Maryland has opened the student loan tax credit application for Maryland residents who wish to claim credits for the 2024 tax year. As of today, Maryland is the only state offering student loan tax credits to residents burdened by student loan debts.
Application for this tax credit began July 1 and will remain open through September 15, 2024.
Maryland student loan tax credit eligibility
You must meet these requirements to qualify for Maryland’s student loan tax credit.
- You must have been a Maryland resident for the 2024 tax year
- You must have filed Maryland state income in 2024
- You must have incurred at least $20,000 in undergraduate or graduate student loans
- You must have at least $5,000 in outstanding student loan debt at the time of application
How is this tax credit allocated?
The Maryland Higher Education Commission (MHEC) allocates this tax credit to qualifying Maryland residents based on criteria set in the Code of Maryland Regulations (COMAR). According to this regulation, the MHEC must prioritize tax credit recipients and allocate amounts in the following order:
- $9,000,000 of the tax credits shall be allocated to the following residents in the following order of priority.
- State employees who graduated from higher institutions in the state where at least 40% of the students are eligible for federal Pell Grants,
- State employees who graduated from higher institutions in the state where less than 40% of the students are eligible for the federal Rell rants,
If the total amount of tax credits received by individuals described in (i) and (iii) above is less than $9,000,000 for the tax year, the MHEC is mandated to use the remaining credits for other qualified taxpayers.
- Based on the (1) above, the MHEC will choose tax credit recipients and the amount allocated in this order of priority:
- Qualified taxpayers who graduated from a higher institution in Maryland where at least 40% of the students are eligible for federal Pell Grants,
- Qualified taxpayers who graduated from higher institutions in Maryland where less than 40% of the students are eligible for the federal Rell rants. This category of qualified residents may be prioritized if they failed to receive a tax credit in 2023, graduated from an institution in Maryland, have a higher debt burden to income ratio, or were eligible for in-state tuition.
How to apply for student loan tax credit
Fill out the application form online to apply for the student loan tax credit. This should last 15–30 min. Before applying, follow these instructions to set up your OneStop account. Prepare the following supporting documents in PDF format. Word, Excel, or Text documents are not acceptable.
- The lender’s documentation showing educational loans that qualify for the tax credit.
- A copy of your 2023 Maryland income tax return. Failure to provide your Maryland Form 502 tax return may affect your eligibility for the student loan tax credit.
- Transcripts from the institution you graduated from.
Also, you are expected to provide your undergraduate or graduate student loan information, Maryland adjusted gross income, tax credit information, and information on the colleges or universities you graduated from.
