An individual shall calculate Maryland taxable income by subtracting from the individual’s Maryland adjusted gross income calculated under Part II of this subtitle an amount that equals: the exemptions allowed under Part III of this subtitle; and the deductions allowed under Part IV of this subtitle.

Except as provided in Subtitle 4 of this title, the Maryland adjusted gross income of an individual is the individual's federal adjusted gross income for the taxable year as adjusted under this Part II of this subtitle.

To the extent excluded from federal adjusted gross income, the amounts under this section are added to the federal adjusted gross income of a resident to determine Maryland adjusted gross income. The addition under subsection (a) of this section includes interest or dividends, less related expenses, attributable to an obligation or security of: another state; or a political subdivision or authority of another state. If exempted by federal law or by treaty from federal but not State tax on income, the addition under subsection (a) of this section includes salary, wages, or other compensation for personal services. If exempted by federal law or by treaty from federal but not State tax on income, the addition under subsection (a) of this section includes interest or dividends attributable to an obligation of: the United States or a foreign government; or an authority, a commission, an instrumentality, a possession, or a territory of the United States or of a foreign government. In this subsection, “lump–sum distribution”, “minimum distribution allowance”, and “total taxable amount” have the meanings stated in § 402(e) of the Internal Revenue Code. The addition under subsection (a) of this section includes the amount by which the total taxable amount of a lump–sum distribution exceeds the sum of: 60% of the capital gains portion of the total taxable amount; and the minimum distribution allowance. For purposes of this subsection, the capital gains portion of the total taxable amount is determined by multiplying the total taxable amount by a fraction: the numerator of which is the number of calendar years of active participation by the employee in the plan before January 1, 1974; and the denominator of which is the number of calendar years of active participation by the employee in the plan. The addition under subsection (a) of this section includes the oil percentage depletion allowance claimed under § 613 or § 613A of the Internal Revenue Code. The addition under subsection (a) of this section includes the amount of pickup contributions of a member of a retirement or pension system: provided for under § 21–313 of the State Personnel and Pensions Article; and excluded from federal adjusted gross income under § 414(h)(2) of the Internal Revenue Code. In this subsection, “remaindermen” includes a person whose remainder interest is vested, contingent, or vested subject to divestment. The addition under subsection (a) of this section includes any capital loss derived from the sale or other disposition of intangible personal property that is held in trust, if the proceeds thereof are added to the principal of the trust, and if all the remaindermen in being are: nonresidents during the entire taxable year; or corporations not doing business in the State. The addition required under paragraph (2) of this subsection does not apply if there are no remaindermen of the trust in being. The addition under subsection (a) of this section includes the amount deducted under § 222 of the Internal Revenue Code for qualified tuition and related expenses paid during the taxable year. Repealed. The addition under subsection (a) of this section includes any amount deducted for costs, as defined under § 10–732 of this title, for security clearance administrative expenses and construction and equipment costs incurred to construct or renovate a sensitive compartmented information facility if an amount is included in the application for a credit under § 10–732 of this title. For a taxable year beginning after December 31, 2012, the addition under subsection (a) of this section includes the amount of income of an electing small business trust, as defined under § 1361(e)(1) of the Internal Revenue Code, that is subject to the special taxing rules under § 641(c) of the Internal Revenue Code. The addition under subsection (a) of this section includes any amount deducted as a donation, as defined under § 10–736 or § 10–749 of this title, to the extent that the amount of the donation is included in an application for a credit that is certified under § 10–736 or § 10–749 of this title.

In addition to the modification under § 10–204 of this subtitle, the amounts under this section are added to the federal adjusted gross income of a resident to determine Maryland adjusted gross income. The addition under subsection (a) of this section includes the amount of a credit claimed under: § 10–702 of this title for wages paid to an employee in an enterprise zone; and § 10–704.7 of this title or § 8–216 of this article for wages paid and qualified child care or transportation expenses incurred with respect to a qualified employee with a disability. In the year after decertification of land used for commercial forest land under § 5–219 of the Natural Resources Article, the addition under subsection (a) of this section includes the amount allowed in a prior taxable year as a subtraction under § 10–208(i) of this subtitle for reforestation or timber stand improvement. The addition under subsection (a) of this section includes the amount of a credit that is claimed under § 10–703 of this title and is based on a tax paid by an S corporation to a state that does not recognize the federal tax treatment of an S corporation. The addition under subsection (a) of this section includes the amount of a credit that is claimed under § 10–703 of this title and is based on a tax imposed on any pass–through entity by another state that is deductible in determining the pass–through entity’s income under the Internal Revenue Code. In this subsection the following words have the meanings indicated. “Loss year” means the taxable year in which there occurs a net operating loss that is carried back or carried over in whole or in part to another taxable year. “Net addition modification” means, for any taxable year, the amount by which the sum of the addition modifications required under this title exceeds the sum of the subtraction modifications allowed under this title. “Net operating loss deduction” means a net operating loss deduction allowed for federal income tax purposes under § 172 of the Internal Revenue Code. If a net operating loss deduction is allowed for the taxable year, the addition under subsection (a) of this section for the taxable year includes, for each loss year as to which a portion of the net operating loss deduction is attributable, an amount equal to the lesser of: the amount of the net operating loss deduction attributable to that loss year; or the amount by which the total net operating loss in the loss year is less than the sum of: the net addition modification for that loss year; and the cumulative net operating loss deductions attributable to that loss year allowed for the taxable year and all prior taxable years. The addition under subsection (a) of this section includes 50% of the sum of tax preference items under § 10–222 of this subtitle. The addition under subsection (a) of this section includes the amount claimed and allowed as a deduction for federal income tax purposes for expenses attributable to: operating a family child care home in the State without having the registration required by § 9.5–304 of the Education Article; or operating a child care center in the State without having the license required by § 9.5–405 of the Education Article. In this subsection the following words have the meanings indicated. “Account holder” means an account holder as defined in § 18–1901, § 18–19A–01, or § 18–19B–01 of the Education Article. “Qualified beneficiary” has the meaning stated in § 18–1901 of the Education Article. “Qualified designated beneficiary” means a qualified designated beneficiary as defined in § 18–19A–01 or § 18–19B–01 of the Education Article. “Qualified higher education expenses” has the meaning stated in § 529 of the Internal Revenue Code. The addition under subsection (a) of this section includes the amount of: any refund received in the taxable year by an account holder under a prepaid contract in accordance with the Maryland Senator Edward J. Kasemeyer Prepaid College Trust; or any distribution received in the taxable year by an account holder under a prepaid contract in accordance with the Maryland Senator Edward J. Kasemeyer Prepaid College Trust or under an investment account in accordance with the Maryland Senator Edward J. Kasemeyer College Investment Plan or the Maryland Broker–Dealer College Investment Plan that is not used on behalf of the qualified beneficiary or qualified designated beneficiary for qualified higher education expenses. The amount of the addition required under this subsection shall be reduced by any amount included in the individual’s federal adjusted gross income as a result of the refund or distribution. The cumulative amount of the addition under this subsection for the taxable year and all prior taxable years may not exceed the cumulative amount allowed as a subtraction: under § 10–208(n) of this subtitle for the taxable year and all prior taxable years for the account holder’s payments to the prepaid contract under which the refund or distribution is received; or under § 10–208(o) of this subtitle for the taxable year and all prior taxable years for contributions made by an account holder to an investment account under which the distribution is received. The addition under subsection (a) of this section includes the amount of a credit claimed under § 10–721 of this title for Maryland qualified research and development expenses. The addition under subsection (a) of this section includes the amount of a credit claimed under § 10–726 of this title for research and development expenses for cellulosic ethanol technology. The addition under subsection (a) of this section includes, if a taxpayer sold or exchanged a property for which a subtraction modification enacted by Chapters 544 and 545 of the Acts of the General Assembly of 2012, as amended, or Chapter 231 of the Acts of the General Assembly of 2017 has been claimed, the difference between: the taxpayer’s federal adjusted gross income as reportable under the federal Mortgage Forgiveness Debt Relief Act of 2007, as amended, prior to its expiration on December 31, 2012, and without regard to the date limitation in § 108(a)(1)(e) of the Internal Revenue Code; and the taxpayer’s federal adjusted gross income as claimed in the taxable year. In this subsection the following words have the meanings indicated. “ABLE account contributor” means an individual who contributes money to an ABLE account as defined in § 18–19C–01 of the Education Article. “ABLE account holder” means the holder of an account as defined in § 18–19C–01 of the Education Article. “Designated beneficiary” has the meaning stated in § 18–19C–01 of the Education Article. “Qualified disability expenses” has the meaning stated in § 18–19C–01 of the Education Article. The addition under subsection (a) of this section includes the amount of: any refund received in the taxable year by an ABLE account contributor under the Maryland ABLE Program; or any distribution received in the taxable year by an ABLE account holder in accordance with the Maryland ABLE Program that is not used for the benefit of the designated beneficiary for qualified disability expenses. The amount of the addition required under this subsection shall be reduced by any amount included in the individual’s federal adjusted gross income as a result of a refund or distribution. The cumulative amount of the addition under this subsection for the taxable year and all prior taxable years may not exceed the cumulative amount allowed as a subtraction under § 10–208(v) of this subtitle for the taxable year and all prior taxable years for contributions made by an ABLE account contributor to an ABLE account under the Maryland ABLE Program under which the distribution is received. The addition under subsection (a) of this section includes the amount of credit that is claimed under § 10–701.1 of this title for the amount of tax paid by a pass–through entity under § 10–102.1 of this title and is attributable to the member’s share of tax on the member’s share of the pass–through entity’s taxable income, as defined in § 10–102.1(a)(8) of this title.

