On February 15, 2021, Governor Hogan signed the RELIEF Act into law. This law provides multiple Covid relief. Some highlights:
- If you qualify for the Maryland Earned Income Tax Credit (EITC), a payment will be issued by the Comptroller’s office for $300 for individuals and $500 for families. The EITC is also enhanced for another 3 years.
- Unemployment benefits will not be taxes for 2020 and 2021 as long as the an individual’s adjusted gross income is not above $75,000 or $100,000 for married filing joint, head of household or surviving spouse. Normally unemployment benefits are taxed at both the federal and state level. For the next 2 years, Maryland will not charge tax on the benefits.
- Any Federal, State, or Local government grant or loan for Coronavirus relief is not taxable in Maryland for 2020 or 2021.
- Codification of Governor Hogan’s executive order freezing business’s unemployment experience rate until after the state of emergency allowing businesses to have relief from the large increase in claims. This freeze helps. However, many businesses will see an increase in unemployment taxes due to the state moving to a different contribution schedule as the unemployment fund balance has dropped. This means that although the experience rating is the same, on the new schedule the unemployment tax rate will be higher.
- A technical correction was issued to the new Maryland passthrough tax to correct some of the problems with the law passed on 2020. If the PTE is electing to pay the Maryland tax at the entity level for its resident members, the nonresident members also follow along for this treatment. The amount of tax expensed as taxes at the entity level must now be added back as a modification to determine Maryland income.
- Businesses may keep up to $3,000 in monthly sales tax collections for 3 months. This is only allowed if the business files its sales and use tax return timely (generally the 20th of the month) and has up to $100,000 in Maryland taxable sales.