Posted on 09/22/22
The Renters' Tax Credit Program provides property tax credits for renters who meet certain requirements. The plan was modeled after and designed to be similar in principle to the Homeowners' Tax Credit Program, which is known to many as the Circuit Breaker Program. The concept rests on the reasoning that renters indirectly pay property taxes as part of their rent and thus should have some protection, as do homeowners.
The plan is based upon the relationship between rent and income. If the portion of rent attributable to the assumed property taxes exceeds a fixed amount in relation to income, the renter can, under specified conditions, receive a credit of as much as $1,000. The credit is paid as a direct check from the State of Maryland.
The rented dwelling may be an apartment in an individual house or any type of apartment building, duplex, co-op, condominium, house trailer, or mobile home pad. The dwelling must be the principal residence in Maryland and the renter must live there at least six months of the year. You are only eligible to receive a tax credit for rent paid in the State of Maryland.
The applicant must have a bona fide leasehold interest in the property and be legally responsible for the rent. If the dwelling that is rented is owned by a tax exempt, charitable organization or is exempt in any way from property taxation, a tax credit cannot be granted.
COMBINED INCOMES: Credits are calculated according to total income, meaning all combined gross household income before deductions. This includes income from all sources, whether or not taxable for federal and state income tax purposes. It also includes Social Security as well as all other retirement benefits.
If you are age 60 or over or 100% disabled, use the chart below to determine if it is worthwhile for you to file an application.
| Column A Total Income |
Column B Monthly Rent |
|
$1 - 10,000
|
117
|
|
20,000
|
423
|
|
25,000
|
576
|
|
33,000
|
800
|
|
39,000
|
1,000
|
|
43,000
|
1,100
|
|
46,000
|
1,200
|
|
49,000
|
1,300
|
|
53,000
|
1,400
|
|
56,000
|
1,500
|
|
59,000
|
1,600
|
|
62,000
|
1,700
|
|
66,000
|
1,800
|
|
69,000
|
1,900
|
|
73,000
|
2,000
|
The rent in Chart 1 assumes that you pay all your own utilities separate from the monthly rent. If the rent includes gas, electric and heat, you may need to have as much as 18% higher monthly rent to qualify for a credit.
Trailer park residents are advised to submit an application and allow this office to determine eligibility.
Chart 1 is a guide only, and the exact amount of your income and rent will be used to determine your eligibility. If you submit an application, the State will determine your eligibility.
If you are a renter under the age of 60 who, during 2021, had at least one dependent under the age of 18 living with you AND you did not receive federal or state housing subsidies or reside in public housing AND the combined income of all residents of your dwelling is below the following guidelines, you are encouraged to apply.
| Persons in Household (Include Applicant) |
2021 Gross Income Limit |
|
2
|
$17,420
|
|
3
|
$21,960
|
|
4
|
$26,500
|
|
5
|
$31,040
|
|
6
|
$35,580
|
|
7
|
$40,120
|
|
8
|
$44,660
|
|
9
|
$49,200
|
Note: If you think you qualify based on the income limits on the above chart, you are encouraged to apply. The State will determine your eligibility using the above chart and the formula that compares rent and income (See Chart 1).
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The State of Maryland has developed a program which allows credits against the homeowner's property tax bill if the property taxes exceed a fixed percentage of the person's gross income. In other words, it sets a limit on the amount of property taxes any homeowner must pay based upon his or her income.
For purposes of the tax credit program, it is emphasized that applicants must report total income, which means the combined gross income before any deductions are taken. Income information must be reported for the homeowner and spouse and all other occupants of the household unless they are dependents or they are paying rent or room and board. Income from all sources must be reported whether or not the monies received are included as income for Federal and State income tax purposes. Nontaxable retirement benefits such as Social Security and Railroad Retirement must be reported as income for the tax credit program. Generally, eligibility for the tax credit will be based upon all monies received in the applicant's household in a given year.
Before your eligibility according to income can be considered, you must meet four basic requirements
The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: 0% of the first $8,000 of the combined household income; 4% of the next $4,000 of income; 6.5% of the next $4,000 of income; and 9% of all income above $16,000.
The chart below is printed in $1,000 increments to show you the specific tax limit for each income level.
| 2021 Household Income | Tax Limit |
|---|---|
|
$1 - 8,000
|
$0
|
|
9,000
|
40
|
|
10,000
|
80
|
|
11,000
|
120
|
|
12,000
|
160
|
|
13,000
|
225
|
|
14,000
|
290
|
|
15,000
|
355
|
|
16,000
|
420
|
|
17,000
|
510
|
|
18,000
|
600
|
|
19,000
|
690
|
|
20,000
|
780
|
|
21,000
|
870
|
|
22,000
|
960
|
|
23,000
|
1050
|
|
24,000
|
1140
|
|
25,000
|
1230
|
|
26,000
|
1320
|
|
27,000
|
1410
|
|
28,000
|
1500
|
|
29,000
|
1590
|
|
30,000
|
1,680
|
|
and up to a maximum
of $60,000 |
*
|
* For each additional $1,000 of income above $30,000, you add $90 to $1,680 to find the tax limit. Your combined gross household income cannot exceed $60,000.
Example:If your combined household income is $16,000, you see from the chart that your tax limit is $420. You would be entitled to receive a credit for any taxes above the $420. If your actual property tax bill was $990, you would receive a tax credit in the amount of $570 --- this being the difference between the actual tax bill and the tax limit.
Homeowners who file and qualify by April 15 will receive the credit directly on their tax bill. Persons who file later up until the October1 deadline will receive any credit due in the form of a revised tax bill. Applicants filing after April 15 are advised not to delay payment of the property tax bill until receipt of the credit if they wish to receive the discount for early payment offered in some subdivisions. A refund check will be issued by the local government if the tax bill was paid before the tax credit was granted.
Whenever homeowners are found not qualified to receive a tax credit, they are informed in writing. The letter gives the reason for denial and what steps to take if further questions remain. The letter also explains how homeowners can appeal the determination of ineligibility to the local Property Tax Assessments Appeals Board.