The amounts under this section are added to the federal adjusted gross income of a nonresident to determine Maryland adjusted gross income. To the extent attributable to Maryland sources the addition under subsection (a) of this section includes the additions required for a resident under § 10-204 of this subtitle. The addition under subsection (a) of this section includes the additions required for a resident under § 10-205 of this subtitle. The addition under subsection (a) of this section includes the amount of any loss or adjustment to income that: is included in computing federal adjusted gross income; and is not attributable to Maryland sources.

To the extent included in federal adjusted gross income, the amounts under this section are subtracted from the federal adjusted gross income of a resident to determine Maryland adjusted gross income. The subtraction under subsection (a) of this section includes a distribution, to a beneficiary, of accumulated income on which a fiduciary has paid the income tax. The subtraction under subsection (a) of this section includes interest or dividends attributable to an obligation of the United States or an authority, commission, instrumentality, possession, or territory of the United States. In this subsection the following words have the meanings indicated. “Mutual fund” means a regulated investment company as defined under § 851 of the Internal Revenue Code. “United States government obligation” means an obligation of the United States or an authority, commission, instrumentality, possession, or territory of the United States. The subtraction under subsection (a) of this section includes a distribution or dividend by a mutual fund of interest or dividends attributable to a United States government obligation. The subtraction under subsection (a) of this section includes income attributable to an employer–provided official vehicle used in accordance with law by a member of a State, county, or local: police force; or fire department. The subtraction under subsection (a) of this section includes a payment from a pension system to an individual for a disability or injury that arose out of and in the course of the individual’s employment as a policeman or fire fighter. In this subsection, “law enforcement officer” means a law enforcement officer as defined in § 1–101 of the Public Safety Article or other sworn law enforcement officer of the United States, a state, or a political subdivision of a state. The subtraction under subsection (a) of this section includes: a payment from a pension system to the surviving spouse or other beneficiary of a law enforcement officer or fire fighter whose death arises out of or in the course of employment as a law enforcement officer or fire fighter; and a payment of a death benefit under a collective bargaining agreement from a county or municpality in the State to the surviving spouse or other beneficiary of a law enforcement officer or fire fighter whose death arises out of or in the course of employment as a law enforcement officer or fire fighter. The subtraction under subsection (a) of this section includes income that: is received by withdrawing money from a retirement account known as a Keogh Plan and established under Subchapter D of the Internal Revenue Code; and is attributable to: money contributed by an individual before 1967 for which the individual was not allowed a deduction at the time of contribution to the account; or interest or dividends paid on the account on which a State tax on income was paid at the time that the interest or dividends accumulated in the account. The subtraction under subsection (a) of this section includes a payment received under a fire, rescue, or ambulance personnel length of service award program that is funded by any county or municipal corporation of the State. Repealed. The subtraction under subsection (a) of this section includes profit realized from the sale or exchange of a bond issued by the State or a political subdivision of the State. The subtraction under subsection (a) of this section includes a payment received: under Title II of the Social Security Act; or as a benefit under the Railroad Retirement Act. The subtraction under subsection (a) of this section includes payment for relocation and assistance under Title 12, Subtitle 2 of the Real Property Article. The subtraction under subsection (a) of this section includes that portion of an annuity received by a retiree of a retirement or pension system: for which pickup contributions were made under § 21–313 of the State Personnel and Pensions Article; and that is included in federal adjusted gross income under § 414(h)(2) of the Internal Revenue Code. The subtraction under subsection (a) of this section includes a refund of tax on income received from a state or a political subdivision of a state. The subtraction under subsection (a) of this section includes any income that federal law or treaty exempts from a state but not federal tax on income. In this subsection, “remaindermen” includes a person whose remainder interest is vested, contingent, or vested subject to divestment. The subtraction under subsection (a) of this section includes: income derived from intangible personal property that is held in trust for the benefit of a nonresident or a corporation not doing business in the State; and to the extent not included under item (i) of this paragraph, capital gain income derived from the sale or other disposition of intangible personal property that is held in trust, if the proceeds thereof are added to the principal of the trust, and if all the remaindermen in being are: nonresidents during the entire taxable year; or corporations not doing business in the State. The subtraction allowed under paragraph (2)(ii) of this subsection does not apply if there are no remaindermen of the trust in being. In this subsection the following words have the meanings indicated. “Military pay” means pay received as a result of military service. “Military service” has the meaning stated in subsection (q)(1) of this section. The subtraction under subsection (a) of this section includes the first $15,000 of military pay that is: received by an individual who is in active military service; and attributable to military service of the individual outside the United States. The amount of the subtraction under paragraph (2) of this subsection: is reduced dollar for dollar in the amount by which military pay received by the individual exceeds $15,000; and is reduced to zero if the amount of military pay received by the individual exceeds $30,000. In this subsection the following words have the meanings indicated. “Armed forces” has the meaning stated in § 9–901 of the State Government Article. “Military retirement income” means retirement income, including death benefits, received as a result of military service. “Military service” means: induction into the armed forces for training and service under the Selective Training and Service Act of 1940 or a subsequent act of a similar nature; membership in a reserve component; membership in an active component of the armed forces; or active duty with the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey. The subtraction under subsection (a) of this section includes: if, on the last day of the taxable year, the individual is under the age of 55 years, the first $12,500 of military retirement income received by an individual during the taxable year; and if, on the last day of the taxable year, the individual is at least 55 years old, the first $20,000 of military retirement income received by an individual during the taxable year. In this subsection, “modified Maryland adjusted gross income” means Maryland adjusted gross income determined separately for each spouse on a joint return without regard to the subtraction allowed under this subsection. For a two–income married couple filing a joint return, the subtraction under subsection (a) of this section includes the lesser of $1,200 or the modified Maryland adjusted gross income of the spouse with the lesser modified Maryland adjusted gross income for the taxable year. In this subsection the following words have the meanings indicated. “Qualified beneficiary” has the meaning stated in § 18–1901 of the Education Article. “Qualified designated beneficiary” means a qualified designated beneficiary as defined in § 18–19A–01 or § 18–19B–01 of the Education Article. “Qualified higher education expenses” has the meaning stated in § 529 of the Internal Revenue Code. Except as provided in paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes any amount included in federal adjusted gross income as a result of a distribution to: a qualified beneficiary pursuant to a prepaid contract under the Maryland Senator Edward J. Kasemeyer Prepaid College Trust; a qualified designated beneficiary from an investment account under the Maryland Senator Edward J. Kasemeyer College Investment Plan; or a qualified designated beneficiary from an investment account under the Maryland Broker–Dealer College Investment Plan. The subtraction under paragraph (2) of this subsection does not apply to: a refund under the Maryland Senator Edward J. Kasemeyer Prepaid College Trust; or a distribution that is not used by the qualified beneficiary or qualified designated beneficiary for qualified higher education expenses. In this subsection the following words have the meanings indicated. “Holocaust victim” means an individual who died or lost property as a result of discriminatory laws, policies, or actions targeted against discrete groups of individuals based on race, religion, ethnicity, sexual orientation, or national origin, whether or not the individual was actually a member of any of those groups, or because the individual assisted or allegedly assisted any of those groups, between January 1, 1929 and December 31, 1945, in the country of Nazi Germany, areas occupied by Nazi Germany, those European countries allied with Nazi Germany, areas occupied by those European countries allied with Nazi Germany, or any other neutral European country or area in Europe under the influence or threat of invasion by Nazi Germany or by any European country allied with or occupied by Nazi Germany. “Nazi Germany” means: for the period from 1929 to 1933, the Republic of Germany, commonly referred to as the Weimar Republic; and for the period from 1933 through 1945, Deutsche Reich. The subtraction under subsection (a) of this section includes: income of an individual related to tangible or intangible property that was seized, misappropriated, or lost as a result of the actions or policies of Nazi Germany toward a Holocaust victim; and amounts received by an individual as reparations or restitution for the loss of liberty or damage to the health of the individual because the individual is: a Holocaust victim; or a spouse or descendant of a Holocaust victim. The subtraction under paragraph (2) of this subsection includes interest on the proceeds receivable as insurance under policies issued to a Holocaust victim by European insurance companies prior to and during World War II. The subtraction under paragraph (2) of this subsection does not include: assets acquired with the assets described in paragraph (2) of this subsection; or assets acquired with the proceeds from the sale of the assets described in paragraph (2) of this subsection. The subtraction under paragraph (2)(i) of this subsection shall only apply if the individual: is the first recipient of the assets described in paragraph (2)(i) of this subsection after their recovery; and is: a Holocaust victim; or a spouse or descendant of a Holocaust victim. Repealed. In this subsection, “artistic work”, “arts and entertainment district”, and “qualifying residing artist” have the meanings stated in § 4–701 of the Economic Development Article. The subtraction under subsection (a) of this section includes the amount of income derived within an arts and entertainment district by a qualifying residing artist from the publication, production, or sale of an artistic work that the artist created, wrote, composed, or executed in the arts and entertainment district. For the purpose of determining whether income is derived within an arts and entertainment district for the purpose of this subsection, a qualifying residing artist shall allocate receipts and expenses as the Comptroller may require. In this subsection: except as provided in item (ii) of this paragraph, “foreign earned income” means foreign earned income within the meaning of § 911(b)(1) of the Internal Revenue Code, subject to the limitation under § 911(b)(2) of the Internal Revenue Code; and “foreign earned income” includes amounts paid by the United States or an agency of the United States to an employee of the United States or of an agency of the United States. Subject to the limitation under paragraph (3) of this subsection, for each taxable year beginning after December 31, 2006, but before January 1, 2010, the subtraction under subsection (a) of this section includes the foreign earned income of an individual earned as an employee of the United States or of an agency of the United States. The amount subtracted under this section: does not include any amount subtracted under any other provisions of this section; and may not exceed $3,500 for any taxable year. The subtraction under subsection (a) of this section includes an amount received as a grant under the Solar Energy Grant Program under § 9–2007 of the State Government Article. In this subsection, “principal residence” has the meaning stated in § 121 of the Internal Revenue Code. Subject to paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes the amount of a gain resulting from a payment from the Maryland Department of Transportation to an individual for the acquisition of a portion of the individual’s property on which the individual’s principal residence is located. The amount subtracted under this subsection may not exceed the amount that may be excluded from income on the condemnation of an individual’s principal residence under § 121 of the Internal Revenue Code. In this subsection the following words have the meanings indicated. “Lost pay” means wages, salary, or other compensation attributable to services performed, or that would have been performed but for a claimed violation of law, as an employee, a former employee, or a prospective employee. “Noneconomic damages” means amounts received by a claimant in satisfaction of a claim of unlawful discrimination, other than compensation for lost pay or punitive damages. “Noneconomic damages” includes amounts received as a result of a claim of unlawful discrimination: whether by judgment or other order or by settlement; and whether payable in a lump sum or periodic payments. “Unlawful discrimination” has the meaning stated in § 62(e) of the Internal Revenue Code. The subtraction under subsection (a) of this section includes any amount received by a claimant for noneconomic damages as a result of a claim of unlawful discrimination. The subtraction under subsection (a) of this section includes the amount of student loan indebtedness discharged. To qualify for the subtraction modification provided under this subsection, an individual must attach to the individual’s income tax return or otherwise file with the Comptroller a copy of the notice stating that the loans have been discharged. In this subsection the following words have the meanings indicated. “Designated beneficiary” means a designated beneficiary as defined in § 18–19C–01 of the Education Article. “Qualified disability expenses” has the meaning stated in § 18–19C–01 of the Education Article. Except as provided in paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes any amount included in federal adjusted gross income as a result of a distribution to a designated beneficiary from an ABLE account under the Maryland ABLE Program. The subtraction under paragraph (2) of this subsection does not apply to: a refund under the Maryland ABLE Program; or a distribution that is not used for the benefit of the designated beneficiary for qualified disability expenses. In this subsection the following words have the meanings indicated. “Law enforcement agency” has the meaning stated in § 3–201 of the Public Safety Article. “Law enforcement officer” means an individual who: in an official capacity is authorized by law to make arrests; and is a member of the Maryland–National Capital Park Police, the Washington Suburban Sanitary Commission Police Force, or a law enforcement agency, including a law enforcement officer who serves in a probationary status or at the pleasure of the appointing authority of a county or municipal corporation. “Maryland Police Training and Standards Commission” means the unit established under § 3–202 of the Public Safety Article. The subtraction under subsection (a) of this section includes the first $5,000 of income earned by a law enforcement officer if: the law enforcement officer resides in the political subdivision in which the law enforcement officer is employed; and the crime rate in the political subdivision exceeds the State’s crime rate; the law enforcement officer is a member of the Maryland Transportation Authority Police or any other State law enforcement unit; and the law enforcement officer resides in a political subdivision in which the crime rate exceeds the State’s crime rate; the law enforcement officer is a member of the Maryland–National Capital Park Police; the law enforcement officer resides in a political subdivision that lies wholly or partially within the Maryland–Washington Regional District established under § 20–101 of the Land Use Article; and the crime rate in the political subdivision exceeds the State’s crime rate; or the law enforcement officer is a member of the Washington Suburban Sanitary Commission Police Force; the law enforcement officer resides in a political subdivision that lies wholly or partially within the Washington Suburban Sanitary District; and the crime rate in the political subdivision exceeds the State’s crime rate. On or before September 1, 2016, and every 3 years thereafter, the Maryland Police Training and Standards Commission shall certify to the Comptroller the political subdivisions in which the crime rate exceeds the State’s crime rate. The subtraction under subsection (a) of this section includes an amount contributed by the State into an investment account under § 18–19A–04.1 of the Education Article. The subtraction under subsection (a) of this section includes the amount that would have been allowed for indebtedness discharged for qualified principal residence indebtedness under the federal Mortgage Forgiveness Debt Relief Act of 2007, as amended, prior to its expiration on December 31, 2012, and without regard to the date limitation in § 108(a)(1)(E) of the Internal Revenue Code. The subtraction under paragraph (1) of this subsection applies only to an owner–occupied principal residence. The subtraction under paragraph (1) of this subsection may not exceed: $100,000 for an individual; or $200,000 for a married couple filing a joint return or an individual described in § 2 of the Internal Revenue Code as a head of household or as a surviving spouse. The subtraction under subsection (a) of this section includes: the value of any medal given by: the International Olympic Committee; the International Paralympic Committee; the Special Olympics International Committee; or the International Committee of Sports for the Deaf; and any prize money or honoraria received from the United States Olympic Committee that is the result of a performance at the Olympic Games, the Paralympic Games, the Special Olympic Games, or the Deaflympic Games. The subtraction under subsection (a) of this section includes the first $50,000 of compensation received by an individual during the taxable year in exchange for the sale of a perpetual conservation easement on real property located in the State. The subtraction under subsection (a) of this section includes the value of a subsidy for rental expenses received by a resident of Howard County under the “Live Where You Work” program of the Downtown Columbia Plan. In this subsection, “Pimlico site” has the meaning stated in § 10–601 of the Economic Development Article. The subtraction under subsection (a) of this section includes: the amount of gain recognized as a result of the direct or indirect transfer or conveyance of: any property located, or used, at or within the Pimlico site; and any portion of the Bowie Race Course Training Center property; and the amount of income recognized as a result of any expenditure of funds directly or indirectly by the State or Baltimore City with respect to the Pimlico site. In this subsection, “coronavirus relief payment” means a federal, State, or local government grant or loan: for which a person applied on or after March 5, 2020; and that was provided to the person for the purpose of assisting with the economic hardships resulting from the coronavirus pandemic. For a taxable year beginning after December 31, 2019, but before January 1, 2022, the subtraction under subsection (a) of this section includes the amount of a coronavirus relief payment, including any amount of a coronavirus relief loan that has been forgiven, received by the person during the taxable year. The Comptroller shall publish guidance to taxpayers regarding eligibility for the subtraction allowed under this subsection, including a list of grants and loans that are eligible for the subtraction. Within 30 days after the effective date of Chapter 39 of the Acts of the General Assembly of 2021, or if created after the effective date of those Acts, within 30 days after creating a coronavirus relief payment program, a unit of State government or a local government shall provide to the Comptroller the name of the coronavirus relief payment programs administered by the unit or local government. On request by the Comptroller, a unit of State government or a local government that administers a coronavirus relief payment program shall provide to the Comptroller, within 30 days of the date of the request and in the manner requested by the Comptroller, the following information: the names of the coronavirus relief payment programs administered by the unit or local government; a list of recipients of a coronavirus relief payment, including the name, address, and tax identification number of each recipient; the amount of the coronavirus relief payment provided to the person; the date that the coronavirus relief payment was provided to the person; and any other information requested regarding a coronavirus relief payment. For a taxable year beginning after December 31, 2020, but before January 1, 2022, the subtraction under subsection (a) of this section includes the amount of any State economic impact payment received by an individual in accordance with Chapter 39 of the Acts of the General Assembly of 2021. For a taxable year beginning after December 31, 2020, but before January 1, 2022, the subtraction under subsection (a) of this section includes the amount of utility arrearages forgiven during the taxable year, if the forgiveness of the utility arrearages was offered through grants provided to utilities in accordance with Sections 9 and 10 of Chapter 39 of the Acts of the General Assembly of 2021. In this subsection the following words have the meanings indicated. “Correctional officer” means an individual who: was employed in: a State correctional facility, as defined in § 1–101 of the Correctional Services Article; a local correctional facility, as defined in § 1–101 of the Correctional Services Article; a juvenile facility included in § 9–226 of the Human Services Article; or a facility of the United States that is equivalent to a State or local correctional facility or a juvenile facility included in § 9–226 of the Human Services Article; and is eligible to receive retirement income attributable to the individual’s employment under item 1 of this subparagraph. “Emergency services personnel” means emergency medical technicians or paramedics. “Employee retirement system” has the meaning stated under § 10–209(a) of this subtitle. “Public safety employee” means an individual who is a retired correctional officer, law enforcement officer, or fire, rescue, or emergency services personnel of the United States, the State, or a political subdivision of the State. Subject to paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes income from an employee retirement system that is attributable to service as a public safety employee, if the income is received by an individual who is at least 55 years old on the last day of the taxable year. The subtraction under subsection (a) of this section includes: for a taxable year beginning after December 31, 2024, but before January 1, 2026, the first $15,000 of income described under paragraph (2) of this subsection; for a taxable year beginning after December 31, 2025, but before January 1, 2027, the first $16,000 of income described under paragraph (2) of this subsection; for a taxable year beginning after December 31, 2026, but before January 1, 2028, the first $17,000 of income described under paragraph (2) of this subsection; for a taxable year beginning after December 31, 2027, but before January 1, 2029, the first $18,000 of income described under paragraph (2) of this subsection; for a taxable year beginning after December 31, 2028, but before January 1, 2030, the first $19,000 of income described under paragraph (2) of this subsection; and for a taxable year beginning after December 31, 2029, the first $20,000 of income described under paragraph (2) of this subsection. The subtraction under subsection (a) of this section includes the first $100,000 of income received by an individual during a taxable year if the individual is at least 100 years old on the last day of the taxable year. The subtraction allowed under subsection (a) of this section includes the amount of union dues paid by an individual during the taxable year that were allowed as a deduction under § 162 of the Internal Revenue Code prior to January 1, 2018, without regard to the limitation imposed by § 67 of the Internal Revenue Code. In this subsection, “benefit payment” means a payment that is provided to an individual or the family member of an individual as a result of the individual being injured or killed in the collapse of the Francis Scott Key Bridge on March 26, 2024. For a taxable year beginning after December 31, 2023, but before January 1, 2026, the subtraction under subsection (a) of this section includes the amount of any benefit payment received by an individual. In this subsection, “legislative energy relief refund” means a credit against a person’s electric utility bill that is offered through grants provided to electric companies in accordance with § 9–20B–05(i)(3) of the State Government Article. The subtraction under subsection (a) of this section includes the amount of a legislative energy relief refund received by a person during the taxable year.

