Rules for the Maryland State Income Tax Subtraction Modification for 2020
Rules for the Maryland State Income Tax Subtraction Modification for 2020
Based on House Bill 1069 the Maryland State Tax Incentive Program has been amended to increase the amount a
member may deduct from their “gross” Maryland income tax up to $7,000.00. It will increase by $1000.00
($6,000.00) for 2020, $500.00 ($6,500.00) for 2021 and $500.00 ($7,000.) for 2022. For the taxable year 2020 the amount allowed to deduct is $6,000.00.
In order for a member to qualify for the yearly deduction they must meet the following requirements:
• Have earned a minimum of 50 points in ANY 3 of the last 10 years as long as 1 of those years is in the
taxable year. In this case the taxable year is 2020. The last 10 years includes 2011 thru 2020.
• If a member has accumulated 25 credited years of service the “taxable year” requirement is waived,
however they must still make 50 or more points in any 3 of the last 10 years.
• A member MUST have served a minimum of 36 full months in order to qualify. For the year 2020 a
member must have joined the company as of January 1, 2018. January 1, 2018 thru December 31, 2020
equals 36 months.
Points earned are based on your County’s program or if your County does not have a program it is based on the
State program as outlined in the MSFA tax incentive form MSFA-P.2.2(Revised 7/20). 50 points must be earned in at least 2 or more categories.
For the taxable year 2020 qualified members can deduct $6,000.00 from their gross income by using Maryland
Income Tax form number 502 under “Other Subtractions From Income” and using income subtraction form 502SU item “va”. They will need to send MSFA tax incentive form MSFA-P.2.2(Revised 7/20) either with their tax return or separately if filing on line.
A new updated tax incentive form will become available each year.
IMPORTANT – If your County has authorized additional (unearned) points for time lost due to
the COVID virus it is highly recommended that you DO NOT add an additional column titled
so. Instead, add points to the current columns as outlined in the MSFA tax incentive form
MSFA-P.2.2(Revised 7/20)
Attached is form MSFA-P.2.2(Revised 7/20) specifically designed for the taxable year 2020. Please use it only for
2019.
VERY IMPORTANT. THE MARYLAND STATE CONTROLLERS OFFICE WILL NEED A FILE WITH
THE FULL 9 DIGIT SOCIAL SECURITY NUMBER IN ORDER TO IDENTIFY THE MEMBER WITH
THE AUTHORISED LIST WE SEND THEM. IF WE DO NOT SUPPLY THEM WITH ALL OF THE
ABOVE INFORMATION THE STATE COULD REJECT THE MEMBERS’ RETURN AND THEY WILL
HAVE TO PAY BACK THE DEDUCTION PLUS INTEREST AND PENALTIES.
If you have any questions please direct them to your County “Points Coordinator”.