Alexandra Stewart, CFP
Maryland residents with college loan debt may be eligible for an income tax credit, which is a dollar-for-dollar reduction in your Maryland income tax liability. Not all applicants are promised to receive a credit, but if you meet the following conditions, we think applying is worth a shot.
The state’s Student Loan Debt Relief Tax Credit program offers tax credit to Marylanders who meet the following criteria:
- Maintain Maryland residency for the 2020 tax year
- Incurred at least $20,000 in undergraduate and/or graduate student loan debt
- Have at least $5,000 in outstanding student loan debt at the time of application
The amount of any credit is determined by the Maryland Higher Education Commission and priority will be given to eligible taxpayers who (1) did not receive a tax credit in a prior year, (2) were eligible for in-state tuition, (3) graduated from an institution of higher education located in Maryland and (4) have higher debt-to-income ratios.
The tax credit program applies to loan debt obtained for undergraduate and/or graduate degrees from an accredited college or university, and the deadline for applying is September 15, 2020. For more information, including the application form, please click here.
Caveat: Recipients of the credit must pay the amount awarded towards their student loans within two years and provide proof to the Maryland Higher Education Commission. Failure to do so will result in recapture of the tax credit.
Feel free to share this information with your family and friends. We are happy to help them too.