§ 10-704. For earned income

   (a) Credit allowed. --

   (1) An individual may claim a credit against the State income tax for a taxable year in the amount determined under subsection (b) of this section for earned income.

   (2) An individual may claim a credit against the county income tax for a taxable year in the amount determined under subsection (c) of this section for earned income.

(b) Amount of credit. --

   (1) Except as provided in paragraph (2) of this subsection and subject to subsection (d) of this section, the credit allowed against the State income tax under subsection (a)(1) of this section is the lesser of:

      (i) 50% of the earned income credit allowable for the taxable year under § 32 of the Internal Revenue Code; or

      (ii) the State income tax for the taxable year.

   (2) An individual may claim a refund in the amount, if any, by which 25% of the earned income credit allowable for the taxable year under § 32 of the Internal Revenue Code exceeds the State income tax for the taxable year.

(c) Calculation of county income tax credit. --

   (1) Except as provided in paragraph (2) of this subsection and subject to subsection (d) of this section, the credit allowed against the county income tax under subsection (a)(2) of this section is the lesser of:

      (i) the earned income credit allowable for the taxable year under § 32 of the Internal Revenue Code multiplied by 10 times the county income tax rate for the taxable year; or

      (ii) the county income tax for the taxable year.

   (2) (i) A county may provide, by law, for a refundable county earned income credit as provided in this paragraph.

      (ii) If a county provides for a refundable county earned income credit under this paragraph, on or before July 1 prior to the beginning of the first taxable year for which it is applicable, the county shall give the Comptroller notice of the refundable county earned income credit.

      (iii) If a county provides for a refundable county earned income credit under this paragraph, an individual may claim a refund of the amount, if any, by which the product of multiplying the credit allowable for the taxable year under § 32 of the Internal Revenue Code by 5 times the county income tax rate for the taxable year exceeds the county income tax for the taxable year.

      (iv) The amount of any refunds payable under a refundable county earned income credit operates to reduce the income tax revenue from individuals attributable to the county income tax for that county.

(d) Credit for nonresidents and part-year residents. -- For an individual who is a nonresident or is a resident of the State for only a part of the year, the amount of the credit or refund allowed under this section shall be determined based on the part of the earned income credit allowable for the taxable year under § 32 of the Internal Revenue Code that is attributable to Maryland, determined by multiplying the federal earned income credit by a fraction:

   (1) the numerator of which is the Maryland adjusted gross income of the individual; and

   (2) the denominator of which is the federal adjusted gross income of the individual.

HISTORY: An. Code 1957, art. 81, § 288; 1988, ch. 2, § 1; 1998, ch. 5; 1999, ch. 493, § 1; 2000, ch. 510; 2001, ch. 581; 2007 Sp. Sess., ch. 3, § 1.