What's New for the 2024 Tax Filing Season (2023 Tax Year)

Note: For forms, visit the 2023 Individual Tax Forms or Business Tax Forms pages.

2023 Individual Income Tax Instruction Booklets

2023 Business Income Tax  Instruction Booklets

Opening of the 2024 Tax Filing Season

The IRS began accepting all Business tax returns on 01/16/2024.

Maryland started accepting all Business tax returns on 01/16/2024.

The IRS begins accepting all Individual tax returns on 01/29/2024.

Maryland begins accepting all Individual tax returns on 01/29/2024.

Claiming Business Income Tax Credits

For tax years beginning after December 31, 2012, you must file your tax return electronically in order to claim a business tax credit unless you submit a waiver from the electronic filing requirement. To request a waiver from filing the Form 500CR electronically, you must submit a completed Form 500CRW Waiver Request For Electronic Filing of Form 500CR and it must be attached to Form 500CR in the filing of your return.

Beginning with Tax Year 2015 certain individual taxpayers may elect to claim the Community Investment Tax Credit and/or the Endow Maryland Tax Credit on Maryland Form 502CR, and thus avoid the electronic filing requirement. Read instructions to Form 502CR to see if you qualify for this election.

Filing Deadline

Your income tax return is due April 15, 2024.

Business income tax return dates vary. See Filing Extensions and Deadlines for Corporations

New Tax Rates

Local Tax Rate Changes - There are no local tax rates increase for calendar year 2023, however, one county (Cecil's) has decreased their local tax rate for calendar year 2024. For calendar year 2024, Federick and Anne Arundel counties tax rates were adjusted by adding new local tax brackets based on filing statuses and taxable income. View a complete list of current city and local counties' tax rate and see note for Anne Arundel and Frederick Counties.

Exemptions and Deductions

There have been no changes affecting personal exemptions on the Maryland returns.

Personal Exemption Amount - The exemption amount of $3,200 begins to be phased out if your federal adjusted gross income is more than $100,000 ($150,000 for joint taxpayers). The $3,200 exemption is phased out entirely when the income exceeds $150,000 ($200,000 for joint taxpayers). See Instruction 10 in the Resident tax booklet for the reduced amounts, or review the page, Determine Your Personal Income Tax Exemptions. The additional exemption of $1,000 remains the same for age and blindness.

Dependent Form 502B - will be required to be attached to Form 502, Form 505 and Form 515 to determine what exemptions you are entitled to claim. 

Standard Deduction - The tax year 2023 standard deduction is a maximum value of $2,550 for single taxpayers and to $5,150 for head of household, a surviving spouse, and taxpayers filing jointly.

Itemized Deduction Limitation - The State of Maryland follows the new federal tax law treatment to suspend the itemized deduction limitation threshold (Pease Limitation). This means that high-income taxpayers are not required to reduce their itemized deductions using the itemized deduction worksheet used in prior years.

Should I take the standard deduction or itemize? - The federal tax reform of 2017 significantly raised the federal standard deduction. Under current Maryland law, if you take the standard deduction the federal level, you cannot itemize at the Maryland level. You may take the federal standard deduction, while this may reduce your federal tax liability, it may result in an increase to your Maryland income tax liability. The Comptroller's Office encourages you to run your income tax returns under both deduction methods, and to compare the results of taking the standard deduction versus itemizing your deductions, to see which method causes the lowest overall tax liability.

Limitation on deduction for state and local tax - Federal tax reform limited the amount you can deduct for state and local taxes. You cannot claim more than $10,000 ($5,000 for married filing separately) for state and local taxes you paid. The new federal limitation impacts your Maryland return because you must addback the amount of state income taxes you claimed as federal itemized deductions. The addback is limited to $10,000 ($5,000 for married filing separately) and is reported on line 17b of the Maryland Form 502. Maryland will accept any reasonable interpretation of the limitation reported on line 17b. A reasonable interpretation of the law includes the following example: you, a single filer, paid $8,000 in real property taxes and $4,000 in Maryland state income taxes, Maryland will accept an addback of state income tax of $2,000 on Line 17b. In this example, the real estate taxes make up $8,000 of your $10,000 limitation and only $2,000 are required to be added back as state income taxes.

Tax Forms, Instructions & Booklets

The resident tax booklets contain both the tax forms and the instructions for each major form. The tax forms on the Web site are available separately from the resident and nonresident instruction booklets.

All of our tax forms have been reformatted to ensure enhanced readability when paper forms are filed. This format has increased the number of pages of some of the tax returns. Make sure that you attach all pages of your return to ensure that your return is processed correctly. 

• Tax Forms and Instructions Online - Tax forms and instructions for Individual and Business taxpayers are available here online at Maryland Tax Forms and Instructions (business and individuals). 
• Tax Booklets at Libraries - We have provided a limited supply of tax booklets to a number of libraries throughout the State that have requested them.
• Tax Booklets at Comptroller's Taxpayer Service Offices -  Tax booklets are available at all of our local taxpayer service offices.
• Request a Tax Booklet - Taxpayers may request a resident or nonresident tax booklet by sending an e-mail to [email protected].

Subtractions

Increased pension exclusion - Maryland's maximum pension exclusion, which is available to qualifying taxpayers who are age 65 or older; are totally and permanently disabled; or have a spouse who is totally and permanently disabled, is $36,200 for tax year 2023.