In addition to the modification under § 10–207 of this subtitle, the amounts under this section are subtracted from the federal adjusted gross income of a resident to determine Maryland adjusted gross income. The subtraction under subsection (a) of this section includes an amount equal to: $12,000, if during the taxable year the taxpayer adopts a child who the State determines is a child with a special need, as described in § 473(c)(1) and (2) of the Social Security Act, and the adoption is made through a private, nonprofit, licensed adoption agency or a public child welfare agency; and $10,000, if during the taxable year the taxpayer adopts a child without a special need as provided under item (1) of this subsection. The subtraction under subsection (a) of this section includes expenses that a blind individual or an employer of a blind individual incurs in providing a human or mechanical reader for the individual, if the individual has permanent impairment of both eyes with central visual acuity: of 20/200 or less in the better eye, with corrective glasses; or of more than 20/200 if there is a field defect in which the peripheral field is limited so that the widest diameter of visual field subtends an angular distance no greater than 20 degrees on the better eye. The total amount of the reading service expenses under paragraph (1) of this subsection may not exceed: $1,000 of expenses that an employer incurs for a reader used in the course of a blind individual’s employment; and to the extent that an expense is not allowed as a medical expense under § 213 of the Internal Revenue Code, $5,000 of the expenses that a blind individual incurs for personal use or use in employment. In this subsection: “enhanced agricultural management equipment” means: a planter or drill that: is commonly known as a “no–till” planter or drill; and is designed to minimize the disturbance of the soil in planting crops; liquid manure soil injection equipment that is designed to inject manure into the soil to reduce nutrient runoff; a deep no–till ripper that does not invert the soil profile and is used to address compaction in high residue cropping systems; poultry or livestock manure spreading equipment used by a farm owner or tenant on farmland in accordance with a nutrient management plan prepared by an individual licensed by the Secretary of Agriculture in accordance with Title 8, Subtitle 8 of the Agriculture Article if the manure spreading equipment is used: to spread poultry manure and bedding from normal poultry production with a capability of being calibrated to 1 ton per acre; or to apply solid or liquid livestock waste; vertical tillage equipment used to incorporate livestock manure or poultry litter into the soil; a global positioning system device used for management of agricultural nutrient applications; and an integrated optical sensing and nutrient application system that measures crop status and applies the crop’s nitrogen requirements at variable rates based on predicted in–season yield potential for the crop and the predicted responsiveness of the crop to additional nitrogen; and “enhanced agricultural management equipment” includes equipment that attaches to or is pulled by equipment listed in item (i) of this paragraph. Except as provided in paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes 100% of the expenses that a taxpayer incurs to buy and install enhanced agricultural management equipment if: the equipment has a useful life of at least 4 years; the taxpayer: bought the equipment: after December 31, 1985, if the equipment is a planter or drill; after December 31, 1989, if the equipment is liquid manure soil injection equipment; after December 31, 1997, if the equipment is poultry or livestock manure spreading equipment; after December 31, 2001, if the equipment is a deep no–till ripper that does not invert the soil profile; or after December 31, 2012, if the equipment is a global positioning system device used for management of agricultural nutrient applications or an integrated optical sensing and nutrient application system; owns the equipment for at least 3 years after the taxable year in which the subtraction is made; and uses the equipment in agricultural production; and for liquid manure soil injection equipment, the equipment is: used on land upon which farm products, as defined under § 10–601 of the Agriculture Article, are raised; and not used to inject sludge into the soil. The subtraction under subsection (a) of this section includes 50% of the expenses that a taxpayer incurs to buy and install enhanced agricultural management equipment that is vertical tillage equipment used to incorporate livestock manure or poultry litter into the soil if: the equipment has a useful life of at least 4 years; and the taxpayer: bought the equipment after December 31, 2012; owns the equipment for at least 3 years after the taxable year in which the subtraction is made; and uses the equipment in agricultural production. To qualify for the subtraction under paragraphs (2) and (3) of this subsection, a taxpayer shall file a statement from the Department of Agriculture certifying compliance with the requirements of this section. If the subtraction allowed under paragraphs (2) and (3) of this subsection exceeds the Maryland taxable income that is computed without the modification allowed under this subsection and the subtraction is not used for the taxable year, the excess may be carried over to succeeding taxable years, not to exceed 5, until the full amount of the subtraction is used. On or before December 1, 2026, and each December 1 thereafter, the Secretary of Agriculture shall report to the Governor and, in accordance with § 2–1257 of the State Government Article, the General Assembly on additional types of equipment that the Secretary recommends should qualify as enhanced agricultural management equipment under this subsection. The subtraction under subsection (a) of this section includes expenses for household and dependent care services not exceeding the dollar limit allowed under § 21(c) of the Internal Revenue Code and determined without reference to the percentage limitation in § 21(a)(2) of the Internal Revenue Code. The subtraction under subsection (a) of this section includes the fair market value of any artistic, literary, or musical creation or other artwork donated to and accepted by a museum in the State that is open to the general public if: the value is not deductible from federal adjusted gross income; at least 50% of total income for the current or prior taxable year is derived from the sale of artwork that the individual produced; an independent appraiser verifies the fair market value; and the adjustment for the artwork is not more than 50% of the individual’s gross income in the calendar year of the donation. In this subsection the following words have the meanings indicated. “Farm product” means a farm product, as defined in § 10–601 of the Agriculture Article, that: is grown or raised primarily to be sold; the farmer donates to a gleaning cooperative; or the farmer allows to be harvested or collected, free of charge, by a gleaning cooperative; and is suitable for human consumption when donated. “Gleaning cooperative” means a nonprofit organization that is: tax exempt under § 501 of the Internal Revenue Code; and organized and operated to provide and distribute food free of charge to needy individuals, including unemployed and low income individuals. “Wholesale market value” means the value of donated farm products based on the wholesale market price of the farm product in the nearest regional market during the calendar week in which the donation is made, determined without consideration of grade or quality of the product, as if the quantity of the product donated were marketable. The subtraction under subsection (a) of this section includes the amount by which: the wholesale market value, determined as of the date of the donation, of farm products donated by an individual during the taxable year to a gleaning cooperative; exceeds the amount attributable to the donated farm products that the individual claims as a deduction for a charitable contribution under § 170 of the Internal Revenue Code. To qualify for the subtraction under paragraph (2) of this subsection, an individual shall file with the individual’s income tax return: a written statement from the gleaning cooperative that receives the farm products that certifies: the quantity of the donated farm products received; and that the donated farm products will be used exclusively to provide free food to needy individuals and will not be transferred in exchange for money, other property, or services; and a written statement from the Maryland Department of Agriculture, using such market data as is deemed suitable by the Secretary of that Department, that certifies the wholesale market value of the donated farm products. Repealed. The subtraction under subsection (a) of this section includes twice the amount of expenses for reforestation or timber stand improvement activity on 3 to 1,000 acres of commercial forest land, exclusive of federal funds. Of the amount under paragraph (1) of this subsection: 50% may be claimed in the taxable year in which the Department of Natural Resources issues an initial certificate of reforestation or timber stand improvement; and 50% may be claimed in the taxable year in which the Department of Natural Resources issues a final certificate of reforestation or timber stand improvement. In this subsection the following words have the meanings indicated. “Public safety organization” means: a bona fide Maryland police agency; a bona fide Maryland fire, rescue, or emergency medical services organization; an auxiliary organization of a bona fide Maryland fire, rescue, or emergency medical services organization; the United States Coast Guard Auxiliary; the Maryland Defense Force; or the Maryland Civil Air Patrol. “Public safety volunteer” means a member of a public safety organization. The subtraction under subsection (a) of this section includes an amount equal to the amount specified in paragraph (4) of this subsection if an individual is a qualifying public safety volunteer for the taxable year, as determined under paragraph (3) of this subsection. An individual is a qualifying public safety volunteer for the taxable year eligible for the subtraction modification under this subsection if the individual: is an active member of a public safety organization; serves the public safety organization in a volunteer capacity without compensation, except nominal expenses or meals; qualifies for active status during the taxable year under: a police auxiliary or reserve volunteer program approved by the Maryland Police Training and Standards Commission in conjunction with the Maryland Association of Counties and the Maryland Municipal League that includes uniform systems for qualification and record keeping, if the program is incorporated into the police agency’s rules and regulations; a volunteer fire, rescue, or emergency medical services personnel or auxiliary length of service award program operated by a county or municipal corporation of the State, if the length of service award program requires for active status qualification a minimum of 50 points per year and that points be earned in at least two different categories; or a point system established by a county or municipal corporation that does not operate a volunteer fire, rescue, or emergency medical services personnel or auxiliary length of service award program or by the United States Coast Guard Auxiliary, the Maryland Defense Force, or the Maryland Civil Air Patrol, to identify active members of a volunteer fire, rescue, or emergency medical services organization or auxiliary organization, if the point system requires for active status qualification a minimum of 50 points per year and that points be earned in at least two different categories; has maintained active status for at least 25 years under: a police auxiliary or reserve volunteer program; or a volunteer fire, rescue, or emergency medical services personnel or auxiliary length of service award program or a point system established in lieu of a length of service award program; is a member of a reserve component who serves on active duty orders during the taxable year; or is a civilian or a member of the Merchant Marine on assignment in support of the armed forces of the United States during the taxable year in an area designated as a combat zone by executive order of the President; and will have been an active member of a public safety organization for at least 36 months during the last 10 calendar years by December 31 of the taxable year. The amount of the subtraction under paragraph (2) of this subsection is equal to $7,000. Each police agency shall: maintain a record of the activities of each member of a police auxiliary or reserve during the calendar year; provide each member a report by February 15 of the following year indicating that the member qualified during the preceding calendar year; and provide a report that includes the names, Social Security numbers, and a certification that the individual qualified for the subtraction modification under this section. Each fire, rescue, or emergency medical services organization or auxiliary organization shall: maintain a record of the points earned by each individual during each calendar year; provide each member a report identifying the number of points earned in each category by February 15 of the following year; and provide a report that includes the names, Social Security numbers, and points earned by those members qualifying for the subtraction modification under this subsection to the Maryland State Firefighters Association by May 1 of the following year. An individual may not qualify for the subtraction under this subsection based on membership in the United States Coast Guard Auxiliary, the Maryland Defense Force, or the Maryland Civil Air Patrol unless the United States Coast Guard Auxiliary, the Maryland Defense Force, or the Maryland Civil Air Patrol: maintains a record of the points earned by each individual during each calendar year; provides each member a report identifying the number of points earned in each category by February 15 of the following year; and provides a report that includes the names, Social Security numbers, and points earned by those members qualifying for the subtraction modification under this subsection to the Comptroller on or before October 1 of each year. To qualify for the subtraction modification under this subsection, an individual shall attach to the individual’s income tax return a copy of the report provided by the public safety organization under paragraph (5) of this subsection. On or before October 1 each year, each bona fide Maryland police agency shall submit to the Department of Public Safety and Correctional Services and the Office of the Comptroller a report listing the names and Social Security numbers of individuals who qualified for the subtraction modification under this subsection for the preceding taxable year. On or before October 1 of each year, the Maryland State Firefighters Association shall submit to the Department of Public Safety and Correctional Services and the Office of the Comptroller a report stating the participation in the point system by the various local subdivisions with the names and Social Security numbers of individuals who qualified for the subtraction modification under this subsection for the preceding taxable year. A person may not knowingly make or cause any false statement or report to be made in any application or in any document required under this subsection. Any person who violates or attempts to violate any provision of subparagraph (i) of this paragraph shall be subject to a fine of $1,000. Except as provided in paragraph (2) of this subsection, the subtraction under subsection (a) of this section includes the gross income of a child included in a parent’s gross income under § 1(g)(7) of the Internal Revenue Code. The subtraction under paragraph (1) of this subsection does not apply for any child who, under § 10–805(b) of this title: is required to file an income tax return for the taxable year; or would have been required to file an income tax return for the taxable year if the parent had not elected the application of § 1(g)(7) of the Internal Revenue Code. The subtraction under subsection (a) of this section includes unreimbursed automobile travel expenses for volunteer service: to a nonprofit volunteer fire company; to an organization whose principal purpose is to provide medical, health, or nutritional care and to which a contribution is deductible under § 170 of the Internal Revenue Code; or to provide assistance, other than transportation, to a handicapped individual, as defined under § 190 of the Internal Revenue Code, who is enrolled as a student in a community college of the State. The amount of the travel expenses under paragraph (1) of this subsection shall be: computed using the standard mileage rate allowed for unreimbursed automobile travel expenses under § 162 of the Internal Revenue Code; and reduced by the amount of unreimbursed automobile travel expenses claimed as an itemized deduction for the same organization on the federal tax return under § 170 of the Internal Revenue Code. The subtraction under subsection (a) of this section includes the amount of salary or wages paid for which a deduction is not allowed under § 280C(a) of the Internal Revenue Code, not exceeding the credit allowed for targeted jobs under § 51 of the Internal Revenue Code. The subtraction allowed under this subsection shall be reduced by the amount of the credit claimed by the taxpayer under § 10–755 of this title. Repealed. Repealed. In this subsection the following words have the meanings indicated. “Account holder” has the meaning stated in § 18–1901 of the Education Article. “Contributor” means an individual who contributes funds to a Maryland Senator Edward J. Kasemeyer Prepaid College Trust account under Title 18, Subtitle 19 of the Education Article. “Qualified higher education expenses” has the meaning stated in § 529 of the Internal Revenue Code. The subtraction under subsection (a) of this section includes the amount of advance payments of qualified higher education expenses made by an account holder or a contributor during the taxable year as provided under a prepaid contract in accordance with the Maryland Senator Edward J. Kasemeyer Prepaid College Trust. Subject to paragraph (4) of this subsection, for each prepaid contract, the subtraction under paragraph (2) of this subsection may not exceed $2,500 