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Poverty Level Credit

If your earned income and federal adjusted gross income plus additions are below the poverty level income for the number of exemptions on your federal tax return, you may be eligible for the poverty level credit. You are not eligible for this credit if you checked filing status 6 (dependent taxpayer) on your Maryland income tax return. 

Generally, if your Maryland state tax exceeds 50% of your federal earned income credit and your earned income and federal adjusted gross income are below the poverty income guidelines from the worksheet, you may claim a credit of 5% of your earned income. This is not a refundable credit.

The tax credit can be claimed on Maryland forms 502, 503, 505 or 515.

State Poverty Level Credit Worksheet

If you checked filing status 6 on your Maryland return, you are not eligible for this credit.

1. Enter the amount from line 7 of Form 502, or line 1 of Form 503. If you checked filing status 3 (married filing separately) and you filed a joint federal return enter your joint federal adjusted gross income plus any  Maryland additions 1.________________
2.Enter the total of your salary, wages, tips and other employee compensation and net profit from self-employment. (Do not include a farm or business loss). Also include your distributive share of income from pass-through entities. 2.________________
3.Find the number of exemptions in the chart that is the same as the number of exemptions entered on your federal tax return. Enter the income level that corresponds to the exemption number. 3.________________
4. Enter the amount from line 1 or 2, whichever is larger. Compare lines 3 and 4. If line 4 is greater than or equal to line 3, STOP HERE. You do not qualify for this credit. If line 3 is greater than line 4, continue to line 5. 4.________________
5. Multiply line 2 by 5% (.05). This is your State Poverty Level Credit. Enter that amount on line 24 of Form 502 or line 7b of Form 503. 5.________________

 

Poverty Income Guidelines
Number of Exemptions on Federal Return Income Level
1 $11,490
2 $15,510
3 $19,530
4 $23,550
5 $27,570
6 $31,590
7 $35,610
8 $39,630
If you have more than 8 exemptions, add $4,020 to the last income level for each additional exemption.

 

Local Poverty Level Credit Worksheet

If the amount on line 3 is greater than the amount on line 4, you are eligible to claim the local poverty level credit. Complete this worksheet to calculate the amount of your credit.

A. ENTER the amount from line 2 of the State Poverty Level Credit Worksheet A.________________
B. ENTER your local tax rate based on where you live. See Local Tax Rate Chart. B. 0.0___ ___ ___
C. MULTIPLY line A by line B. Enter the amount on line 31 of Form 502 or line 10B of Form 503. C.________________

To claim the credit:

  • Complete your Maryland return up to the line on the form labeled "Maryland tax."
  • Complete the State Poverty Level Credit Worksheet included in Instruction 18 of the tax booklet and the Local Poverty Level Credit Worksheet in Instruction 19.
  • Enter the state and local credit amounts on the appropriate lines of your Maryland return.

If you are a nonresident or a part-year resident, you must prorate the credits based on the ratio of your Maryland adjusted gross income to your federal adjusted gross income. See Instruction 26(o) in the Maryland tax booklet for more information.

If the credit exceeds your tax liability, the unused credit may not be carried forward to any other tax year.



 
Links for Tax Credits and Deductions
General Information
Tax Credits and Deductions
  College Savings Plans Deductions
  Poverty Level Credit
  Preservation and Conservation Easement Credit
  Income Taxes Paid to Other States Credit
  Heritage Structure Rehabilitation Tax Credit
  Solar Energy Grant Subtraction
  Tax Subtraction for Two-Income Families
  Determine Tax Credits and Deductions
  Long-Term Care Insurance Credit
  Quality Teacher Incentive Credit
  Earned Income Tax Credit
  Aquaculture Oyster Float Credit
  Sustainable Communities Tax Credit
  Child or Dependent Care Expenses
  Neighborhood Stabilization Credit
  Child and Dependent Care Tax Credit
  Hurricane Tax Relief
 
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