Bill
SB 99
Expands Maryland's military retirement income subtraction, eliminating age limits and raising caps to $25,000 in 2025 and $40,000 from 2026, helping veterans stay in state.
(“Keep Our Heroes Home Act”)
Status & Sponsors
- Bill: SB 99 (Sen. Salling) — cross-file: HB 60
- Introduced: Early January 2025 (prefiled Oct 29, 2024)
- Committee assignment: Budget & Taxation (Maryland)
- Effective date (as written): July 1, 2025
Purpose / Intent
- To expand Maryland income‑tax relief for military retirees by raising the annual subtraction (exclusion) for military retirement income, and by making the expanded exclusion available regardless of the retiree’s age — with the stated intent of helping keep veterans in Maryland.
Key provisions
- Modifies the existing military retirement income subtraction (Tax‑General §10‑207):
- Tax year 2025 (i.e., taxable years beginning after 12/31/2024 but before 1/1/2026): increases the subtraction to $25,000 per individual.
- Tax year 2026 and thereafter: increases the subtraction to $40,000 per individual.
- Removes the current age‑based tiers (previously lower limits for taxpayers under certain ages), so the new maximum applies regardless of age.
- Definition of eligible “military retirement income” remains tied to retirement or death benefits resulting from qualifying military service, including active duty/reserve service, Maryland National Guard membership, and certain commissioned corps (e.g., Public Health Service, NOAA).
- Does not change other exclusions (for example, the standard pension exclusion available to those 65+, totally disabled, or with a disabled spouse still exists for qualifying retirement income not covered by the military subtraction).
Who is affected
- Directly: Maryland resident taxpayers who receive military retirement pay (including certain survivors and death benefits) — they would be able to subtract a larger portion of that income from Federal AGI when computing Maryland taxable income.
- Indirectly: State general fund and local income tax revenues (local income tax share declines as a result).
Fiscal and implementation impacts (Department of Legislative Services / Comptroller)
- State general fund revenue losses (estimated):
- FY 2026: –$11.3 million
- FY 2027: –$25.2 million
- FY 2028: –$26.2 million
- FY 2029: –$27.2 million
- FY 2030: –$28.3 million
- Local government income tax revenue losses (estimated):
- FY 2026: –$6.9 million; FY 2027: –$15.3 million; similar annual impacts thereafter.
- Expenditures: no direct fiscal impact on State or local expenditures identified.
- Small business: none identified.
- Estimates are based on Comptroller and tax‑return data (tax year 2021 baseline, including Form 502SU and 1099‑R reporting).
Timeline / next steps
- Bill takes effect July 1, 2025; the larger $40,000 subtraction applies starting in tax year 2026.
- Implementation will rely on Comptroller/Treasurer systems to apply the revised subtraction on Maryland returns for affected tax years.
Notes & context
- The bill builds on prior changes (Chs. 613 & 614 of 2023) that adjusted earlier age‑based subtraction amounts.
- Policymakers and budget analysts will weigh the revenue loss against the policy goal of veteran retention and potential economic/community benefits of keeping retired military personnel in Maryland.
Compiled from official sources — confirm details with the bill’s official record.
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