What's New for the 2022 Tax Filing Season (2021 Tax Year)

Here are some of the most important changes and benefits affecting the approximately 3.5 million taxpayers working on their 2021 Maryland income tax returns.

Note: For forms, visit the 2021 Individual Tax Forms pages.

2021 Individual Income Tax Instruction Booklets

Booklet Title Description
Resident Maryland State and Local Tax Forms and Instructions Instructions for filing personal state and local income taxes for full- or part-year Maryland residents.
Nonresident Maryland Tax Forms for Nonresidents Instructions for filing personal income tax returns for nonresident individuals.
Fiduciary Maryland Instructions for Fiduciaries Instructions for filing fiduciary income tax returns.
Maryland's Withholding Requirements for Sales or Transfers of Real Property and Associated Personal Property by Nonresidents Maryland's Withholding Requirements for Sales or Transfers of Real Property and Associated Personal Property by Nonresidents Instructions for nonresidents who are required to file forms MW506NRS, MW506AE, MW506R and MW508NRS to determine and collect income tax withholding due on the sale of property located in Maryland and owned by nonresidents.

Opening of the 2022 Tax Filing Season

The IRS began accepting all Business tax returns on To be determined.

Maryland started accepting all Business tax returns on To be determined.

The IRS will begin accepting all Individual tax returns on 01/24/22.

Maryland will begin accepting all Individual tax returns on 01/24/22.

Claiming Business Income Tax Credits

For tax years beginning after December 31, 2012, you must file your tax return electronically in order to claim a business tax credit unless you submit a waiver from the electronic filing requirement. To request a waiver from filing the Form 500CR electronically, you must submit a completed Form 500CRW Waiver Request For Electronic Filing of Form 500CR and it must be attached to Form 500CR in the filing of your return.

Beginning with Tax Year 2015 certain individual taxpayers may elect to claim the Community Investment Tax Credit and/or the Endow Maryland Tax Credit on Maryland Form 502CR, and thus avoid the electronic filing requirement. Read instructions to Form 502CR to see if you qualify for this election.

Filing Deadline

Your income tax return is due July 15, 2022.

Business income tax return dates vary. See Filing Extensions and Deadlines for Corporations

Local Taxpayer Service Offices

Taxpayer Service Offices will be open from 8:30 a.m. to 4:30 p.m., Monday through Friday by appointment only. In order to make an appointment at one of our branch offices, please access the appointment scheduler at https://www.marylandtaxes.gov/locations.php. Our branch offices will assist taxpayers to fill out and electronically file Maryland income tax forms for free. Please bring any W-2 statements or other withholding statements, such as 1099s, that you have, along with your completed federal income tax return.

New Tax Rates

  • Local Tax Rate Changes - There are no local tax rates increase for tax year 2021, however, two counties (St Mary's and Washington's) have decreased their local rate for calendar year 2022. Click here for a complete list of current city and local counties' tax rate.

Exemptions and Deductions

There have been no changes affecting personal exemptions on the Maryland returns.

Personal Exemption Amount - The exemption amount of $3,200 begins to be phased out if your federal adjusted gross income is more than $100,000 ($150,000 for joint taxpayers). The $3,200 exemption is phased out entirely when the income exceeds $150,000 ($200,000 for joint taxpayers). See Instruction 10 in the Resident tax booklet for the reduced amounts, or review the page, Determine Your Personal Income Tax Exemptions. The additional exemption of $1,000 remains the same for age and blindness.

Dependent Form 502B - will be required to be attached to Form 502, Form 505 and Form 515 to determine what exemptions you are entitled to claim. 

Standard Deduction - The tax year 2021 standard deduction is a maximum value of $2,350 for single taxpayers and to $4,700 for head of household, a surviving spouse, and taxpayers filing jointly.

Itemized Deduction Limitation - The State of Maryland follows the new federal tax law treatment to suspend the itemized deduction limitation threshold (Pease Limitation). This means that high-income taxpayers are not required to reduce their itemized deductions using the itemized deduction worksheet used in prior years.

Should I take the standard deduction or itemize? - The federal tax reform of 2017 significantly raised the federal standard deduction. Under current Maryland law, if you take the standard deduction the federal level, you cannot itemize at the Maryland level. You may take the federal standard deduction, while this may reduce your federal tax liability, it may result in an increase to your Maryland income tax liability. The Comptroller's Office encourages you to run your income tax returns under both deduction methods, and to compare the results of taking the standard deduction versus itemizing your deductions, to see which method causes the lowest overall tax liability.

