Maryland’s Homestead Tax Credit

By: Sunny Cooper, Special Projects Manager, NHS of Baltimore

The homestead tax credit is a program brought on to help homeowners deal with large assessment on their main residence. The way the homestead tax credit works is that it limits the increase in taxable assessments each year to a fixed percentage. According to state law, every county and municipality is required to limit taxable assessment increases to 10% or less each year. Taxpayers should make sure they are aware of the homestead caps for each local government.

This tax credit does not limit the market value of the property as determined by the Department of Assessments and Taxation. It is a credit calculating on any assessment increase exceeding 10% (or the lower cap enacted by the local governments) from one year to the next. The credit is calculated based on the 10% limit for purposes of the State property tax, and 10% or less (as determined by local governments) for purposes of local taxation. In other words, the homeowner pays no property tax on the market value increase which is above the limit.


Taxpayers who wish to receive the homestead tax credit, should also be mindful of the new application requirements. This tax credit requires that all homeowners submit to a one-time application to establish eligibility for the credit. The application form will be in an assessment notice mailed to a third of the homeowners at the end of December for the next three years. New purchasers of residential properties will also receive this form.


The homestead tax credit will only be granted if certain conditions were meant during the previous tax year. Conditions include that the property must not have been transferred to new ownership, there had been no change in the zoning classification requested by the homeowner resulting in an increased value of the property, and the previous assessment was not clearly erroneous. A further condition is that the dwelling must be the owner’s principal residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable, unless the owner was temporarily unable to do so by reason of illness or need of special care. An owner can receive a credit only on one property---the principal residence.

If you have been denied the homestead tax credit, you may appeal the decision if you feel that you are eligible. To appeal you must contact the Central Office for the Homestead Tax Credit Program. A final denial of a Homestead Tax Credit by the Central Office may be appealed within 30 days to the Property Tax Assessment Appeal Board in the jurisdiction where the property is located.