Chapter 17. Student Loan Debt Relief Tax Credit
Regulation .01 Purpose.LinkCopy Citation
The purpose of the Student Loan Debt Relief Tax Credit is to assist students who have incurred a certain amount of undergraduate loan debt, graduate loan debt, or both, by providing a tax credit on their Maryland State income tax pursuant to Tax-General Article, §10-740, Annotated Code of Maryland.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meaning indicated.
B.
“Commission” means the Maryland Higher Education Commission.
C.
“Comptroller” means the Comptroller of Maryland.
D.
“Debt burden” means the amount a qualified taxpayer is currently obligated to pay for a student loan debt.
E.
Lender.
(1)
“Lender” means an entity, institution, or government that lends funds to a student, or on behalf of a student, to pay for charges for tuition or fees.
(2)
“Lender” includes:
(a)
A bank, mutual savings bank, savings and loan association, or credit union that is subject to examination and supervision in its capacity as a lender by an agency of the United States or of the state in which its principal place of operation is located;
(b)
A pension fund that is subject to examination and supervision by an agency of the United States or a state;
(c)
An insurance company that is subject to examination and supervision by an agency of the United States or a state;
(d)
In any state, a single agency of the state or a single private nonprofit agency designated by the state to lend funds to a student or manage student loan debt;
(e)
For purposes of purchasing and holding loans made by other lenders, a student loan marketing association or an agency of any state or the federal government functioning as a secondary market; and
(f)
The United States Department of Education, federal Department of Veterans Affairs, federal Department of Defense, and any other federal agency.
F.
“Secretary” means the Maryland Secretary of Higher Education.
G.
“Student loan debt” means an individual’s obligation to repay a lender for monies borrowed by the individual to pursue an undergraduate or graduate education at an institution of higher education that is accredited by an accrediting body recognized by the United States Department of Education.
H.
“Student Loan Debt Relief Tax Credit” means the tax credit authorized under Tax-General Article, §10-740, Annotated Code of Maryland.
I.
“Qualified taxpayer” means an individual who has:
(1)
Incurred at least $20,000 in student loan debt; and
(2)
At least $5,000 in outstanding student loan debt as of the submission date of an application under Regulation .04 of this chapter.
Regulation .03 Tax Credit.LinkCopy Citation
A.
Subject to the provisions of Tax-General Article, §10-740, Annotated Code of Maryland, and the provisions of this chapter, a qualified taxpayer may claim a credit against the State income tax for the taxable year in which the Commission certifies a tax credit under this chapter.
B.
The Commission shall certify a tax credit to a qualified taxpayer as provided in this Chapter.
C.
A qualified taxpayer that receives a certification of a tax credit from the Commission shall be responsible for timely and appropriately incorporating the Commission’s certification into the taxpayer’s tax filings with the Comptroller’s office. A qualified taxpayer shall attach a copy of the Commission’s certification of the approved credit amount to the taxpayer’s income tax return.
D.
The total amount of a Student Loan Debt Relief Tax Credit claimed under a qualified taxpayer’s income tax return and approved by the Comptroller pursuant to §F of this regulation shall be recaptured if the qualified taxpayer does not use an approved credit for the repayment of the qualified taxpayer’s student loan debt within 3 years from the close of the taxable year in which the credit is awarded. The qualified taxpayer who claimed the approved tax credit shall pay the total amount of the credit claimed as taxes payable to the State of Maryland for the taxable year in which the event requiring recapture of the credit occurs.
E.
If a Student Loan Debt Relief Tax Credit claimed under a qualified taxpayer’s income tax return and approved by the Comptroller pursuant to §F of this regulation in any taxable year exceeds the total tax otherwise payable by the qualified taxpayer for that taxable year, the qualified taxpayer may claim a refund in the amount of the excess.
F.
The Comptroller shall make the final determination on a qualified taxpayer’s eligibility for a Student Loan Debt Relief Tax Credit pursuant to Tax-General Article, Annotated Code of Maryland.
Regulation .04 Applying to the Commission for Certification of a Tax Credit.LinkCopy Citation
A.
A qualified taxpayer requesting that the Commission certify a tax credit shall apply to the Commission as provided in this regulation.
B.
A qualified taxpayer shall submit a signed application, on a form prepared by the Commission in accordance with §C of this regulation, for a Student Loan Debt Relief Tax Credit by September 15 of the tax year in which the taxpayer seeks to apply a Student Loan Debt Relief Tax Credit to the taxpayer’s income tax return.
C.
