ANNAPOLIS, MD (February 18, 2010) – As Maryland’s working families file their state taxes this year, they are eligible for increased exemptions and may qualify for an expanded tax credit thanks to measures passed during the 2007 Special Legislative Session to expand the safety net for low- to moderate-income earners. Today, Governor Martin O’Malley, House Speaker Michael E. Busch, and Comptroller Peter Franchot joined Robin McKinney, Director of the Maryland CASH Campaign, to remind eligible taxpayers of the new tax policies for their 2008 tax filings. Under the new policies, tax filers may be eligible for an expanded state Earned Income Tax Credit (EIC) as well as an increased personal income tax exemption.
“The tax relief initiatives passed during the Special Session create a larger safety net for the working families of Maryland, particularly during these tough economic times,” said Governor O’Malley. “Even though our workers are producing more, wages have stagnated and costs have gone up. The Earned Income Tax Credit provides immediate tax relief to families who need it. Low- to moderate-income families filing taxes today are eligible for refundable money from the state Earned Income Tax Credit. That means $33 million back into the pockets of Maryland’s middle class at a time when they need it most.”
“The EITC is the most effective tax credit available to help lift people out of poverty,” said Comptroller Franchot. “Behind the numbers, there are parents and children receiving a better life in Maryland because of the Earned Income Tax Credit. But working families must apply for the credit in order to receive the benefit. I am grateful to work with Governor O'Mallye, Speaker Busch and partners such as the Maryland CASH Campaign to spread the word about the EITC and the free tax preparation services available for those in need.”
During the 2007 Special Legislative Session, the General Assembly adopted measures that increased the regular personal income tax exemption from $2,400 to $3,200 for individuals with gross income of up to $100,000 or $150,000 for joint filers in a move that created a more progressive tax structure for Maryland families and helped close a $1.7 billion inherited structural deficit. During the same session, the Governor fought to increase Maryland’s Earned Income Tax Credit to 25 percent of the federal credit and expanded to include workers without children, to help our hardworking families weather a tough economy.
“At a time when many Marylanders are struggling to make ends meet, the Earned Income Tax Credit is an important tool to help offset some of the burden for low-income families,” said Speaker Michael E. Busch. “This credit provides millions of dollars in federal and State tax relief for working families when they need it most.”
The EITC is a federal tax benefit for low- and moderate-income individuals who work full-time, part-time, or part of the year. Designed primarily to benefit families, workers who qualify for the EITC and file a federal tax return can receive some or all of their federal income tax refunded. Maryland’s state EITC can be used to reduce or eliminate state income tax liability. If the amount of the Maryland credit exceeds the worker’s state tax liability, then the taxpayer may be eligible to receive a portion of the Maryland EITC as a refund payment, known as the refundable earned income credit (REIC). Taxpayers may qualify for this benefit even if they do not otherwise have to file a state tax return.
For the 2008 tax year, 225,858 Maryland taxpayers had taxable income that qualified for the Maryland EITC in the amount of $65,058,138. Of these, 117,738 also qualified for the Maryland refundable EITC in the additional amount of $59,370,460. Traditionally, about 20 percent of people eligible for the EITC do not claim it.
The REIC was expanded during the Special Session in November 2007, increasing the REIC from 20 percent to 25 percent of the federal EITC, putting up to $33 million back in the pockets of Maryland’s middle class. Taxpayers will benefit from these changes when they file taxes on income earned in 2009.
Earned Income and adjusted gross income (AGI) must each be less than:
$43,279 ($48,279 married filing jointly) with three or more qualifying children
$40,295 ($45,295 married filing jointly) with two qualifying children
$35,463 ($40,463 married filing jointly) with one qualifying child
$13,440 ($18,440 married filing jointly) with no qualifying children
Tax Year 2009 maximum credit:
$5,657 with three or more qualifying children
$5,028 with two qualifying children
$3,043 with one qualifying child
$457 with no qualifying children
The American Recovery and Reinvestment Act provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009 and 2010 tax years.