Limitation on deduction for state and local tax - Federal tax reform limited the amount you can deduct for state and local taxes. You cannot claim more than $10,000 ($5,000 for married filing separately) for state and local taxes you paid. The new federal limitation impacts your Maryland return because you must addback the amount of state income taxes you claimed as federal itemized deductions. The addback is limited to $10,000 ($5,000 for married filing separately) and is reported on line 17b of the Maryland Form 502. Maryland will accept any reasonable interpretation of the limitation reported on line 17b. A reasonable interpretation of the law includes the following example: you, a single filer, paid $8,000 in real property taxes and $4,000 in Maryland state income taxes, Maryland will accept an addback of state income tax of $2,000 on Line 17b. In this example, the real estate taxes make up $8,000 of your $10,000 limitation and only $2,000 are required to be added back as state income taxes.

Tax Forms, Instructions & Booklets

The resident tax booklets contain both the tax forms and the instructions for each major form. The tax forms on the Web site are available separately from the resident and nonresident instruction booklets.

All of our tax forms have been reformatted to ensure enhanced readability when paper forms are filed. This format has increased the number of pages of some of the tax returns. Make sure that you attach all pages of your return to ensure that your return is processed correctly. 

  • Tax Forms and Instructions Online - Tax forms and instructions for Individual and Business taxpayers are available here online at Maryland Tax Forms and Instructions (business and individuals). 
  • Tax Booklets at Libraries - We have provided a limited supply of tax booklets to a number of libraries throughout the State that have requested them.
  • Tax Booklets at Comptroller's Taxpayer Service Offices -  Tax booklets are available at all of our local taxpayer service offices.
  • Request a Tax Booklet - Taxpayers may request a resident or nonresident tax booklet by calling (410) 260-7951, or by e-mail at taxforms@marylandtaxes.gov.

Subtractions

Increased pension exclusion - Maryland's maximum pension exclusion, which is available to qualifying taxpayers who are age 65 or older; are totally and permanently disabled; or have a spouse who is totally and permanently disabled, increased to $34,300 for tax year 2021.

Pension exclusion for qualifying retired correctional officer, law enforcement officer or fire, rescue, or emergency services personnel - Pursuant to House Bill 296 (Acts of 2018), the pension exclusion for Retired Law Enforcement Officer or Fire, Rescue, or Emergency Services Personnel has expanded eligibility to include retirement income of correctional officers. Up to a $15,000 subtraction for resident retired law enforcement officers, fire, rescue and emergency personnel who are at least 55 years old and (1) were employed by the State, a political subdivision of the State, or the federal government, and (2) receive pension income related to their above employment. An individual may not claim both this subtraction and the standard pension exclusion.

Subtraction modification updates for tax year 2021:

There were four new subtractions for tax year 2021. However, there have been modifications to a few.

  • Code letter ww. First- Time Homebuyer Savings Account. A qualified individual may subtract up to $5,000 per year of the amount contributed to a designated First- Time Homebuyer Savings Account plus the earnings, including interest and other income on the principal, on such account. The First-Time Homebuyer Savings Account must be opened for the sole purpose of paying or reimbursing eligible costs for the purchase of a home in the State. The subtraction may be claimed for a period not to exceed 10 years, and total earnings may not exceed $50,000 during that 10-year period.
  • Code letter xx. Amount of donations of certain disposable diapers, certain hygiene products, and certain monetary gifts made by a taxpayer during the taxable year to certain qualified charitable entities that are registered with the Comptroller. To qualify for this subtraction, you must enter the value of the donation and the name of each qualified charitable entity to which a donation was made. The Comptroller may verify the donation with the qualified charitable entity.
  • Code letter yy. Amount of unemployment compensation reported on 1099-G, Box 1, that was included in your FAGI for qualified taxpayers. You may find instructions to review if you qualify for this subtraction on page 12 of the 2021 Maryland resident income tax booklet.
  • Code letter zz Amount of Coronavirus relief grant payment, relief loan, and any portion of the loan that was forgiven. You may find a list of eligible Maryland grant and loan programs here.

Also, there have been modifications to a few.

  • Code letter va. Increase to the existing Honorable Louis L. Goldstein Volunteer Fire, Rescue and Emergency Medical Services Personnel Subtraction Modification Program maximum amount to $6,500.
  • The mileage rate for certain qualifying charitable use of a car on Form 502V has decreased to 56 cents.
  • Code letter oo., now includes the Maryland-National Capital Park Police or the Washington Suburban Sanitary Commission Police Force.

