Agenda Item 18
Robert H. Drummer, Senior Legislative Attomeyf(./ft:)
Bill 48-16, Taxation - Credit to Offset Certain Income Tax Revenues
Bill 48-16, Taxation - Credit to Offset Certain Income Tax Revenues - Amendments, sponsored
by Lead Sponsor Government Operations and Fiscal Policy Committee and Co-Sponsor Councilmember
Rice, was introduced on December 6, 2016. A Government Operations and Fiscal Policy Committee
worksession is tentatively scheduled for January 30, 2017 at 10:30 a.m.
Bill 48-16 would clarify the eligibility for the property tax credit to offset certain income tax
Maryland law permits counties to provide a property tax credit to offset a portion of the income
tax levied. Under Md. Code, Tax-Property §9-221 (Property Tax Credit for Income Tax Offset or ITOC),
the credit is only available to the owner-occupied property of a homeowner, as described in Md. Code,
Tax -Property §9-1 05 (Homestead Tax Credit),
defines a homeowner as an individual having
a legal interest in a dwelling. A dwelling is then defined as a house or unit that is used as a principal
residence and is actually occupied as such (or expected to be occupied as such) for at least 6 months out
of the relevant 12 month period.
Montgomery County implemented the property tax credit for income tax offset
law in County
Code §52-86, which states that an "eligible taxpayer is any homeowner who
for a homestead
property tax credit under Maryland Code, Tax-Property Article, Section 9-105, or any successor
provision." The Montgomery County law further states that a taxpayer need not file an application to
receive the income tax offset credit.
The State Homestead Tax Credit is a "circuit-breaker" that limits the amount of any annual property tax increase for
homeowners who use the home as a principal residence and occupy it as such for at least 6 months out of the relevant 12 month
period. The impact of this "circuit-breaker" protection is felt during periods of rapidly rising assessments. The effect of the
credit is to spread the increase out over multiple years.
The amount of the County's property tax credit for income tax offset is set annually by resolution. For FYI7, the credit is
$692 per eligible homeowner. Approximately 244,000 taxpayers will receive the credit in FYI7.