for any taxable year. The amount disallowed as a subtraction under this subsection for any taxable year as a result of the limitation under paragraph (3) of this subsection shall be treated as having been made in the next succeeding taxable year and, subject to the $2,500 annual limitation for each prepaid contract, may be carried over to succeeding taxable years until the full amount of the advance payments has been allowed as a subtraction. In this subsection the following words have the meanings indicated. “Account holder” means an account holder as defined in § 18–19A–01 or § 18–19B–01 of the Education Article. “Contributor” means an individual who contributes funds to a Maryland Senator Edward J. Kasemeyer College Investment Plan or Broker–Dealer College Investment Plan account under Title 18, Subtitle 19A or Subtitle 19B of the Education Article. “Investment account” means an investment account as defined in § 18–19A–01 or § 18–19B–01 of the Education Article. “Qualified designated beneficiary” means a qualified designated beneficiary as defined in § 18–19A–01 or § 18–19B–01 of the Education Article. Except as provided in subparagraph (ii) of this paragraph and subject to the limitation under paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes the amount contributed by an account holder or a contributor during the taxable year to an investment account. The subtraction under subparagraph (i) of this paragraph may not be taken if the account holder received a State contribution under § 18–19A–04.1 of the Education Article during the taxable year. Subject to paragraph (4) of this subsection, for each account holder or contributor for all investment accounts maintained in the Maryland Senator Edward J. Kasemeyer College Investment Plan and the Maryland Broker–Dealer College Investment Plan for the same qualified designated beneficiary, the subtraction under paragraph (2) of this subsection may not exceed $2,500 for any taxable year per qualified designated beneficiary. For purposes of the limitation under this paragraph, each spouse on a joint return shall be treated separately. Subject to the $2,500 annual limitation for each account holder or contributor for each qualified designated beneficiary, the amount disallowed as a subtraction under this subsection for any taxable year as a result of the limitation under paragraph (3) of this subsection may be carried over until used to the next 10 succeeding taxable years as a subtraction. In this subsection, “health care facility” has the meaning stated in § 19–114 of the Health – General Article. The subtraction under subsection (a) of this section includes 100% of the expenses that a taxpayer incurs to buy and install handrails in an existing elevator in a health care facility or other building in which at least 50% of the space is used for medical purposes. In this subsection the following words have the meanings indicated. “Nitrogen removal technology” has the meaning stated in § 9–1108 of the Environment Article. “On–site sewage disposal system” has the meaning stated in § 9–1108 of the Environment Article. The subtraction under subsection (a) of this section includes the amount by which the cost difference between a conventional on–site sewage disposal system and a system that utilizes nitrogen removal technology exceeds the amount of assistance the Department of the Environment provides the homeowner under § 9–1108 of the Environment Article. The subtraction under subsection (a) of this section includes any payment to an individual made as a result of a foreclosure settlement negotiated by the Attorney General. In this subsection, “qualified conservation program expenses” means amounts expended by an individual during the taxable year related to an application for the Forest Conservation and Management Program within the Department of Natural Resources. “Qualified conservation program expenses” includes the costs associated with hiring a professional land surveyor and the preparation of a land management program for the conserved property. The subtraction allowed under subsection (a) of this section includes up to $500 of qualified conservation program expenses paid by an individual who applies to enter into a forest conservation and management plan with the Department of Natural Resources, if the application is approved by the Department. Subject to paragraph (2) of this subsection, the subtraction under subsection (a) of this section includes 100% of the costs of health insurance that a taxpayer incurs on behalf of another individual if the other individual and taxpayer are recognized by the State as lawfully married. The subtraction under paragraph (1) of this subsection may not exceed the cost of a health insurance premium that: is paid by the taxpayer or the employer of the taxpayer to provide coverage for the taxpayer’s spouse; and is subject to federal income tax under the Internal Revenue Code. In this subsection the following words have the meanings indicated. “Foster parent” means an individual approved by a local department to provide 24–hour care for a foster child in the home where the individual resides. “Foster parent” includes a kinship parent. “Foster parent” does not include a treatment foster parent licensed by a child placement agency. “Kinship parent” has the meaning stated in § 5–534 of the Family Law Article. “Local department” means a department of social services in a county or the Montgomery County Department of Health and Human Services. Subject to the requirements of this subsection, the subtraction under subsection (a) of this section includes 100% of the unreimbursed expenses that a foster parent incurs on behalf of a foster child. The subtraction allowed under paragraph (2) of this subsection includes only an expense that the local department approves as necessary. The subtraction under paragraph (2) of this subsection may not include an expense for which the foster parent receives an allowance or a reimbursement from any public or private agency. On or before October 1 of each year, the Department of Human Services shall submit to the Comptroller a list of approved foster parents. The subtraction allowed under paragraph (2) of this subsection may not exceed $1,500. In this subsection the following words have the meanings indicated. “ABLE account contributor” means an individual who contributes money to an ABLE account as defined in § 18–19C–01 of the Education Article. “Designated beneficiary” means a designated beneficiary as defined in § 18–19C–01 of the Education Article. “Qualified disability expenses” has the meaning stated in § 18–19C–01 of the Education Article. Subject to the limitation under paragraph (3) of this subsection, the subtraction under subsection (a) of this section includes the amount contributed by an ABLE account contributor during the taxable year to an ABLE account under the Maryland ABLE Program. Subject to paragraph (4) of this subsection, for each ABLE account contributor under the Maryland ABLE Program, the subtraction under paragraph (2) of this subsection may not exceed $2,500 for any taxable year per qualified designated beneficiary. For purposes of the limitation under this paragraph, each spouse on a joint return shall be treated separately. Subject to the $2,500 annual limitation for each ABLE account contributor per qualified designated beneficiary, any amount disallowed as a subtraction under this subsection for any taxable year as a result of the limitation under paragraph (3) of this subsection may be carried over until used to the next 10 succeeding taxable years as a subtraction. In this subsection the following words have the meanings indicated. “Organ” means all or part of an individual’s liver, kidney, pancreas, intestine, lung, or bone marrow. “Qualified expenses” means any unreimbursed travel expenses, lodging expenses, child or elder care expenses, medication expenses, or lost wages. The subtraction under subsection (a) of this section includes up to $10,000 of the qualified expenses paid or incurred by a living individual during the taxable year that are attributable to the donation of one or more of the individual’s organs to another individual for organ transplantation. In this subsection, “eligible teacher” means an individual who is employed on a full–time basis for an academic year ending during the taxable year as: a prekindergarten classroom teacher in a publicly funded prekindergarten program at an eligible public provider, as defined in § 7–1A–01 of the Education Article; or a lead teacher or consulting teacher in a publicly funded prekindergarten program at an eligible private provider, as defined in § 7–1A–01 of the Education Article; or a kindergarten through grade 12 classroom teacher in an elementary or secondary school in the State. Subject to paragraph (3) of this subsection, the subtraction allowed under subsection (a) of this section includes up to $250 of the unreimbursed expenses paid or incurred by an eligible teacher during a taxable year for the purchase of classroom supplies if the supplies are used by: students in the classroom; or the eligible teacher to prepare for or during classroom teaching. The amount allowed as a subtraction under paragraph (2) of this subsection does not include an expense that is subtracted from federal adjusted gross income under § 62 of the Internal Revenue Code. For a taxable year beginning after December 31, 2019, but before January 1, 2022, the subtraction under subsection (a) of this section includes the amount of benefits paid to an individual in accordance with Title 8 of the Labor and Employment Article, or in accordance with the unemployment insurance progam of a jurisdiction with which the State has a reciprocal taxation agreement, if the individual’s federal adjusted gross income for the taxable year does not exceed: $75,000 for an individual; or $100,000 for a married couple filing a joint return or an individual described in § 2 of the Internal Revenue Code as a head of household or as a surviving spouse. In this subsection the following words have the meanings indicated. “Diaper bank” means a nonprofit organization located in the State that: is qualified as tax exempt under § 501(c)(3) of the Internal Revenue Code; is established and operating primarily for the purpose of collecting or purchasing disposable diapers or other hygiene products for infants or children; and distributes those diapers or hygiene products through schools, health care facilities, government agencies, or other nonprofit entities for eventual distribution to individuals free of charge. “Donation” means an irrevocable gift of: disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products; or cash that is specifically designated for the purchase of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products. “Feminine personal hygiene products” means sanitary pads, tampons, menstrual sponges, menstrual cups, or other similar feminine hygiene products, whether reusable or disposable. “Qualified charitable entity” means a diaper bank, homeless shelter, domestic violence shelter, religious organization, or other charitable organization that has registered with the Comptroller as a distributor of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products. Subject to the limitations of this subsection, the subtraction allowed under subsection (a) of this section includes up to $1,000 of donations made by the taxpayer during the taxable year to a qualified charitable entity. To qualify for the subtraction under this subsection, the taxpayer shall file with the taxpayer’s income tax return: the name of each qualified charitable entity to which a donation was made; proof of the value of the donation; and any other information that the Comptroller requires. The Comptroller shall adopt regulations to carry out the provisions of this section, including the criteria and procedures for registration as a qualified charitable entity. In this subsection the following words have the meanings indicated. “Account holder” means a first–time homebuyer who establishes a first–time homebuyer savings account. “Allowable closing costs” means a disbursement listed on a settlement statement for the purchase of a home in the State by an account holder. “Eligible costs” means the down payment and allowable closing costs for the purchase of a home in the State by an account holder. “Financial institution” has the meaning stated in § 1–101 of the Financial Institutions Article. “First–time homebuyer” means an individual who is a resident of the State and who has not owned or purchased, either individually or jointly, a home in the State in the last 7 years. “First–time homebuyer savings account” or “account” means an account with a financial institution that an account holder designates as a first–time homebuyer savings account on the account holder’s Maryland income tax return for taxable year 2021 or any following taxable year and that is established for the sole purpose of paying or reimbursing eligible costs for the purchase of a home in the State by the account holder. “Home” means a single–family residential real property, including a mobile home as defined in § 8A–101 of the Real Property Article. “Settlement statement” means the statement of receipts and disbursements for a transaction related to real estate, including a statement prescribed under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq., as amended, and associated regulations. Except as otherwise provided in this subsection and subject to the limitations under this paragraph, the subtraction under subsection (a) of this section includes: up to $5,000 of the amount contributed by an account holder to a first–time homebuyer savings account during the taxable year; and the earnings, including interest and other income on the principal, from the account during the taxable year. An account holder may claim a subtraction under this subsection: for a period not to exceed 10 years; for total earnings not to exceed $50,000 during that 10–year period; and except as provided in paragraph (5) of this subsection, only if the principal and earnings of the account remain in the account until a withdrawal is made for eligible costs related to the purchase of a home by the account holder. A transfer of money into or from the account by a person other than the account holder to the account is subject to the requirements and limitations provided under this subsection. A person other than an account holder who transfers money to the account is not entitled to the subtraction under this subsection. An individual may jointly establish an account with another person if the joint account holders are both first–time homebuyers and file a joint income tax return. An individual may not be the account holder of more than one account. An account holder may withdraw money from the account and deposit the money in a new first–time homebuyer savings account held by a different financial institution or the same financial institution. The account holder shall use the funds in the account for eligible costs related to the purchase of a home within 15 years following the date on which the account was established. This subparagraph does not apply to any funds in the account for which a subtraction has not been claimed under this subsection. Any funds in the account not expended on eligible costs by December 31 of the last year of the 15–year period under subparagraph (i) of this paragraph shall be subject to taxation as ordinary income. The financial institution holding the first–time homebuyer savings account: may not be held responsible for the use or application of funds deposited in or withdrawn from the account; and may use funds held in the account for paying the expenses of administering the account. Except as authorized under paragraph (6) of this subsection or as provided in subparagraph (ii) of this paragraph, if the account holder withdraws any funds from the account for a purpose other than eligible costs for the purchase of a home: those funds shall be taxed as ordinary income of the account holder; and the account holder shall pay a penalty to the State equal to 10% of the amount withdrawn. A disbursement of any assets of a first–time homebuyer savings account under a filing by an account holder for protection under the United States Bankruptcy Code, 11 U.S.C. §§ 101 through 1330, may not subject the account holder to tax liability. An account holder claiming a subtraction under this subsection shall: submit to the Comptroller detailed information regarding the first–time homebuyer savings account with the account holder’s income tax return, including a list of transactions for the account during the taxable year; and on a withdrawal of funds from the account, submit to the Comptroller a detailed account of the eligible costs toward which the account funds were applied and a statement of the amount of funds remaining in the account, if any. The financial institution shall provide to each account holder, in the manner specified by the Department of Housing and Community Development, information about homebuyer education and housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State. The Department of Housing and Community Development shall provide and maintain the information required under subparagraph (i) of this paragraph. The Department of Housing and Community Development shall conduct outreach to communities of the State that have experienced lower rates of homeownership regarding first–time homebuyer savings accounts and the availability of the subtraction under this subsection. The Comptroller shall adopt regulations to carry out the provisions of this subsection. The subtraction under subsection (a) of this section includes the amount of ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or a business as a cannabis grower, processor, dispensary, or any other cannabis establishment licensed or registered by the State, if the deduction for ordinary and necessary expenses is disallowed under § 280E of the Internal Revenue Code. The subtraction allowed under paragraph (1) of this subsection includes a reasonable allowance for salaries or other compensation for personal services actually rendered during the taxable year. The subtraction allowed under this subsection is applicable to all taxable years beginning after December 31, 2021. For a taxable year beginning after December 31, 2024, the subtraction under subsection (a) of this section includes the amount of tuition assistance provided to students who are eligible dependents or surviving spouses of fallen transportation workers in accordance with Title 18, Subtitle 40 of the Education Article.

