Note: eligibility for the majority of credits is determined by the Maryland State Department of Assessments and Taxation (SDAT). Specifically, SDAT determines whether a property is a “principal residence” (i.e., owner-occupied) which makes the property eligible for the County’s largest tax expenditures: (i) homestead credit, and (ii) local income tax offset credit. Moreover, the computation of many credits is performed by SDAT (e.g., homestead credit, homeowners property tax credit, senior credit), with only a minor portion of the credits computed by the Department of Finance, Treasury Division.
The program provides tax credits for homeowners who qualify on the basis of their household income as compared to their tax bill. The Maryland’s Homeowner’s Property Tax Credit (HOTC) program and its Montgomery County supplement are administered by the State Department of Assessments and Taxation (SDAT). The tax credits are granted to eligible homeowners of all ages. The County supplemental credit pertains only to County property taxes. Although this credit does not require a separate application, taxpayers must apply for the State HOTC to be considered for the supplemental tax credit.
Effective levy year 2005, Montgomery County greatly enhanced the program by (1) doubling the maximum property assessment amount used for computing the tax to $300,000, and (2) changing the income formula to allow for eligibility at a higher income level. Due to changes in the State HOTC credit program in levy year 2006, qualified retirement savings are now excluded from the maximum $200,000 net worth requirement (this net worth also excludes the value of the principal property).
Although, generally, applications must be made by September 1 to be applicable that tax year, for taxpayers at least 70 years of age, retroactive applications may be submitted for 3 prior years.
Maryland Code: TAX-PROPERTY: TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 1. STATEWIDE MANDATORY 9-104. Homeowners' tax credits
Montgomery County Code, Chapter 52, Article I, Section 52-11A
February 1, 1986
SDAT in Baltimore, MD at (800) 944-7403
The County introduced this credit in levy year 2007 for eligible residents at least 65 years of age. This credit is calculated as 50 percent of the combined State Homeowners’ Tax Credit and County Supplement. This credit, if applicable, is added to the County Supplement and reduces the taxpayer’s tax bill. The Senior credit may be based on (i) the State credit (if the County Supplement is zero), (ii) the County Supplement (if the State credit is zero), or (iii) both the State credit and County Supplement. Although this credit does not require a separate application, taxpayers must apply for the State HOTC to be considered for the senior tax credit.
Maryland Code: TAX-PROPERTY: TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 2. STATEWIDE OPTIONAL: § 9-245. Credit for individuals at least 65 years old
Montgomery County Code, Chapter 52, Article I, Section 52-11C
SDAT in Baltimore, MD at (800) 944-7403
To assist homeowners with the fiscal impact from large assessment increases, the Homestead Property Tax Credit program limits the annual taxable assessment increase to a rate set annually by county resolution between 1% and 10%. This program is administered by the State Department of Assessments and Taxation (SDAT) and applied only to owner-occupied residential dwellings. Note: this credit is not applicable in the first year following the purchase of a new home.
The State of Maryland, Montgomery County, and municipalities in Montgomery County (with the exception of the Town of Kensington which elected 5% effective LY 2006) use a 10% homestead credit which results in any annual assessment growth in excess of 10% to become a credit. For example, if the annual phase-in of assessment growth is 25%, the homestead credit will reflect 15% while the remaining 10% is reflected in taxable assessment growth that year.
In addition to limiting annual growth in taxable assessment for homeowners, the homestead credit spreads out the assessment growth over a longer period of time resulting in a stable revenue flow. Since the cumulative credit can be significant, some taxpayers may still observe growth in taxable assessment during times of weak real estate market conditions as prior year growth is still being phased in.
Maryland Code: TAX-PROPERTY: TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 1. STATEWIDE MANDATORY: § 9-105. Homestead property tax credit.
SDAT in Rockville, MD at (240) 314-4510
The County may grant, by law, a property tax credit against the county tax imposed on real property, in order to offset, in whole or in part, increases in the county income tax revenues resulting from a county income tax rate in excess of 2.6%.
This tax credit is available only to the owner of an owner occupied residential property (i.e., principal residence), as determined by SDAT. The County establishes the amount of a property tax credit under this section by Resolution.
Note: The County’s “piggyback” income tax was 60% of the Maryland income tax (effectively 3.00%) in tax year 1998, and changed to a 3.20% income tax rate based on Maryland Adjusted Gross Income (AGI) effective tax year 2004. Therefore, prior to tax year 2004, the credit could be based on income tax revenues resulting from a county “piggyback” income tax in excess of 50% of the Maryland income tax..
