What's New for the 2023 Tax Filing Season (2022 Tax Year)

Note: For forms, visit the 2022 Individual Tax Forms pages.

2022 Individual Income Tax Instruction Booklets

Opening of the 2023 Tax Filing Season

The IRS began accepting all Business tax returns on 01/12/23.

Maryland started accepting all Business tax returns on 01/12/23.

The IRS began accepting all Individual tax returns on 01/23/23.

Maryland began accepting all Individual tax returns on 01/23/23.

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 April 18, 2023.

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

New Tax Rates

Local Tax Rate Changes - There are no local tax rates increase for tax year 2022, however, six counties (Allegany's, Anne Arundel's*, Cecil's, Frederick's*, St Mary's and Washington's) have decreased their local rate for calendar year 2023. *Click here for a complete list of current city and local counties' tax rate and see note for Anne Arundel and Frederick Counties.

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 2022 standard deduction is a maximum value of $2,400 for single taxpayers and to $4,850 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, is $34,300 for tax year 2022.

Pension exclusion for retired forest/park/wildlife ranger - The pension exclusion available to public safety personnel in prior years is now available only to retired forest, park, and wildlife rangers of the United States, the State of Maryland, or a political subdivision of Maryland. (The pension exclusion for other public safety personnel is still available, but is now calculated as a separate subtraction. See below.) To claim this pension exclusion, a retired forest, park, or wildlife ranger must be (1) age 55 or older, (2) not 65 or older, totally disabled, or have a spouse who is totally disabled, and (3) included on your federal return taxable income received as a pension, annuity, or endowment from an “employee retirement system” qualified under Section 401(a), 403, or 457(b) of the Internal Revenue Code. Use WORKSHEET (13E) to calculate this pension exclusion, up to a maximum of $15,000. An individual may not claim both this subtraction and the standard pension exclusion.

Subtraction modification updates for tax year 2022:

There were three new subtractions for tax year 2022. However, there have been modifications to a few.

• Code letter v. The pension exclusion available in prior years for certain retired public safety personnel is now a separate subtraction. Up to $15,000 in income from an employee retirement system that is attributable to service as a public safety employee for a taxpayer who is age 55 or older on the last day of the taxable year. To qualify, you must be a retired correctional officer, law enforcement officer, or fire, rescue, or emergency services personnel of the United States, Maryland, or a political subdivision of Maryland. Only subtract income that you included on your federal return as taxable income received as a pension, annuity or endowment from an "employee retirement system" qualified under Section 401(a), 403, or 457(b) of the Internal Revenue Code. Retirees claiming this subtraction may now also claim the standard pension exclusion to further reduce their taxable income if they meet the requirements; however, the same income cannot be used to claim both this subtraction and the pension exclusion.
• Code letter ya. HB186, Acts of 2022, creates a subtraction modification against the State income tax for resident individuals who are at least 100 years of age at the end of the taxable year. The maximum value of the subtraction modification is equal to $100,000 of income received by an individual during a taxable year.
• Code letter yb. HB837, Acts of 2022, creates a subtraction modification against the State individual and corporate income tax for the amount of ordinary and necessary expenses, including a reasonable allowance for salaries or compensation, paid or incurred during the taxable year in carrying on a trade or business as a State licensed medical cannabis grower, processor, dispensary, or any other cannabis establishment licensed by the State, if the deduction for ordinary and necessary expenses is disallowed under Section 280E of the Internal Revenue Code.

Also, there have been modifications to a few.

• Code letter va. The Honorable Louis L. Goldstein Volunteer Fire, Rescue and Emergency Medical Services Personnel Subtraction Modification Program. $7,000 for each taxpayer who is a qualifying volunteer as certified by a Maryland fire, rescue or emergency medical services organization. $7,000 for each taxpayer who is a qualifying member of the U.S. Coast Guard Auxiliary, Maryland Defense Force or Maryland Civil Air Patrol as certified by these organizations. Attach a copy of the certification.
• The mileage rate for certain qualifying charitable use of a car on Form 502V has increased as follows: 58.5 cents per mile for the period of 01/01/2022 through 06/30/2022 and 62.5 cents per mile for the period of 07/01/2022 through 12/31/2022.