In this section: “employee retirement system” means a plan: established and maintained by an employer for the benefit of its employees; and qualified under § 401(a), § 403, or § 457(b) of the Internal Revenue Code; and “employee retirement system” does not include: an individual retirement account or annuity under § 408 of the Internal Revenue Code; a Roth individual retirement account under § 408A of the Internal Revenue Code; a rollover individual retirement account; a simplified employee pension under Internal Revenue Code § 408(k); or an ineligible deferred compensation plan under § 457(f) of the Internal Revenue Code. Subject to subsections (d) and (e) of this section, to determine Maryland adjusted gross income, if, on the last day of the taxable year, a resident is at least 65 years old or is totally disabled or the resident’s spouse is totally disabled, or the resident is 55 years old and is a retired forest ranger, park ranger, or wildlife ranger of the United States, the State, or a political subdivision of the State, an amount is subtracted from federal adjusted gross income equal to the lesser of: the cumulative or total annuity, pension, or endowment income from an employee retirement system included in federal adjusted gross income; or the maximum annual benefit under the Social Security Act computed under subsection (c) of this section, less any payment received as old age, survivors, or disability benefits under the Social Security Act, the Railroad Retirement Act, or both. For purposes of subsection (b)(2) of this section, the Comptroller: shall determine the maximum annual benefit under the Social Security Act allowed for an individual who retired at age 65 for the prior calendar year; and may allow the subtraction to the nearest $100. Military retirement income that is included in the subtraction under § 10–207(q) of this subtitle may not be taken into account for purposes of the subtraction under this section. Public safety employee retirement income that is included in the subtraction under § 10–207(mm) of this subtitle may not be taken into account for purposes of the subtraction under this section. In the case of a retired forest ranger, park ranger, or wildlife ranger of the United States, the State, or a political subdivision of the State, the amount included under subsection (b)(1) of this section is limited to the first $15,000 of retirement income that is attributable to the resident’s employment as a forest ranger, park ranger, or wildlife ranger of the United States, the State, or a political subdivision of the State unless: the resident is at least 65 years old or is totally disabled; or the resident’s spouse is totally disabled.

