Maryland Gov. Larry Hogan has signed into law a COVID-19 relief package that brings more than $1 billion in tax relief and economic aid to Maryland residents and small businesses.

Known in legislative parlance as the RELIEF (or “Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families”) Act, the bill was introduced by Gov. Hogan at the start of the General Assembly’s 2021 legislative session on Jan. 13. The bill has evolved a bit since then, thanks to deliberations in both the state House and Senate. In a final flurry of activity, both chambers on Friday passed a version of the relief package totaling between $1.1 billion and $1.2 billion.

This Baltimore Business Journal article includes a summary of the changes made to the bill since it was first introduced.

The final bill includes:

  • Direct stimulus payments of $500 for Maryland families and $300 for individuals who filed for the Earned Income Tax Credit. “It also would expand the amount of the benefit that workers receive under the (EITC) for three years,” The Baltimore Sun reported.
  • A number of provisions to provide relief for the state’s small businesses. “Aid would include allowing small businesses to keep the sales taxes they collect for up to three months, up to $3,000 per month,” The Sun reported. “Businesses that received state pandemic assistance, including grants and forgiven loans, would be exempt from paying state taxes on that money. Employers who laid people off during the pandemic would not have to pay increased unemployment insurance taxes. Businesses with fewer than 50 workers would be able to postpone unemployment taxes for a year.”

The bill also clarifies a number of tax-related issues related to pass-through entities. Originally outlined in a separate piece of legislation, the technical fix is now contained in its entirety in the RELIEF Act. Specifically, the fix calls for “… clarifying certain provisions of law concerning the state income tax imposed on certain pass–through entities; authorizing a pass–through entity to elect to pay the tax imposed with respect to certain shares of all members of the pass–through entity, rather than only resident members; allowing each member to claim a credit against the income tax for the member’s proportionate share of the tax paid by the pass–through entity; (and) requiring certain taxpayers to add the amount of the credit back to federal adjusted gross income to determine Maryland adjusted gross income.”

As a piece of emergency legislation, the law takes effect immediately. Direct stimulus payment may be sent as soon as this week.

Complete details on the relief package can be found here. And be sure to follow the MACPA’s State Tax Community for related updates on administrative releases as they are made available by the Maryland Comptroller’s Office.

More recent Annapolis developments of interest

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