Maryland Tax Update

– by Jon C. Holmes, CPA, Principal

Qualified Farms – Food Donation Pilot Program

House Bill 472, effective July 1, 2017, permits a qualified farm to claim a credit against Maryland income tax for eligible food donations made to a Tax Credit Certificate Administrator.  A qualified farm is a farm business located in Anne Arundel, Calvert, Charles, Montgomery, Prince George’s or St. Mary’s County.  For a food donation to be eligible it must consist of farm fresh products for human consumption.  A farm may claim a credit of up to $5,000 in each taxable year.  For each donation, a Tax Credit Certificate Administrator will issue a certificate which is 50% of the value of the donation or 75% of the certified organic food donation.

Maryland ABLE Plan – Achieving a Better Life Experience

House Bill 431 was passed on April 12, 2016, enabling Maryland to construct an ABLE program.  The Maryland ABLE plan is projected to be operational by the end of 2017.  The ABLE account is a way for people with disabilities to save money without jeopardizing means-tested benefits such as Social Security Income or Medicaid.  Contributions of up to $14,000 per year may be made to an ABLE account, and a single contributor can receive up to a $2,500 Maryland state income tax deduction, or $5,000 for joint filers.  Friends and family can contribute to an ABLE plan and benefit from the state income tax deduction.  The account earnings will not be subject to federal or state income tax if the funds are used for qualified disability expenses, and they can be used in conjunction with a special needs trust.

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