Pension exclusion for retired forest/park/wildlife ranger - The pension exclusion available to public safety personnel in prior years is now available only to retired forest, park, and wildlife rangers of the United States, the State of Maryland, or a political subdivision of Maryland. (The pension exclusion for other public safety personnel is still available, but is now calculated as a separate subtraction. See below.) To claim this pension exclusion, a retired forest, park, or wildlife ranger must be (1) age 55 or older, (2) not 65 or older, totally disabled, or have a spouse who is totally disabled, and (3) included on your federal return taxable income received as a pension, annuity, or endowment from an “employee retirement system” qualified under Section 401(a), 403, or 457(b) of the Internal Revenue Code. Use WORKSHEET (13E) to calculate this pension exclusion, up to a maximum of $15,000. An individual may not claim both this subtraction and the standard pension exclusion.

Subtraction modification updates for tax year 2023:

There was one new subtractions for tax year 2023. However, there have been modifications to a few.

• Code Letter yc. Union Dues. Enter the amount of dues you paid for union membership that is included in your federal adjusted gross income and that you would have been able to deduct on your federal return as an unreimbursed employee expense prior to tax year 2018. Do not include (1) the portion of any contributions that provide funds for the payment of sick, accident, or death benefits, (2) contribu¬tions to a pension fund even if the union requires you to make contributions, or (3) any amounts of the contribution that are related to certain lobbying and political activities. This includes any amounts the union uses to influence legislators or executive branch officials or to participate in any political campaign or other political activities. If your union engages in any of these activities, it should provide you with the percentage of your union dues that it uses to conduct these activities.

  Do not claim this subtraction if you are self-employed and you claimed your union dues as a business expense on your federal return.

  Retain all records of your payment of union dues, and make them available upon request by the Comptroller’s office.

Also, there have been modifications to a few.

• Code Letter k. Up to $12,000 in expenses incurred by parent(s) to adopt a child with special needs through a public or nonprofit adoption agency and up to $10,000 in expenses incurred by parent(s) to adopt a child without special needs.
• Code Letter u. Up to $12,500 of military retirement income, including death benefits, received by a qualifying individual during the tax year if the taxpayer has not yet attained the age of 55; or up to $20,000 of military retirement income, including death benefits, received by a qualifying individual if the taxpayer is age 55 or over. To qualify, you must have been a member of an active or reserve component of the armed forces of the United States, an active-duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, the Coast and Geodetic Survey, a member of the Maryland National Guard, or the member’s surviving spouse or ex-spouse.
• Code letter yb. Amount of ordinary and necessary expenses, including a reasonable allowance for salaries or compensation, paid, or incurred during the taxable year in carrying on a trade or business as a State licensed medical cannabis grower, processor, dispensary, or any other cannabis establishment licensed by the State, if the deduction for ordinary and necessary expenses is disallowed under Section 280E of the Internal Revenue Code. Include your Cannabis Business License Number on the line provided.
• The mileage rate for certain qualifying charitable use of a car on Form 502V has increased as follows: 65.5 cents per mile for the period of 01/01/2023 through 12/31/2023.

Individual Taxpayer Changes

• Interest Rate Increase: Interest is due at the rate of 10.0075% annually or 0.8339% per month for any month or part of a month that a tax is paid after the original due date of the 2023 return but before January 1, 2025. Click here for assistance in calculating interest for tax paid on or after January 1, 2025. Enter any interest due on the appropriate line of your tax return.
• There is one new subtraction modification and three subtraction modifications that have been updated. For more information, see Instruction 13 (Line 13, Code Letters k., yc., u., and yb.).
• Addition Modifications: There is a new addition modification for resident members of a pass-through entity that is taxed at the entity level in another state. This new addition modification is addition t. See instruction 12.
• Tax Credits: There are two updated tax credits for qualified individuals. For more information, see Instruction 18 (Line 24 code letter b.) and Instruction 21 (Line 43, #1). There is one new tax credit for businesses. For more information, see Instruction 18 (Line 25, code letter y.).
• Updated Form 502CR, CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES. **This credit is available to residents only. If you were eligible for a Child and Dependent Care Credit on your federal income tax return and your income is below certain thresholds, you are entitled to a tax credit equal to a percentage of the federal credit. You may also be entitled to a refundable credit. See Part CC, Line 7 of Form 502CR and Instructions.
• If you are a member of a PTE (pass-through entity) which elected to pay the tax imposed with respect to members’ distributive or pro rata shares, you may be entitled to a credit for your share of that tax paid. Enter the amount on this line and attach Maryland Schedule K-1 (Form 510/511) issued to you.
• Many state revenue agencies, including Maryland, are requesting additional information in an effort to combat stolen-identity tax fraud and to protect you and your tax refund. If you and your spouse have a driver's license or state issued identification card, please provide the requested information from it. The return will not be rejected if you do not provide a driver's license or state-issued identification. If you provide this information, it may help to identify you as the taxpayer.

Business Taxpayer Changes

New Subtraction Modifications: There are no new subtraction modifications.

Changes to business tax credits

• Senate Bill 721, Acts of 2023: This bill restarts the Federal Security Clearance Costs tax credit for tax years beginning after Dec. 31, 2022, but only for individuals or corporations that employ 500 or fewer employees.
• House Bill 584, Acts of 2023: This bill indefinitely extends the Food Donations by Qualified Farms tax credit. The credit amount is increased: 100% of the value of donated fresh farm products (increased from 50%), and 100% of the value of donated certified organic produce (increased from 75%).
• House Bill 1074 / Senate Bill 624, Acts of 2023: This new nonrefundable income tax credit is available to an individual or business entity that owns a restaurant in Maryland with annual gross income of at least $400,000 and purchases one or more FDA-approved automated external defibrillator.
• Senate Bill 968, Acts of 2023: This bill alters the definition of "captive REIT" for the purpose of the dividend addback.

Click 2023 State Legislative Summaries for more information.

Tax Professional Changes

Please see the latest updated list of approved eFile software vendors for individuals and businesses.

Click here for more information regarding new business tax credits.