Maryland Homeowners’ Property Tax Credit

Quick Facts

• Benefit type: State-administered property tax credit that reduces the county and municipal property tax owed on an owner-occupied primary residence.
• Who it helps: Maryland homeowners with limited income and assets who struggle to keep up with rising property taxes.
• How much you can get: The credit varies based on income, property value, and local tax rate; many households save between $1,000 and $2,500 per year, with some receiving larger relief in high-tax jurisdictions.
• How to claim: File the Homeowners’ Tax Credit Application (Form HTC) online or by mail with the Department of Assessments and Taxation (SDAT) by October 1.
• Renewal: Applications must be submitted each year; there is no automatic renewal.

Program Overview

Maryland’s Homeowners’ Property Tax Credit (HPC) ensures that property tax bills remain affordable for residents with modest incomes. The credit limits the amount of property taxes a homeowner must pay based on their gross household income. The state compares the homeowner’s tax bill to a threshold percentage of income; taxes above that threshold are covered by the credit. This structure means the benefit grows when local tax rates climb or when homeowners experience income drops, making it a critical tool for seniors and families living on fixed budgets.

The program covers the real property tax levied by counties, municipalities, and special taxing districts. It does not cover service charges or special benefit assessments, but reducing the core property tax often frees up cash for other essentials. The credit is funded through the state and appears as a reduction on the property tax bill, lowering the amount due. If the credit is granted after you have already paid taxes, you receive a refund from the local tax office.

Maryland indexes eligibility thresholds periodically and recently increased the income limit to $60,000, with a $200,000 cap on net worth (excluding the value of the home and up to one acre of surrounding land). This means more working-age homeowners can qualify, especially in high-cost counties like Montgomery, Howard, and Anne Arundel.

Eligibility Requirements

To qualify you must meet all of the following:

1. Ownership and occupancy: You must own the property (fee simple, life estate, or legal interest) and occupy it as your principal residence. The credit applies to the dwelling and up to one acre of land. Co-ops and condominiums are eligible if the occupant is responsible for property taxes.
2. Income limit: Your combined gross household income cannot exceed $60,000. Include the income of the homeowner, spouse, and any other residents who contribute to household expenses. Income includes wages, Social Security, pensions, annuities, unemployment, alimony, and net self-employment earnings.
3. Asset limit: Your net worth must not exceed $200,000, excluding the home value, retirement accounts, and household furnishings. Include cash, investments, vacation properties, boats, and valuable collectibles.
4. Property assessment: The property must have an assessed value under $500,000 to qualify for the full benefit. Homes above this value may still receive partial credits, but the benefit tapers.
5. Application submission: You must file Form HTC each year by October 1 with all required documentation.

Special Cases

• Seniors transitioning to assisted living: If you move midyear but still own the home, you may qualify for a partial credit for the months you occupied it. Notify SDAT of address changes.
• Joint owners: If multiple people own the property, include the income of all occupants. Non-occupying owners do not count toward income limits.
• Trusts: Homes held in revocable or certain irrevocable trusts qualify if the applicant is a beneficiary occupying the home and responsible for taxes.

Benefit Calculation

• Threshold percentage: The state sets a maximum percentage of income that a household should pay in property tax. For most applicants with income up to $30,000, the threshold is 0% to 4.5%; it increases gradually for higher incomes up to 9%.
• Calculation example: Suppose your household income is $35,000 and your county property tax bill is $4,200. Based on the HPC formula, you may be expected to pay around $2,100 (6% of income). The state credit covers the difference—$2,100—reducing your tax bill to $2,100.
• Interaction with local credits: Some counties provide supplemental credits. The state credit applies first; local credits further reduce the remaining balance.
• Refunds: If you already paid the full tax bill, your county or city will issue a refund for the credit amount, typically within 60 days of SDAT approval.

Application Process

1. Gather documentation: Collect proof of income for all household members (W-2s, 1099s, SSA-1099, pension statements), proof of assets (bank statements, brokerage statements), and a copy of your most recent property tax bill.
2. Access the application: Visit the SDAT Homeowners’ Tax Credit page to apply online using the OneStop portal. Paper applications can be downloaded or requested by calling 410-767-4433.
3. Complete the form: Provide property information, income details, asset listings, and any special circumstances (e.g., disability). Upload supporting documents if filing online. For paper forms, attach copies and mail to SDAT, Homeowners’ Tax Credit Program, P.O. Box 49005, Baltimore, MD 21297.
4. Submit by October 1: Applications submitted after the deadline are denied unless you can show good cause. File early to avoid delays.
5. Track your application: Use the OneStop portal or call SDAT to confirm receipt. Processing can take 6–10 weeks during peak season.
6. Review your tax bill: Approved credits appear on the property tax bill as a reduction. If approval occurs after bills were issued, the local tax office will adjust the account and send a revised bill or refund.