The Student Loan Debt Relief Tax Credit application shall require a qualified taxpayer to submit, in a form prescribed by the Secretary, information required by the Secretary to determine the taxpayer’s eligibility for certification, including but not limited to:
(1)
The qualified taxpayer’s full legal name, date of birth, residency address, email address, phone number, and social security number;
(2)
The name of the institution or institutions attended, date the qualified taxpayer’s degree or degrees were awarded, and dates of attendance attributable to the qualified taxpayer’s student loan debt;
(3)
A statement attesting that the qualified taxpayer has:
(a)
Incurred at least $20,000 in student loan debt; and
(b)
At least $5,000 in outstanding student loan debt at the time the application is submitted;
(4)
For each student loan debt that contributes to the amount of student loan debt attested to pursuant to §C(3) of this regulation the:
(a)
Name, address, and phone number of the entity that provided the student loan debt;
(b)
Account numbers associated with the student loan debt;
(c)
Full names of all persons legally responsible for repaying the student loan debt;
(d)
Original amount of the student loan debt disbursed to the qualified taxpayer; and;
(e)
Total amount of the student loan debt currently outstanding at the time the Student Loan Debt Relief Tax Credit application is submitted;
(5)
Information that the Secretary deems necessary in order to allow the Commission to determine the qualified taxpayer's debt burden;
(6)
Information that the Secretary deems necessary in order to allow the Commission to determine the qualified taxpayer's adjusted gross income;
(7)
A signed statement by the qualified taxpayer under penalty of perjury attesting that the information submitted in the application is true and correct to the knowledge and belief of the qualified taxpayer;
(8)
A signed statement by the qualified taxpayer authorizing a lender or educational institution to release personal academic or financial information as may be requested by the Commission in processing the qualified taxpayer’s application; and
(9)
A signed statement of assurance by the qualified taxpayer that the individual shall use any credit approved by the Commission and accepted by the Comptroller for the repayment of the individual’s student loan debt as soon as practicable and not later than 3 years after the taxable year in which the credit is claimed.
D.
By December 15 of the year in which a qualified taxpayer has submitted an application under §B of this regulation, the Commission shall certify to the individual the amount of any tax credit approved by the Commission as provided in Regulation .05 of this chapter.
Regulation .05 Commission Action on an Application.LinkCopy Citation
A.
Upon the filing of a timely and complete application for the Student Loan Debt Relief Tax Credit by a qualified taxpayer, the Commission shall review the application and certify to the individual the amount of any tax credit approved by the Commission.
B.
The Commission’s certification under §A of this regulation shall be issued by December 15 of the year in which the qualified taxpayer submitted an application.
C.
The amount of the tax credit approved by the Commission:
(1)
May not exceed $5,000; and
(2)
May be $0.00.
D.
The Commission shall prioritize tax credit recipients and amounts credited to each recipient in the following order:
(1)
Qualified taxpayers who are State employees and graduated from institutions of higher education in the State where at least 40 percent of the attendees are eligible to receive federal Pell Grants;
(2)
Qualified taxpayers who are State employees and are not described under §D(1) of this regulation;
(3)
Qualified taxpayers who are not State employees and graduated from institutions of higher education in the State where at least 40 percent of the attendees are eligible to receive federal Pell Grants; and
(4)
All other qualified taxpayers, who may be prioritized based on one or more of the following categories:
(a)
Those who did not receive a tax credit in the prior year;
(b)
Those who graduated from an institution of higher education located in the State;
(c)
Those who were eligible for in-State tuition; and
(d)
Those who have higher debt-burden-to-income ratios.
E.
For any taxable year, the Commission may not certify tax credits in an amount more than the maximum permitted under Tax-General Article, §10-740, Annotated Code of Maryland.
Regulation .06 Delegation to Secretary.LinkCopy Citation
The Commission delegates to the Secretary the responsibility and authority to act on its behalf in administering the Student Loan Debt Relief Tax Credit program, including the authority to certify or deny a Student Loan Debt Relief Tax Credit application.
Chapter annotations
Authority: Education Article, §11-105(u); Tax-General Article, §10-740; Annotated Code of Maryland
History: Effective date: August 28, 2017 (44:17 Md. R. 837)
History: Regulation .01 amended effective November 19, 2018 (45:23 Md. R. 1071)
History: Regulation .02 amended effective November 19, 2018 (45:23 Md. R. 1071); November 25, 2024 (51:23 Md. R. 1037)
History: Regulation .03D amended effective November 19, 2018 (45:23 Md. R. 1071); November 25, 2024 (51:23 Md. R. 1037)
History: Regulation .04A, C amended effective November 19, 2018 (45:23 Md. R. 1071)
History: Regulation .04C amended effective November 18, 2019 (46:23 Md. R. 1067); November 25, 2024 (51:23 Md. R. 1037)
History: Regulation .05 amended effective November 25, 2024 (51:23 Md. R. 1037)
History: Regulation .05F amended effective November 19, 2018 (45:23 Md. R. 1071); November 25, 2024 (51:23 Md. R. 1037)