The amounts under this section are subtracted from the federal adjusted gross income of a nonresident to determine Maryland adjusted gross income. To the extent included in federal adjusted gross income, the subtraction under subsection (a) of this section includes all income other than: income derived from real or tangible personal property located in the State, whether the income is derived directly or from a fiduciary; income derived from: a business that is wholly carried on in the State and in which the individual is a partner, shareholder of an S corporation, member of a limited liability company as defined under Title 4A of the Corporations and Associations Article, but only to the extent the company is taxable as a partnership under § 761 of the Internal Revenue Code, or proprietor; or an occupation, profession, or trade that is wholly carried on in the State; the part, allocable to the State under § 10-401 of this title, of income derived from: a business that is carried on both in and out of the State and of which the individual is a partner, shareholder of an S corporation, member of a limited liability company as defined under Title 4A of the Corporations and Associations Article, but only to the extent the company is taxable as a partnership under § 761 of the Internal Revenue Code, or proprietor; or an occupation, profession, or trade that is carried on both in and out of the State; and income from Maryland State Lottery prizes or winnings from any other wagering, as defined in § 10-905(e) of this title, in the State. To the extent not otherwise included under subsection (b) of this section, the subtraction under subsection (a) of this section includes the amounts allowed to be subtracted for residents under § 10-207 of this subtitle. Subject to § 10-219 of this subtitle, the subtraction under subsection (a) of this section includes the amounts allowed to be subtracted for residents under § 10-208 of this subtitle. The subtraction under subsection (a) of this section includes income derived from wages, as defined in § 10-905(f) of this title, that are earned in this State if the Comptroller and the state in which the nonresident resides have agreed in writing to allow a reciprocal exemption from tax and withholding for the wages of residents of each state that are earned in the other state. The subtraction under subsection (a) of this section includes income derived from wages that are earned in the State by a nonresident rendering police, fire, rescue, or emergency services in an area covered under a state of emergency declared by the Governor under § 14-107 of the Public Safety Article if the wages are paid by: a nonprofit organization not registered to do business in the State and not otherwise doing business in the State; or a state, county, or political subdivision of a state, other than the State of Maryland.