Maryland Code: TAX-PROPERTY: TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 2. STATEWIDE OPTIONAL: § 9-221. Offsets of local income tax rate increases
Department of Finance in Rockville, MD at (240) 777-0311
This tax credit is available to businesses that locate in designated areas of downtown Silver Spring, Takoma Park/Long Branch, and Wheaton, and is designed to spur economic growth in these areas. This real property tax credit is available only for nonresidential properties located within the Enterprise Zones and is based on growth in property assessment. Under the Enterprise Zone law, personal property is not included. The “base year assessment” is the real property assessment for the year before any new construction or refurbishing is done. The credit is based on the increase in the assessment for each of the next 10 years compared to the base-year assessment. The credit itself will be given on the actual taxes that result from the increase in assessment, using the following rate schedule:
Years 1 through 5: Credit = 80% of assessment increase versus the base year
Year 6: Credit = 70%
Year 7: Credit = 60%
Year 8: Credit = 50%
Year 9: Credit = 40%
Year 10: Credit = 30% (expires thereafter)
The State of Maryland also grants a tax credit for businesses that locate in Enterprise Zones. However the State’s credit is for State income taxes and is related to the number of new employees (in the Enterprise Zone) that a business hires.
Maryland Code: TAX-PROPERTY: TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 1. STATEWIDE MANDATORY: § 9-103. Enterprise zones
Department of Finance in Rockville, MD at (240) 777-8931
This tax credit is available to a taxpayer against the County property tax imposed on a manufacturing, commercial, or industrial building that is located in an Arts and Entertainment District and is wholly or partially renovated for use by a qualifying residing artist or an arts and entertainment enterprise. This real property tax credit applies for 10 years, providing the building continues to be used by a qualifying residing artist or an arts and entertainment enterprise. The tax credit is based on growth in property assessments. The “base year assessment” is the real property assessment for the year before any renovation is done. The credit is based on the increase in the assessment for each of the next 10 years compared to the base year assessment. The credit itself will be given on the actual taxes that result from the increase in assessment. Except for properties allowed an Enterprise Zone Tax Credit, the amount of the Arts and Entertainment District Tax Credit shall be calculated as follows:
Years 1 through 5: Credit = 80% of the increase in the assessment versus the base year.
Year 6: Credit = 70%
Year 7: Credit = 60%
Year 8: Credit = 50%
Year 9: Credit = 40%
Year 10: Credit = 30% (expires thereafter)
For properties allowed an Enterprise Zone Tax Credit, the amount of the Arts and Entertainment Tax Credit is 20% as calculated above, added to the Enterprise Zone Credit.
Montgomery County Code, Chapter 52, Article I, Section 52-18L
Department of Finance in Rockville, MD at (240) 777-8931
This program consists of the New Jobs Tax Credit and the Enhanced New Jobs Tax Credit, and benefits businesses that are planning to increase both their space and staff. A business seeking either credit must notify the County of its intent to claim the credit before the expansion.
This is a six-year credit available to businesses that increase their space by at least 5,000 square feet and their employee count by at least 25 new jobs. Businesses that are already resident in the County or that are moving from outside of Maryland are eligible to apply. The credit is not available to businesses that move to Montgomery County from another Maryland county or Baltimore City, and it is not available to retailers. The 25 new jobs must be permanent full-time positions and must last for at least 24 months. The new space must be occupied during the period the business retains the 25 new employees. The credit is based on the increase in both real and personal property tax assessments resulting from the business’s expansion. The credit decreases over six years, as follows:
Years 1 and 2: Credit = 52% of tax attributable to the assessment increase
Years 3 and 4: Credit = 39%
Years 5 and 6: Credit = 26%
New Jobs Tax Credit recipients automatically receive an additional State of Maryland tax credit, which uses the same calculation method. However, the State credit is given against one of the following taxes:
Enhanced New Jobs Tax Credit
This 12-year credit benefits large expansion projects and is available when businesses either:
1.Increase their space by at least 250,000 square feet,and either (A) create 1,250 new permanent, full-time positions or (B) create 500 new permanent, full-time positions in addition to retaining at least 2,500 existing permanent, full-time positions, OR
2.Expend at least $150 million to obtain at least 700,000 square feet of new space and employ at least 1,100 individuals, with at least 500 being in new, permanent, full-time positions.
The company must pay all these employees at least 150% of the federal minimum wage.
To qualify for the Enhanced New Jobs Tax Credit, a business must be engaged in one of the following industries:
A business has six years from the notification date to create and fill the required number of new jobs and acquire and inhabit the new space. When this is accomplished, the business will begin receiving the credit. The Enhanced Tax Credit, like the regular New Jobs Tax Credit, is given against the local real and personal property tax and is based on the amount of additional taxes due as a result of the expansion. Unlike the regular New Jobs Tax Credit, however, the Enhanced Tax Credit is calculated at the same rate for all 12 years. The rate is 58.5% of the additional local tax liability.