Required Documentation Checklist

• Proof of age or identification (driver’s license or state ID).
• Social Security numbers for all household members.
• Income documentation: W-2s, SSA-1099, 1099-R, 1099-INT/DIV, unemployment statements, alimony documentation.
• Asset documentation: bank statements, investment account summaries, cash value of life insurance, property deeds for secondary properties.
• Property tax bill or account number.
• Proof of residency (utility bill, voter registration, or other documents showing the address as your primary residence).

Deadlines and Timing Considerations

• Annual deadline: October 1. SDAT encourages filing by April 15 to ensure credits appear on the initial tax bill.
• Processing time: Early submissions in spring often see credits applied before tax bills are issued in July. Late filings may take longer and require refunds.
• Renewal reminders: SDAT mails reminders to prior-year recipients, but you should calendar the deadline because mailings can be missed.
• Appeals: If denied, you have 30 days to request reconsideration. Provide additional documentation or corrected income information.

Interaction with Other Programs

• Baltimore City Targeted Homeowners Relief: City residents may qualify for additional credits layered on top of the state program. Check with the City’s Department of Finance.
• County hardship programs: Several counties offer hardship deferrals or senior tax credits. Combine these with the HPC to reduce or delay property taxes further.
• Mortgage escrow: If your mortgage includes escrow for taxes, notify your servicer once the credit is approved to adjust payments. Provide documentation so they don’t over-withhold.
• State income tax: The HPC does not affect your Maryland income tax liability and is not considered taxable income.

Maximizing Your Credit

1. File early: Submitting before April ensures the credit reduces the initial bill, which prevents cash-flow crunches. Late approvals mean you must wait for a refund.
2. Document assets carefully: Exclude exempt assets like retirement accounts and home furnishings but include all non-exempt assets. Over-reporting can reduce or eliminate the credit.
3. Report income accurately: The application requests prior-year income. Use your federal tax return as a guide, but add nontaxable income such as workers’ compensation or child support if it supports household expenses.
4. Combine with local benefits: Research county programs like Montgomery County’s Elderly Homeowners Tax Credit or Anne Arundel’s Tax Deferral for Seniors to stack savings.
5. Plan for life changes: If your income drops midyear due to retirement or job loss, still file using the lower income. The credit is based on income for the prior tax year, but you can include an explanation and supporting documentation to request consideration of current circumstances.

Common Mistakes to Avoid

• Missing signatures: Paper applications must be signed by all homeowners. Unsigned forms are rejected.
• Incomplete asset listings: Failing to list secondary properties or investment accounts can lead to denial. SDAT cross-checks records.
• Using estimates: Provide exact income figures. Estimates trigger requests for more information and delay processing.
• Ignoring denial letters: If you receive a denial, act quickly. Many denials stem from missing documents that can be remedied with a prompt response.
• Assuming automatic renewal: The credit requires a new application annually. Even long-time recipients must reapply.

Example Scenarios

• Retired couple in Montgomery County: Rosa and Miguel own a townhouse with a $4,800 annual tax bill and combined income of $38,000. Their expected tax threshold is about $2,280, so the credit covers $2,520. They file online in March, and the credit appears on the July tax bill, reducing their escrow payment.
• Single parent in Baltimore City: Jasmine earns $45,000 and owns a rowhouse with a $3,200 tax bill. The HPC reduces her bill by $1,000, freeing funds for school supplies. She also applies for Baltimore’s Homeowners’ Water Billing discount using the same income documentation.
• Senior with limited assets: Harold, age 82, has $20,000 income and minimal savings. His $2,900 tax bill is almost entirely wiped out by the credit. He relies on the program to remain in his home while on a fixed income.

Frequently Asked Questions

• Do I need to own the home for a full year? No. As long as you owned and occupied the home by July 1 of the tax year, you can apply.
• Is there an age requirement? No. The program is income-based, so younger homeowners can qualify if they meet income and asset limits.
• Can I file online? Yes. The OneStop portal allows full online submission, including document uploads.
• What if my property is in a trust? Provide trust documentation showing you are the beneficiary and occupy the home. SDAT accepts most revocable trusts.
• Will this affect my eligibility for Medicaid or SNAP? The credit reduces your property tax liability and does not count as income, so it should not impact means-tested benefits.

Additional Resources

• Program overview and application links
• Online OneStop portal
• Phone assistance: 410-767-4433 or 1-800-944-7403
• County finance office directory
• Tax credit estimator worksheet