In this section the following words have the meanings indicated. “Depreciation” includes any deduction allowed under § 179 of the Internal Revenue Code. “Heavy duty SUV” means a 4–wheeled vehicle that: is manufactured primarily for use on public streets, roads, and highways; is rated at more than 6,000 but not more than 14,000 pounds gross vehicle weight; and would be a passenger automobile as defined in § 280F of the Internal Revenue Code if it were rated at 6,000 pounds gross vehicle weight or less. “Manufacturing entity” means a person conducting or operating a trade or business that is primarily engaged in activities that, in accordance with the North American Industrial Classification System (NAICS), United States Manual, United States Office of Management and Budget, 2012 Edition, would be included in Sector 31, 32, or 33. “Manufacturing entity” does not include a refiner, as defined in § 10–101 of the Business Regulation Article. In addition to the modifications under §§ 10–204 through 10–210 of this subtitle, to determine Maryland adjusted gross income of an individual: except as provided in item (ii) of this item, an amount is added to or subtracted from federal adjusted gross income to reflect the determination of the depreciation deduction provided under § 167(a) of the Internal Revenue Code and the adjusted basis of property without regard to the additional allowance under § 168(k) of the Internal Revenue Code; and for a manufacturing entity, an amount is added to or subtracted from federal adjusted gross income to reflect the determination of the depreciation deduction provided under § 167(a) of the Internal Revenue Code and the adjusted basis of property by limiting the additional allowance under § 168(k) of the Internal Revenue Code to 20% of the adjusted basis of the qualified property; an amount is added to or subtracted from federal adjusted gross income to reflect the determination of the depreciation deduction provided under § 167(a) of the Internal Revenue Code and the adjusted basis of property without regard to the additional allowance under § 168(n) of the Internal Revenue Code; an amount is added to or subtracted from federal adjusted gross income to determine the net operating loss deduction allowed under § 172 of the Internal Revenue Code without regard to an election under § 172(b)(1)(H) of the Internal Revenue Code for a carryback period of up to 5 years; except as provided in item (ii) of this item, an amount is added to or subtracted from federal adjusted gross income to reflect the determination of the maximum aggregate costs that the taxpayer may treat as an expense under § 179 of the Internal Revenue Code for any taxable year without regard to any changes made to that section after December 31, 2002: increasing above $25,000 the dollar limitation set forth in § 179(b)(1) of the Internal Revenue Code; or increasing above $200,000 the phase–out threshold set forth in § 179(b)(2) of the Internal Revenue Code; and item (i) of this item does not apply to property that is placed in service by a manufacturing entity on or after January 1, 2019; an amount is added to or subtracted from federal adjusted gross income to reflect the recognition of income from discharge of indebtedness and the allowance of any deduction with respect to original issue discount without regard to § 108(i) of the Internal Revenue Code; and an amount is added to or subtracted from federal adjusted gross income to reflect the determination of the depreciation deduction with respect to any heavy duty SUV as if the heavy duty SUV were subject to the limitations of § 280F of the Internal Revenue Code in the same manner as it would be if the vehicle were rated at 6,000 pounds gross vehicle weight or less.

