County Homestead Tax Credit

The Homestead Tax Credit (HTC) limits the increase in taxable assessment each year to a fixed percentage. Every county and municipality in Maryland is required to limit taxable assessment increases to no more than 10% per year, and the State also limits the taxable assessment for the State portion of the tax to 10%. All municipalities in Montgomery County have adopted the 10% HTC limit, except for the Town of Kensington, which has a 5% HTC limit.

The credit applies only to owner occupied residential dwellings and is based on the total assessment for the land and the dwelling associated with the land. The credit does not limit the market value of the property. It is a credit applied against the tax due on the portion of the reassessment exceeding 10% from one year to the next. The credit is based on the 10% limit for purposes of the State property tax, and 10% or less for purposes of local taxation. In other words, the homeowner pays no property tax on the assessment increase which is above the limit.

There are certain conditions that must be met for credit eligibility:

  • The dwelling must be the owner's principle residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable, unless owner is temporarily unable to do so by reason of illness or need of special care.
  • The property was not transferred to new ownership.
  • There was no change in the zoning classification requested by the homeowner that resulted in an increased value of the property.
  • A substantial change did not occur in the use of the property.
  • The previous assessment was not clearly erroneous.

Click  here for more information on the Homestead Tax Credit from the Maryland State Department of Assessments and Taxation. Click here to go directly to the on-line Homestead Tax Credit application, or Click here to download an application to mail in.

State Law Change Requiring Homestead Credit Application on file with SDAT to Qualify for the ITOC

Important Information About The Maryland Homestead Tax Credit - YouTube

Dear Montgomery County Property Owner, 

There has been a change in State law that will restrict your eligibility for a $692 County property tax credit.  This new State law requires all residential property owners to also have an approved Homestead Application on file with the State Department of Assessments and Taxation (SDAT) to be eligible for the County’s Income Tax Offset Credit (ITOC).  This credit appears on your annual property tax bill.   

You must have an approved application on file to continue receiving your $692 credit on your annual property tax bill.   

This is a one-time application and must be completed to keep the ITOC tax credit that will be on your July 1, 2022, tax bill.  If an approved application is not on file by May 1, 2023, State law will require the County to recapture the $692 ITOC you were granted on your tax bill.  Additionally, the ITOC tax credit itself will no longer appear on all future tax bills until there is an approved Homestead Application on file with SDAT. 

The Homestead Application can be filed online or by mailing an application to SDAT.  

To file an application online, you will first need an Access Number issued by SDAT.  To obtain an access number, email your name and address with the subject line of “Montgomery County Homestead Tax Credit” to sdat.homestead@maryland.gov.  Within a few days, SDAT will send you your access number and directions for filing online. 

To file an application by mail, please complete the application form and mail it to the address listed on the form.   The link to the paper application form is:  https://dat.maryland.gov/SDAT%20Forms/Homestead_application.pdf

Once your application has been filed, or if you believe you already have a Homestead Application on file with SDAT, you can check the status of your Homestead Application on the SDAT webpage:   https://sdat.dat.maryland.gov/RealProperty/.   

If you have any questions, please email  sdat.homestead@maryland.gov or call 410-767-2165 (toll-free 1-866-650-8783). 

Please note that sometime between October 2022 and February 2023, SDAT will be changing their Homestead Application process and will no longer require the access number for the online application.