The State also will give a credit based on this additional local tax liability. The State credit is 31.5% for each of the 12 years and is given against the same State taxes as the regular New Jobs Tax Credit (corporate or personal income taxes, the financial institutions franchise tax, or the insurance premiums tax). Both the regular and enhanced State tax credits allow a business to “roll” the credit for up to five years. This means that if the State tax credit is higher than the amount of taxes due in any given year, the business can claim the difference for up to five years. Both tax credits also contain a “recapture” provision that requires a business to repay the credits if they fail to maintain the job and space requirements for three years. This provision is applicable to each individual year, so that if a business maintains the requirements for 14 years, it will have to repay only the last year of the credit.
Montgomery County Code, Chapter 52, Article X
Department of Finance in Rockville, MD at (240) 777-8931
The County must allow a tax credit of 50% of the increased Property Tax Liability (the increase in the property tax levied on a Qualified Brownfield’s Site resulting from an increased assessment due to a voluntary cleanup or a corrective action plan for the Site), for a Qualified Brownfield’s Site, for each of the 5 tax years immediately following the first revaluation of a Qualified Brownfield’s Site after completion of a voluntary cleanup or corrective action plan.
The County must allow a credit equal to an additional 20% of the increased Property Tax Liability for a Qualified Brownfield’s Site, if the site is in an Enterprise Zone, or in a neighborhood designated by the County Council for participation in the Neighborhood Business Development Program under state law.
A recipient of the property tax credit under this article is no longer eligible if the recipient of the property tax credit withdraws from the voluntary cleanup program under Section 7-512(A) or (B) of the Environment Article of the Maryland Code; or the Maryland Department of the Environment withdraws approval of a Response Action Plan or a Certificate of Completion under Section 7-512(E) and (F) of the Environment Article of the Maryland Code.
Montgomery County Code, Chapter 52, Article XI
Department of Finance in Rockville, MD at (240) 777-8931
Conservation land is defined as real property that is used to assist in the preservation of a natural area, used for the environmental education of the public, used to promote conservation generally, or used as a sanctuary for wildlife. Conservation land is subject to a perpetual conservation easement donated to a land trust on or after July 1, 1991; or acquired by a land trust by July 1, 1991, owned in fee by that land trust; and subject to a letter of intent, agreement, or option agreement to convey the property to a government agency. The owner of conservation land may receive a tax credit equaling 100% of any county real property tax imposed on the conservation land, not including any improvements.
Maryland Code: TAX-PROPERTY : TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF: SUBTITLE 2. STATEWIDE OPTIONAL: § 9-220. Conservation lands
Montgomery County Code, Chapter 52, Article IX
Department of Finance in Rockville, MD at (240) 777-8931
This tax credit may be granted against the County real property taxes, based upon the amount expended by a taxpayer for restoration or preservation of an historic property. A property must be an historic site designated on the master plan for historic preservation, or within a historic district designated on the master plan for historic preservation.
A tax credit will be allowed only for work which is the subject of an approved historic area work permit; or for ordinary maintenance expenses, when the amount expended exceeds $1,000.00. A credit will be approved for exterior work only, and no credit shall be granted for new construction.
The amount of the credit is equal to 25% of the amount expended by the taxpayer for the restoration or preservation of an historic property, up to the amount of County real property taxes. The credit shall be allowed for the tax year immediately following the work or any portion thereof is completed, and any unused portion of this tax credit, may be carried forward for up to 5 tax years, after which the credit lapses.
Montgomery County Code, Chapter 52, Article VI
Department of Finance in Rockville, MD at (240) 777-8931
This tax credit is granted against the County real property tax, for that portion of property that is leased, occupied, and used by a religious organization exclusively for public religious worship, educational purposes, or office space necessary to support or maintain public religious worship or educational purposes.
In order to be eligible for the tax credit, an application must be filed with the Montgomery County Division of Treasury, by the first day of April, preceding the tax year in which the credit is to be used.
Montgomery County Code, Chapter 52, Article I, Section 52-18I
Department of Finance in Rockville, MD at (240) 777-8931
A taxpayer may receive a tax credit against the County real property tax for an improvement on real property, if the improvement is used exclusively for day care services (registered family day care home, licensed child care center, licensed day care center for the elderly, or licensed day care center for the medically handicapped). Likewise, a taxpayer may receive a property tax credit against the County real property tax for an improvement on real property owned by a business with at least 25 employees, if the improvement is used exclusively for day care services (registered family day care home, licensed child care center).
The credit is limited to the lesser of (1) $3,000.00; or (2) the amount of the General County and Special Area taxes, attributable to the improvement.
A taxpayer must apply for the tax credit with the Montgomery County Division of Treasury by April 1, to receive the credit in the next taxable year.
Montgomery County Code, Chapter 52, Article I, Section 52-18E
Department of Finance in Rockville, MD at (240) 777-8931
A taxpayer may receive a one-time real property tax credit against the General County tax for any detached single-family dwelling unit, and any attached dwelling unit or multi-family building in which a fire sprinkler system was not legally required to be installed, if an approved complete automatic sprinkler system that is used for fire protection is installed on or after July 1, 2000.