Individual Taxpayer Changes

• Interest Rate Decrease: Interest is due at the rate of 9.0% annually or 0.7500% per month for any month or part of a month that a tax is paid after the original due date of the 2022 return but before January 1, 2024. For assistance in calculating interest for tax paid on or after January 1, 2024, click here or visit the Comptroller's website. Enter any interest due on the appropriate line of your tax return.
• Subtraction Modifications: There are three new subtraction modifications and one new subtraction modification that has been updated. For more information, see Instruction 13 (Line 13, Code Letters v., va., ya., and yb.) of the Resident Booklet. Additionally, a pension exclusion is now available for forest rangers, park rangers, and wildlife rangers of the United States, the State of Maryland, or a political subdivision of the State of Maryland who are at least 55 years old. For more information, see Instruction 13 (line 10b) of the Resident booklet.
• Addition Modifications: There are no new addition modifications.
• Tax Credits: There is one tax credit for qualified individuals. For more information, see Instruction 18 (Line 24 code letter m.). There is one tax credit for business. For more information, see Instruction 18 (Line 25, code letter x.).
• Updated Form 502CR, Added Part M- Senior Tax Credit: A resident individual who is at least age 65 may claim a nonrefundable credit against the State income tax if the taxpayer's federal adjusted gross income does not exceed $100,000. The amount of the tax credit is equal to $1,000. For married filing jointly, qualifying widow(er), and head of household whose federal adjusted gross income does not exceed $150,000, the credit amount is $1,750 (reduced to $1,000 if only one spouse filing jointly is at least age 65). Also, added a new line under Part AA to enter the senior tax credit.
• 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 510/511) 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 2022. Click here for more information.

New Subtraction Modifications: There is one new subtraction for 2022. Click here for more information

• House Bill 837, Acts of 2022: This bill creates a subtraction modification against the State individual and corporate income tax for the amount of ordinary and necessary expenses, including a reasonable allowance for salaries or compensation, paid or incurred during the taxable year in carrying on a trade or business as a State licensed medical cannabis grower, processor, dispensary, or any other cannabis establishment licensed by the State, if the deduction for ordinary and necessary expenses is disallowed under Section 280E of the Internal Revenue Code.

Changes to business tax credits

• Tax Credits: There is one new refundable credit and one new non-refundable tax credit. Click here for more information
• House Bill 0002 / Senate Bill 0598, Acts of 2022: These cross-filed bills create a nonrefundable credit against the State income tax for up to 50% of the federal Work Opportunity Tax Credit claimed by an employer with respect to a qualified individual who is employed in the State. Any unused amount of the credit may not be carried forward to any other tax year. The existing subtraction for salary or wages paid for targeted jobs is reduced by the amount of the new credit claimed. Organizations exempt from taxation under IRC § 501(c) may apply the new credit as a credit toward employee withholding. The Department of Legislative Services must evaluate the tax credit program and report its findings to the General Assembly by December 31, 2028.
• House Bill 0641 / Senate Bill 0597, Acts of 2022: These cross-filed bills create a refundable credit against the State income tax for 25% of qualified theatrical production costs incurred in the State. The Department of Commerce is required to administer the credit and may award a maximum of $5 million in credits in each fiscal year and a maximum of $2 million for a single theatrical production.
• Senate Bill 0093, Acts of 2022: This bill increases the tax credit available to employers for wages paid to qualified employees with a disability and childcare provided or paid for by a business entity for the children of a qualified employee with a disability. Employers are allowed a credit of 30% of up to the first $15,000 of wages paid during each of the first two years of employment, including employees employed for less than 1 year because the employee terminates employment with the employer to take another job. A business entity may take a credit of up to $1,500 of qualified childcare or transportation expenses incurred for each of the first two years of employment.
• Senate Bill 0536, Acts of 2022: This bill adds a definition for digital animation project and adds digital animation project to the list of film production activities which qualify for the income tax credit. The bill also alters the list of items not considered a film production activity, excluding a digital project or animation project that is not a digital animation project.
• Senate Bill 0210, Acts of 2022: This bill expands the existing tax credit for employer-provided commuter benefits to cover subsidies for employees for the cost of "active transportation" (i.e., walking, bicycling, or scootering, and the equipment and gear associated with them), carpooling (including E-ZPass and toll fees, parking fees, and other costs), and teleworking (including prorated costs for internet service, computer and telephone equipment, software, and membership in co-working spaces and telework centers). This bill also alters the procedure by which an employer must claim the credit.

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.