Governor O'Malley, Senate President Miller, Speaker Busch, Comptroller Franchot Promote Tax Credit, Exemptions for Working Families
ANNAPOLIS, MD (February 3, 2009) – 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, Senate President Thomas V. Mike Miller, Jr., 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 and the increased personal exemptions each provide immediate tax relief to families who need it.”
“This is not an entitlement program – it’s a credit that is targeted to assist working families,” said Senate President Thomas V. Mike Miller, Jr. “It went largely unnoticed when we enhanced this program over a year ago, and in these times of economic stress, we need to make sure that anything that helps Maryland families make ends meet is used to its fullest.”
“The Earned Income Tax Credit is the most effective anti-poverty tool that we have and I am firmly committed to ensuring that every qualifying Marylander takes advantage of it,” said Comptroller Franchot. “This tax credit rewards hard work and gives working Marylanders a boost as they move up the economic ladder. I commend Governor O’Malley and the General Assembly for expanding the state credit and look forward to working with them to get the word out to all eligible Marylanders.”
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.
“The increased exemption was designed to offset the burden for Maryland taxpayers,” said Speaker Michael E. Busch. “At a time of growing unemployment and financial instability across the country, the increased exemptions will put more money in the pockets of working Marylanders.”
The EIC 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 EIC and file a federal tax return can receive some or all of their federal income tax refunded. Maryland’s state EIC 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 EIC 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.
In 2007, 237,523 Maryland tax returns claimed the Earned Income Tax Credit, with 189,573 eligible for the REIC. About 20 percent of people eligible for the EIC do not claim it. That means that approximately $110,000,000 left on the table that could be invested into Maryland’s working families and economy.
The REIC was expanded during the Special Session in November 2007, increasing the REIC from 20 percent to 25 percent of the federal EIC, 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 2008.
EIC Eligibility:
Families with 1 child:
Income < $33,995 or $36,995 for married workers
Maximum Federal credit: $2,917
Maximum Maryland REIC: $729
TOTAL REFUNDABLE CREDIT (state & federal): $3,646
(Maximum Maryland non-refundable credit: $1459)
Families with 2 or more children:
Income < $38,646 or $41,646 for married workers
Maximum Federal credit: $4,824
Maximum Maryland refundable credit: $1,206
TOTAL REFUNDABLE CREDIT (state & federal): $6,030
(Maximum Maryland non-refundable credit: $2412)
Workers between the ages of 25 and 64 with no children:
Income < $12,880 or $15,880 for married workers
Maximum Federal credit: $438
Maximum Maryland refundable credit: $110
TOTAL REFUNDABLE CREDIT (state & federal): $548
(Maximum Maryland non-refundable credit: $219)