The tax credit may not exceed the lesser of (1) the total cost of installing the sprinkler system; or (2) 50% of the General County property tax attributable to the dwelling unit or building.
A taxpayer must apply for the tax credit in the year the sprinkler system is installed to receive the credit in that tax year or the following tax year.
Montgomery County Code, Chapter 52, Article I, Section 52-18K
Department of Finance in Rockville, MD at (240) 777-8931
The tax credit is 100% of the County real property tax on the dwelling of a surviving spouse (who has not remarried), of a fallen law enforcement officer or fallen rescue worker, if:
1) The dwelling was owned by the fallen law enforcement officer or fallen rescue worker at the time of their death; or if
2) The fallen law enforcement officer or rescue worker or the surviving spouse was domiciled in the State as of the date of the fallen law enforcement officer’s or rescue worker’s death, and the dwelling was acquired by the surviving spouse within 2 years of the fallen law enforcement officer’s or rescue worker’s death; or if
3) The dwelling was acquired after the surviving spouse qualified for a credit for a former dwelling under 1) or 2) above, to the extent of the previous credit.
Application for the tax credit should be submitted to the Division of Treasury by April 1, to receive the tax credit for the next taxable year.
Montgomery County Code, Chapter 52, Article I, Section 52-18N
Department of Finance in Rockville, MD at (240) 777-8931
An employer may receive an annual tax credit against the County personal property tax for the purchase of a new home computer or new laptop computer to establish a new off-site employee workstation, if the computer is purchased after December 31, 2005. The amount of the tax credit must not exceed 50% of the cost of each new computer. The aggregate tax credit allowed for a taxpayer, in any tax year, must not exceed $2,000.00.
The Department of Finance must grant each tax credit in the order in which the Department receives the applications for the credit.
The amount of credits allowed in each calendar year must not exceed:
1)$100,000 in 2006
2)$175,000 in 2007
3)$250,000 in 2008
Starting in 2009, the total amount of credits allowed in each future year, must be set by the County Council, if the Council takes no action the amount allowed for the prior year also applies to that year.
An employer is eligible for and must apply for the tax credit within 12 months after a new computer purchase, and the credit must be applied in the tax year of the purchase, or the following tax year. The employer must show that:
1) The computer will be used for telecommuting.
2) Affirm that the employee works at home at least 78 days per calendar year.
3) Document the date of purchase and the cost of the computer.
Montgomery County Code, Chapter 52, Article I, Section 52-18O
Department of Finance in Rockville, MD at (240) 777-8931
A nonprofit swim club is eligible for a real property tax credit against the general County tax and special service area taxes, provided it uses its facilities exclusively to provide a recreational outlet for a local community. In the year for which the credit is applied, the nonprofit swim club must provide the County with documentation that shows it is a nonprofit entity, and must certify to the county that its facilities are used solely for the purposes stated. The required documentation to receive the tax credit is as follows:
1) A copy of its Articles of Incorporation
2) current Certificate of Good Standing from the State of Maryland
Montgomery County Code, Chapter 52, Article I, Section 52-18P
Department of Finance in Rockville, MD at (240) 777-8931
The intent of this property tax credit is to encourage building owners to increase the energy performance of existing buildings, incentivize building owners to reduce the energy and climate impacts of existing buildings, as the built environment generates more than half of the County’s measured community-wide greenhouse gas emissions, and advance the County’s aggressive climate goals of an 80 percent reduction in greenhouse gas emissions by 2027 and zero emissions by 2035.
This property tax credit is available to energy-efficient buildings that meet the following criteria:
To earn this property tax credit, an existing energy-efficient building must install an eligible energy conservation device and document that the device improved energy performance against a pre-installation 12-month baseline using ENERGY STAR Portfolio Manager Data Verification Checklists. ENERGY STAR Data Verification Checklists must be verified by an accredited building professional, which are a licensed Professional Engineer (PE) or Registered Architect (RA) that are in good standing.
Baseline and Improved ENERGY STAR Score 12-month time periods must not overlap, include the energy conservation device installation period, or be more than 6 calendar years apart. The Baseline and Improved ENERGY STAR Score 12-month time period must use the same ENERGY STAR score metric reference data. The Baseline ENERGY STAR Score 12-month time period must not begin earlier than August 26, 2018. Improved ENERGY STAR 12-months cannot have been issued more than 12 months before the application date.
To calculate the 2-year tax credit for your building, subtract the 12-month Baseline ENERGY STAR score from the Improved ENERGY STAR score, then multiply the difference by the appropriate multiplier value (determined by the Improved ENERGY STAR score tier, listed below):
Improved ENERGY STAR Score Tiers
Multiplier