# Tax - General (GTG)

## Title 8. Franchise Taxes

### Subtitle 2. Financial Institution Franchise Tax

#### Section 8-204

(a) A financial institution shall compute its net earnings:

  (1) based on the accounting period used as its fiscal year; and

  (2) subject to the modifications required under this section, in the manner that a corporation computes, for purposes of the income tax, the Maryland modified income.

(b) A financial institution shall add to its net earnings computed under subsection (a) of this section the amounts that, even if otherwise allowed to be subtracted under Sec. 10-307(b) and (g)(1) and (4) of this article, equal:

  (1) profit realized from the sale or exchange of bonds issued by this State or a political subdivision of this State;

  (2) dividends received from foreign corporations and included in federal gross income under Sec. 78 of the Internal Revenue Code;

  (3) interest derived from a United States obligation;

  (4) State tax-exempt interest received from a mutual fund and allowed to be subtracted under Sec. 10-307(g)(4) of this article; and

  (5) interest excluded from federal gross income under Sec. 103 of the Internal Revenue Code and derived from a bond:

    (i) issued by a state or a public corporation, special district, or political subdivision of a state or their instrumentalities; or

    (ii) under Sec. 150 of the Internal Revenue Code, treated as a bond issued by a state or a public corporation, special district, or political subdivision of a state or their instrumentalities.

(c) A financial institution shall subtract from its net earnings computed under subsection (a) of this section interest expense incurred to purchase or carry a bond as defined in subsection (b)(5) of this section.

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Md. Code Ann., Tax-Gen. (as displayed at mgaleg.maryland.gov, October 16, 2026)