Maryland SB163 modifies the state income tax to exclude certain federal tax-exempt income from state tax, effective from 2026.

Maryland SB163 amends the state income tax law to exclude from state tax certain income that is exempt from federal tax by federal law or treaty but not state tax. This change applies to all taxable years beginning after December 31, 2025. The bill specifically excludes foreign earned income from this modification. The law also modifies the calculation of Maryland adjusted gross income to include salary, wages, or other compensation for personal services that are exempt from federal but not state tax.

Maryland SB163 modifies the state income tax to exclude certain federal tax-exempt income from state tax, effective from 2026.

Maryland SB163 amends the state income tax law to exclude from state tax certain income that is exempt from federal tax by federal law or treaty but not state tax. This change applies to all taxable years beginning after December 31, 2025. The bill specifically excludes foreign earned income from this modification. The law also modifies the calculation of Maryland adjusted gross income to include salary, wages, or other compensation for personal services that are exempt from federal but not state tax.