Guest blogger Brian Smith, is a veteran of the U.S. Navy and founder of Free State Veterans, an organization providing resources and advocacy for Maryland veterans and their families.
Newly-Enacted Real Property Tax Credits Benefit Service-Disabled Veterans
Prior to 2020, there were two real property tax credit programs that benefited uniformed services retirees and certain service-disabled veterans:
- A property tax exemption available to veterans with a service-connected disability rated 100% “permanent and total” by the Department of Veterans Affairs provides a complete exemption from real property taxes on their primary residence.
- Additionally, Maryland municipalities have the OPTION to provide uniformed services retirees, or their surviving spouses, a partial, temporary real property tax credit. The amount of the property tax credit may not exceed 20% of the tax imposed on the property and may be granted for up to five years. The uniformed services retirees become eligible upon reaching the age of 65 years. In the event the uniformed services retiree passes prior to reaching 65 years of age, their un-remarried spouse becomes eligible upon reaching 65 years of age.
An important change to the second law, passed in the 2020 Maryland General Assembly Legislative Session significantly expands the pool of those eligible for the municiple credit.
Delegate Kaiser and Senator Waldstreicher sponsored bills expanding the optional real property tax credit to include any active duty, honorably discharged, or retired uniformed services member who has a service-connected disability, regardless of age. This would also apply to a surviving spouse. Additionally, the municipality may establish the criteria that define the service-connected disability, i.e. the percentage of disability required for eligibility.
Senator Waldstreicher’s bill passed the Maryland General Assembly and became law on May 7th. The law is applicable to all taxable years beginning after June 30, 2020.
The addition of the "honorably discharged, with service-connected disability" category is huge. Over 20% of Maryland's nearly 400,000 veterans have a service-connected disability that has been rated less than 100%. Additionally, military retirees with a service-connected disability would no longer need wait until the age of 65 to apply.
Depending on how municipalities set the qualifying disability rating levels, should they choose to do anything, potentially tens of thousands of our most deserving veterans may qualify.
An additional real property tax credit bill passed specifically benefiting our severely disabled veterans. Delegate Crosby and Senator Salling sponsored bills that provide for a partial, sliding scale, municipality-optional, real property tax credit for service-disabled veterans rated with a 50-99% disability. The following conditions apply:
- Eligibility capped at Federal AGI of $100K
- Credit of 25% of tax imposed if rated at least 50%, but no more than 74%
- Credit of 50% of tax imposed if rated at least 75%, but more than 99%
There are just over 36,000 service-disabled veterans residing in Maryland that could potentially become eligible for the tax break. The challenge remains, however, of getting municipalities to take the necessary action to provide these real property tax credits to our uniformed services retirees, service-disabled veterans, and their surviving spouses.
Achieving success will test the grass-roots advocacy skills of our veteran service organizations at the county level. Time to get out the word to members of your posts, branches, chapters, etc. and engage your county officials to take advantage of this new opportunity.