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Homeowners Tax Credit

The State of Maryland has an income based Homeowners Tax Credit program which allows credits against the property tax bill. The program sets a limit on the amount of property taxes any homeowner must pay on their principal residence based upon their income. This plan is sometimes commonly known as the "circuit breaker" plan. The Homeowners Tax Credit program is available to all homeowners regardless of their age, and the credits are applied based upon the person's income.

Note that this program is separate and distinct from the Homestead Tax Credit program.

How is the Credit figured?

The tax credit is based upon the amount by which the property taxes exceed a percentage of your combined household income according to the following formula:

    0% of the first $8,000.00 of income
    4% of the next $4,000.00 of income
    6.5% of the next $4,000.00 of income
    9% of all income above $16,000.00

What Are The Basic Requirements?

Before your eligibility according to income can be considered, you must meet four basic requirements:
    You must own or have a legal interest in the property.
    The home must be your principal residence where you live at least six months of the year, including July 1.
    Your net worth, not including the value of your home or any qualified retirement savings, must be less than $200,000.00.   
    Your combined gross household income cannot exceed $60,000.00.
See the Homeowners Tax Credit application for a further explanation of the above requirements and any other limitations.

When do you apply?

The Homeowners' Tax Credit is not automatically renewed each year. You must re-apply every year. This is true even if you were awarded the credit last year and there have been no changes to your income. You must apply by no later than September 1. If you apply by May 1, the credit will be applied to the initial July tax bill. Otherwise, if you apply between May 1 and September 1, you will either need to pay the entire tax bill and wait for a refund, pay the first half of the tax bill and wait for the credit to be applied to the second half bill, or wait for a revised tax bill to be issued. Note that if you wait for the credit to be issued, you may miss out on the discount applicable for early tax bill payment.

How do you apply?

You can obtain the application on the Department of Assessments and Taxation here.

Need some help with a real estate transaction?

Our office can assist you. Please call or send us an email with your question and we will be glad to assist.