Individual Taxpayer Changes

  • Interest Rate Decrease: Interest is due at the rate of 9.5% annually or 0.7916% per month for any month or part of a month that a tax is paid after the original due date of the 2021 return but before January 1, 2023. For assistance in calculating interest for tax paid on or after January 1, 2023, click here or visit the Comptroller's website. Enter any interest due on the appropriate line of your tax return.
  • Updated Form 502CR, Part CC, line 9: If you are the beneficiary of a trust or a Qualified Subchapter S Trust which elected to pay the tax imposed with respect to members’ distributive or pro rata shares, you may be entitled to a credit for your share of that tax. Enter the amount on this line and attach the Maryland Schedule K-1 (504) for the trust.
  • If you are a member of a PTE (pass-through entity) which elected to pay the tax imposed with respect to members’ distributive or pro rata shares, you may be entitled to a credit for your share of that tax paid. Enter the amount on this line and attach Maryland Schedule K-1 (Form 510) issued to you.
  • Many state revenue agencies, including Maryland, are requesting additional information in an effort to combat stolen-identity tax fraud and to protect you and your tax refund. If you and your spouse have a driver's license or state issued identification card, please provide the requested information from it. The return will not be rejected if you do not provide a driver's license or state-issued identification. If you provide this information, it may help to identify you as the taxpayer.

Business Taxpayer Changes

Single Sales Factor Apportionment: For apportioning income to the state for corporate income tax purposes, a single sales factor apportionment formula has been updated for tax year 2021.

New Subtraction Modifications: There is one new subtraction for 2021. Click here for more information

Changes to business tax credits

  • Tax Credits: There is one new refundable credit. Click here for more information
  • Senate Bill 0160, Act of 2021 - This bill extends the duration of the Cybersecurity Investment Incentive Tax Credit Program by two years, through June 30, 2025, and expands the applicability of the program to technology companies, rather than solely cybersecurity companies. The program and its reserve fund are renamed accordingly. The credit will be called the Innovation Investment Incentive Tax Credit.
  • House Bill 0495/Senate Bill 0578, Act of 2021 - This bill changes the automatic one-year decoupling provision. Beginning in tax year 2021, automatic decoupling also applies to any taxable year preceding the calendar year in which the amendment is enacted when the Comptroller determines that the federal change will have at least a $5 million impact in the fiscal year preceding the calendar year in which the amendment is enacted.
  • Senate Bill 19, Acts of 2021 - This bill alters certain eligibility requirements and reduces the percentage value of the Biotechnology Investment Incentive Tax Credit.
  • Senate Bill 186, Acts of 2021 - This bill establishes an enhanced job creation tax credit for the hiring of a qualified veteran and extends program eligibility to small businesses who hire a qualified veteran. The bill also repeals the Hire Our Veterans Tax Credit.
  • Senate Bill 196, Acts of 2021 - This bill alters the existing Research and Development Tax Credit Program by eliminating the basic credit, limiting the maximum value of the tax credit, and defining net book assets for the purpose of determining small business eligibility.
  • House Bill 711/Senate Bill 622, Acts of 2021 - This bill allows a subtraction modification of up to $1,000 for certain qualifying diaper, hygiene products, or monetary donations to diaper banks or other qualified charitable entities by taxpayers in a given calendar year.
  • Senate Bill 885, Acts of 2021, Acts of 2021 - This bill creates a refundable income tax credit for 20% of rehabilitation and new construction costs for a qualifying catalytic revitalization project. A qualifying catalytic revitalization project is defined as a substantial renovation of a property formerly owned by the state or federal government that was previously used as a college, K-12 school, hospital, mental health facility, or military facility.
  • House Bill 1279/Senate Bill 778, Acts of 2021 - This bill changes the existing Regional Institution Strategic Enterprise (RISE) Zone Program by establishing a rental assistance program, establishing a Regional Institution Strategic Enterprise Fund, enhancing biotechnology investment incentive and cybersecurity investment incentive tax credits, limiting the zone size, and limiting existing income and property tax credits to businesses that are located in a RISE zone before January 1, 2023.

Tax Professional Changes

Please see the latest updated list of approved eFile software vendors for individuals and businesses.

Click here for more information regarding new business tax credits.