3/20/2026Senate

  9. Second Reading Passed

    3/20/2026Senate

  10. Favorable Adopted

    3/20/2026Senate

  11. Favorable Report by Budget and Taxation

    3/20/2026Senate

  12. Hearing 3/03 at 1:30 p.m.

    2/11/2026Senate

  13. First Reading Budget and Taxation

    2/6/2026Senate

Bill Text

  • Enacted

    5/26/2026

    PDF

  • Third Reading

    3/20/2026

    PDF

  • First Reading

    2/6/2026

    PDF

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