Published on January 13, 2021
With the opening of Maryland’s General Assembly today, Governor Larry Hogan is expected to introduce the state’s latest relief package, called the $1 Billion RELIEF Act of 2021. He outlined the plan at a press conference earlier in the week.
Hogan is asking state lawmakers to take quick action on this legislation, which includes actions to help Maryland families, small businesses and those who have lost jobs as a result of the pandemic.
If enacted, this emergency legislation would support small businesses with sales tax credits, extend unemployment tax relief for small businesses, repeal income taxes on state unemployment benefits, safeguard Maryland businesses against tax increases, and provide direct stimulus payments for low- to moderate-income Marylanders.
Let’s look more closely at some of the provisions in the relief package.
If the legislation passes, $300 million will go toward supporting small businesses with sales tax credits of up to $12,000. Under the proposed legislation, small businesses can get a sales tax credit of up to $3,000 per month over the course of four months. This aspect of the RELIEF Act is expected to help more than 55,000 small businesses in Maryland.
This sales tax credit is automatic and is based on a sliding scale up to $3,000. Here’s how it works: say your business brings in $100,000 in monthly revenue and you collect $6,000 in sales tax. Under the new legislation, you’d only remit $3,000. In another scenario, if you have $50,000 in monthly revenue and you collect $3,000 in sales tax, you would hold onto all of it.
The RELIEF Act commits $180 million to Maryland taxpayers who have lost their jobs by repealing all state and local income taxes on unemployment benefits.
There’s a provision in the RELIEF Act that codifies a relief order that Governor Hogan issued in December 2020. It’s essentially an extension of the unemployment tax relief for small businesses, and wards off sudden and substantial tax increases in 2021.
The RELIEF Act provides direct stimulus payments for low- to moderate-income Marylanders, totaling $750 for families and $450 for individuals. This is for the earned income tax credit filer. Relief is broken up into two rounds, which totals $267 million in relief for about 400,000 Maryland taxpayers. The first stimulus checks are expected to go out as soon as the proposed legislation passes.
The legislation is funded through a variety of sources, including budgetary actions taken by the Board of Public Works as well as budget surplus from FY20. Hogan indicates that there is bipartisan agreement to not drain the state’s rainy day fund.
Governor Hogan intends to introduce the RELIEF Act as emergency legislation on the first day of the new legislative session (January 13) and has asked state lawmakers to take quick action on this legislation. Once passed, the RELIEF Act will take immediate effect so relief checks can go out immediately.
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Published on January 13, 2021