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Category: Maryland

Maryland Subtractions from Income

Federally Taxes Social Security and Railroad Retirement Benefits

If you included in your federal adjusted gross income Social Security, Tier I, Tier II, and/or supplemental railroad retirement benefits, then you must include the total amount of such benefits on line 11. Social Security and Railroad Retirement benefits are exempt from state tax.

Other Maryland Subtractions from Income

Other certain subtractions for which you may qualify will be reported on Form 502-SU. Determine which subtractions apply to you and enter the amount for each with your Maryland state return from the list below.

  • Payments from a pension system to firemen and policemen for job-related injuries or disabilities (but not more than the amount of such payments included in your total income).
  • Net allowable subtractions from income from pass-through entities, not attributable to decoupling.
  • Net subtractions from income reported by a fiduciary.
  • Distributions of accumulated income by a fiduciary, if income tax has been paid by the fiduciary to the State (but not more than the amount of such income included in your total income).
  • Profit (without regard to losses) from the sale or exchange of bonds issued by the State or local governments of Maryland.
  • Benefits received from a Keogh plan on which State income tax was paid prior to 1967. Attach statement.
  • Amount of wages and salaries disallowed as a deduction due to the work opportunity credit allowed under the Internal Revenue Code Section 51.
  • Expenses up to $5,000 incurred by a blind person for a reader, or up to $1,000 incurred by an employer for a reader for a blind employee.
  • Expenses incurred for reforestation or timber stand improvement of commercial forest land. Qualifications and instructions are on Form DNR-393, available from the Department of Natural Resources, telephone 410-260-8531.
  • The amount added to taxable income for the use of an official vehicle by a member of a state, county or local police or fire department. The amount is stated separately on your W-2 form.
  • Up to $6,000 in expenses incurred by parents to adopt a child with special needs through a public or nonprofit adoption agency and up to $5,000 in expenses incurred by parents to adopt a child without special needs.
  • Purchase and installation costs of certain conservation tillage equipment as certified by the Maryland Department of Agriculture.
  • Deductible artist’s contribution.
  • Payment received under a fire, rescue, or ambulance personnel length of service award program that is funded by any county or municipal corporation of the State.
  • The value of farm products you donated to a gleaning cooperative as certified by the Maryland Department of Agriculture. Attach a copy of the certificate.
  • Up to $15,000 of military pay included in your federal adjusted gross income that you received while in the active service of any branch of the armed forces and which is attributable to service outside the boundaries of the U.S. or its possessions. To compute the subtraction, follow the directions on the MILITARY OVERSEAS INCOME WORKSHEET found on the state site. If your total military pay exceeds $30,000, you do not qualify for the subtraction.
  • Amount of pickup contribution shown on Form 1099R from the state retirement or pension systems included in federal adjusted gross income. The subtraction is limited to the amount of pickup contribution stated on the 1099R or the taxable pension, whichever is less. Excess contribution may be carried forward to the next year.
  • The amount of interest and dividend income (including capital gain distributions) of a dependent child which the parent has elected to include in the parent’s federal gross income under Internal Revenue Code Section 1(g)(7).
  • Payments received from the State of Maryland under Title 12 Subtitle 2 of the Real Property Article (relocation and assistance payments).
  • Up to $5,000 of military retirement income received by a qualifying individual during the tax year. To qualify, you must have been a member of an active or reserve component of the armed forces of the United States, an active duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey, a member of the Maryland National Guard, or the member’s surviving spouse or ex-spouse.
  • The Honorable Louis L. Goldstein Volunteer Police, Fire, Rescue and Emergency Medical Services Personnel Subtraction Modification Program. $3,500 for each taxpayer who is a qualifying volunteer as certified by a Maryland fire, police, rescue or emergency medical services organization. $3,500 for each taxpayer who is a qualifying member of the U.S. Coast Guard Auxiliary as certified by the organization. Attach a copy of the certification.
  • Purchase cost of certain poultry or livestock manure spreading equipment as certified by the Maryland Department of Agriculture. Attach a copy of the certification.
  • Up to $2,500 per contract purchased for advanced tuition payments made to the Maryland Prepaid College Trust and a maximum of $2,500 per taxpayer per beneficiary for the total of all amounts contributed to investment accounts for same beneficiary under the Maryland College Investment Plan and the Maryland Broker-Dealer College Investment Plan. See Administrative Release 32.
  • Any income of an individual that is related to tangible or intangible property that was seized, misappropriated or lost as a result of the actions or policies of Nazi Germany towards a Holocaust victim. For additional information contact the Revenue Administration Division.
  • Expenses incurred to buy and install handrails in an existing elevator in a healthcare facility (as defined in Section 19-114 of the Health General Article) or other building in which at least 50% of the space is used for medical purposes.
  • Payments from a pension system to the surviving spouse or other beneficiary of a law enforcement officer or firefighter whose death arises out of or in the course of their employment.
  • Income derived within an arts and entertainment district by a qualifying residing artist from the publication, production, or sale of an artistic work that the artist created, wrote, composed or executed. Complete and attach Form 502AE.
  • The amount received as a grant under the Solar Energy Grant Program administered by the Maryland Energy Administration (but not more than the amount included in your total income).
  • Cost difference between a conventional on-site sewage disposal and a system that utilizes nitrogen removal technology, for which the Department of Environment's payment assistance program does not cover.
  • Interest on any Build America Bond that is included in your federal adjusted gross income.