Subject to the provisions of this section, an individual may deduct an exemption for: the taxpayer; the spouse of the taxpayer if: a joint return is not made by the taxpayer and the spouse; and the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not a dependent of another taxpayer; and each individual who is a dependent, as defined in § 152 of the Internal Revenue Code, of the taxpayer for the taxable year. Except as provided in subsection (c) of this section, whether or not a federal return is filed, to determine Maryland taxable income, an individual other than a fiduciary may deduct as an exemption: $3,200 for each exemption that the individual may deduct under subsection (a) of this section; an additional $3,200 for each dependent, as defined in § 152 of the Internal Revenue Code, who is at least 65 years old on the last day of the taxable year; an additional $1,000 if the individual, on the last day of the taxable year, is at least 65 years old; and an additional $1,000 if the individual, on the last day of the taxable year, is a blind individual, as described in § 10–208(c) of this subtitle. If an individual other than one described in paragraph (2) of this subsection has federal adjusted gross income for the taxable year greater than $100,000, the amount allowed for each exemption under subsection (b)(1) or (2) of this section is limited to: $1,600 if federal adjusted gross income for the taxable year does not exceed $125,000; $800 if federal adjusted gross income for the taxable year is greater than $125,000 but not greater than $150,000; and $0 if federal adjusted gross income for the taxable year is greater than $150,000. If a married couple filing a joint return or an individual described in § 2 of the Internal Revenue Code as a head of household or as a surviving spouse has federal adjusted gross income for the taxable year greater than $150,000, the amount allowed for each exemption under subsection (b)(1) or (2) of this section is limited to: $1,600 if federal adjusted gross income for the taxable year does not exceed $175,000; $800 if federal adjusted gross income for the taxable year is greater than $175,000 but not greater than $200,000; and $0 if federal adjusted gross income for the taxable year is greater than $200,000.

To determine Maryland taxable income, a fiduciary other than a personal representative may deduct $200 as an exemption. To determine Maryland taxable income, a personal representative may deduct $600 as an exemption.

The subtraction modifications for volunteer police, fire, rescue, and emergency medical services personnel under § 10-208(i-1) and (l) of this subtitle shall be known as the Honorable Louis L. Goldstein Volunteer Police, Fire, Rescue, and Emergency Medical Services Personnel Subtraction Modification Program.

Except as otherwise provided in this subsection, an individual may elect to use the standard deduction to compute Maryland taxable income whether or not the individual itemizes deductions on the individual’s federal income tax return in determining federal taxable income. If an individual elects to use the standard deduction on the federal income tax return, the individual may not take any itemized deduction in § 10–218 of this subtitle. A fiduciary may not use the standard deduction. For an individual other than one described in paragraphs (2) and (3) of this subsection, the standard deduction is $3,350. For an individual described in § 2 of the Internal Revenue Code as a head of household or as a surviving spouse, the standard deduction is $6,700. For spouses on a joint return, the standard deduction is $6,700. For each taxable year beginning after December 31, 2025, the standard deduction amount specified in subsection (b) of this section shall be increased by an amount equal to the product of multiplying the standard deduction amount by the cost–of–living adjustment specified in this subsection. For purposes of this subsection, the cost–of–living adjustment is the cost–of–living adjustment within the meaning of § 1(f)(3) of the Internal Revenue Code for the calendar year in which a taxable year begins, as determined by the Comptroller, by substituting “calendar year 2024” for “calendar year 2016” in § 1(f)(3)(A) of the Internal Revenue Code. If any increase determined under paragraph (1) of this subsection is not a multiple of $50, the increase shall be rounded down to the next lowest multiple of $50.

Only an individual who itemizes deductions on the individual’s federal income tax return may elect to itemize deductions on the individual’s income tax return. Subject to subsection (c) of this section, an individual who elects to itemize deductions is allowed as a deduction the sum of the individual’s federal itemized deductions: limited and reduced as required under the Internal Revenue Code; further reduced by any amount deducted under § 170 of the Internal Revenue Code for contributions of a preservation or conservation easement for which a credit is claimed under § 10–723 of this title; and further reduced by the amount claimed as taxes on income paid to a state or political subdivision of a state, after subtracting a pro rata portion of the reduction to itemized deductions required under § 68 of the Internal Revenue Code. In this subsection, “applicable amount” means: $100,000 for a married individual filing separately; and $200,000 for all other filers. This subsection does not apply to a fiduciary. In the case of an individual whose federal adjusted gross income exceeds the applicable amount, the amount of itemized deductions otherwise allowable for a taxable year shall be reduced by 7.5% of the excess of the federal adjusted gross income over the applicable amount. This subsection shall be applied after the application of any other limitation on the allowance of any itemized deduction.

A nonresident may claim and shall include only the part attributable to Maryland, as determined under this section, of: the subtractions from federal adjusted gross income under § 10-208 of this subtitle; the deduction for exemptions under § 10-211 or § 10-212 of this subtitle; and the standard deduction under § 10-217 of this subtitle; or itemized deductions under § 10-218 of this subtitle. Unless the Comptroller requires or allows another method to compute the items listed in subsection (a) of this section, a nonresident shall prorate the items using a fraction: the numerator of which is the Maryland adjusted gross income of the nonresident; and the denominator of which is the federal adjusted gross income of the nonresident.

An individual who is a resident of the State for only a part of the taxable year may claim and shall include only the part attributable to Maryland, as determined under this section, of: the additions to federal adjusted gross income under § 10-204 of this subtitle; the subtractions from federal adjusted gross income under §§ 10-207 through 10-209 of this subtitle; the deduction for exemptions under § 10-211 or § 10-212 of this subtitle; and the standard deduction under § 10-217 of this subtitle; or itemized deductions under § 10-218 of this subtitle. Unless the Comptroller requires or allows another method to compute the items listed in subsection (a) of this section, an individual who is a resident for only a part of the taxable year shall prorate the items using a fraction: the numerator of which is the number of months in which the individual was a resident; and the denominator of which is 12. An individual who is a resident for a period of more than 15 days in a month is deemed to be a resident for the full month.

In this section, “tax preference items” mean the items that: total more than $10,000 for an individual return or $20,000 for a joint return; are defined under § 57 of the Internal Revenue Code; are modified and apportioned under § 59 of the Internal Revenue Code; and are further modified by excluding: the oil percentage depletion allowance claimed under § 613 or § 613A of the Internal Revenue Code; and interest described in § 57(a)(5) of the Internal Revenue Code, if the interest is attributable to obligations of: the State of Maryland; a political subdivision or authority of the State; or any other entity authorized under Maryland law to issue obligations the interest on which is excluded from gross income under § 103 of the Internal Revenue Code. Each shareholder of an S corporation shall report the shareholder’s pro rata share of the tax preference items of the corporation. A nonresident shall include as tax preference items only those items that are based on income taxable in the State. If the tax preference items are based on income derived both in and out of the State, the nonresident shall include only a fraction: the numerator of which is the dollar amount of the tax preference items based on income taxable in the State; and the denominator of which is the total dollar amount of the tax preference items.

Beginning with individual tax returns for the 1986 tax year, and for all subsequent tax years, the Comptroller shall collect and compile information from income tax returns regarding the various elements of the State income tax and, for the State and for each county and the City of Baltimore, the impact of those various elements on various classes of Maryland taxpayers and on revenues. The data base shall be comprehensive and shall include the following: component items of federal adjusted gross income, including loss items and preference income; components of itemized deductions; components of Maryland addition and subtraction modifications; and the number of taxpayers reporting each of the elements contained in items (1), (2), and (3) of this subsection. On or before January 1 of the second year after returns are received for a tax year, the Comptroller shall submit to the Governor and, subject to § 2-1257 of the State Government Article, the President of the Senate and the Speaker of the House of Delegates a report providing the information compiled for that tax year.