Maryland Gov. Larry Hogan (R) has proposed a tax relief package that would phase out taxes on retirement income and permanently expand the state earned income tax credit.
During a January 11 news conference ahead of the 2022 legislative session, Hogan announced a series of proposals that would: eliminate all state taxes on retirement income; make the temporary increase to the EITC permanent; extend a manufacturing tax credit program to 2027; and eliminate some filing fees for businesses and farms. According to the governor’s release, the proposals total $4.6 billion, which would make it the largest tax relief package in state history.
“Next to our health recovery from the worst pandemic in more than a century, nothing is more important than our continued economic recovery,” Hogan said during the announcement.
The proposal to eliminate retirement taxes would be phased in starting with an income exclusion in tax year 2022 and would apply to seniors age 65 and older who are receiving Social Security benefits, according to Hogan’s presentation.
Hogan, who is now in his last year as governor, proposed a similar measure last year that failed to make headway in the Democrat-controlled legislature. After the announcement, he told reporters that “nobody actually disagreed with the goal . . . they simply said we can’t afford to do this.” He hopes to take advantage of the state’s $2.5 billion budget surplus for fiscal 2021 to convince lawmakers and advance the proposals.
The governor also seeks to make permanent the expansions to the EITC that were temporarily enacted under a COVID-19 relief bill. That relief bill increased the state EITC to 100 percent of the federal credit for eligible childless workers and to 45 percent for all others, according to Hogan’s release.
The release said Hogan will also propose legislation to eliminate the fees that businesses pay when filing an annual report with the state Department of Assessments and Taxation. This would include the $300 fee for some businesses and the $100 fee for family farms.
Further, the governor proposes to extend the More Jobs for Marylanders incentive program — which provides tax credits for new or existing manufacturing businesses against state income tax on wages — through 2027.
Also mentioned in the governor’s announcement is a plan to codify an existing COVID-19 relief initiative that provides rent subsidies and sales tax rebates to struggling small businesses.