Maryland seniors can deduct property taxes on their federal return, but the deduction has limits that changed in 2017

You can deduct property taxes you paid on your Maryland home on your federal income tax return — but only if you itemize deductions instead of taking the standard deduction. The Tax Cuts and Jobs Act of 2017 capped the total deduction for state and local taxes (called SALT) at $10,000 per year for all filers, including seniors. This means if your property taxes alone exceed $10,000, you can only deduct $10,000 total when combined with any state income tax you paid.

Maryland does not offer a separate state property tax deduction for seniors. However, Maryland does have a homestead property tax credit that reduces your actual tax bill — not your federal deduction — if you meet income and age requirements. These are two different things: one is a federal deduction, the other is a Maryland state credit that lowers what you owe to the state.

Key Takeaways

  • Federal property tax deductions are capped at $10,000 per year when combined with state income taxes, so most Maryland homeowners cannot deduct their full property tax bill.
  • You must itemize deductions on your federal return to claim any property tax deduction — the standard deduction is higher for most seniors and makes itemizing unnecessary.
  • Maryland's homestead property tax credit directly reduces your state tax bill if you are 65 or older and meet income limits, and this is separate from any federal deduction.
  • The homestead credit income limit is $31,150 for single filers and $38,950 for married couples filing jointly as of 2024, though these amounts change yearly.
  • You must file Maryland Form 502 to claim the homestead credit; it does not happen automatically when you file your state return.

When itemizing deductions makes sense for property taxes

Most seniors take the standard deduction on their federal return because it is larger than the total of all their itemized deductions combined. For 2024, the standard deduction is $28,050 for single filers age 65 and older, and $56,100 for married couples filing jointly where at least one spouse is 65 or older. If your property taxes plus state income taxes plus mortgage interest plus charitable donations add up to less than these amounts, itemizing will not help you.

You only benefit from deducting property taxes if your total itemized deductions exceed the standard deduction. For example, if you are single, age 67, and paid $8,000 in property taxes and $2,000 in state income tax, your SALT deduction would be capped at $10,000 total. That is less than the $28,050 standard deduction, so you would take the standard deduction instead and get no benefit from the property tax deduction.

However, if you paid $12,000 in property taxes, $3,000 in state income tax, and $8,000 in mortgage interest, your total itemized deductions would be $23,000 (with the SALT capped at $10,000). That is still less than $28,050, so the standard deduction wins. You would need significantly higher deductible expenses — or a much higher property tax bill — for itemizing to pay off.

Maryland's homestead property tax credit for seniors

Maryland offers a homestead property tax credit that directly reduces the property tax bill you owe to Maryland, separate from any federal deduction. To may have access to, you must be 65 or older, own and occupy your home as your primary residence, and meet Maryland income limits. The credit is not automatic — you must file Maryland Form 502 with your state return to claim it.

The income limits change each year. For the 2024 tax year, the limit is $31,150 for single filers and $38,950 for married couples filing jointly. If your income exceeds these limits, you do not may have access to. The credit amount depends on your income and the property taxes you paid; Maryland publishes a table on Form 502 that shows the credit based on your specific income level.

The homestead credit is worth pursuing even if you do not itemize federal deductions, because it reduces your actual Maryland tax bill dollar-for-dollar. A senior who does not may have access to for the federal deduction due to the $10,000 SALT cap might still receive a meaningful credit from Maryland. You can claim both the federal deduction (if you itemize) and the Maryland homestead credit in the same year — they do not conflict.

How to claim the federal property tax deduction

To claim property taxes on your federal return, you must file Schedule A (Itemized Deductions) instead of using the standard deduction. You will list your property taxes on Line 5a of Schedule A, along with any state income taxes you paid. The total of state and local taxes cannot exceed $10,000.

You need documentation of the property taxes you paid. Maryland sends homeowners a property tax bill each year, usually in the fall. If you paid property taxes in 2024, that amount appears on your 2024 bill. Some counties also send a receipt or statement showing what you paid during the year. Keep these documents with your tax records in case the IRS asks for proof.

If you paid property taxes in a previous year that were assessed in 2024 — for example, a January 2024 payment for taxes owed in 2023 — you can only deduct the amount in the year you actually paid it, not the year it was assessed. This matters if you are trying to decide whether to pay a bill early or late.

How to claim Maryland's homestead property tax credit

File Maryland Form 502 (Homestead Property Tax Credit) with your state return. The form asks for your age, income, filing status, and the amount of property taxes you paid during the year. Maryland provides a table on the form that shows your credit amount based on your income level and property tax payment.

You must be 65 or older by December 31 of the tax year you are filing for. If you turned 65 during 2024, you can claim the credit on your 2024 return. The property must be your primary residence — rental properties and vacation homes do not may have access to. You must own the property or be buying it under a land contract; tenants cannot claim the credit.

File Form 502 along with your regular Maryland return (Form 502H or 502NR, depending on your residency status). The credit is not refundable, meaning it can reduce your Maryland tax to zero but cannot result in a refund. However, any unused credit can sometimes be carried forward to future years — check the current year's form instructions for details, as this rule changes.

Income limits and how they affect your claim

Maryland's homestead credit income limits are $31,150 for single filers and $38,950 for married couples filing jointly for the 2024 tax year. These limits increase slightly each year. If your income is one dollar over the limit, you do not may have access to — there is no phase-out or partial credit.

Income for this purpose includes wages, Social Security benefits, pensions, interest, dividends, and capital gains. It does not include certain types of income like some disability payments or workers' compensation, but most seniors' income counts. If you are married filing jointly, both spouses' income is combined to determine whether you meet the limit.

If you are close to the income limit, you may want to check the current year's Form 502 instructions to confirm the exact limit for your filing status. Maryland updates these limits annually, and they may have changed since this article was written. The form itself will show the current year's limit at the top.

Property taxes you cannot deduct

You cannot deduct property taxes on rental properties, vacation homes, or land you own but do not live on. The federal deduction and Maryland's homestead credit both explore only to your primary residence. If you own multiple properties, you can only claim taxes on the one where you live.

You also cannot deduct property taxes that are part of a mortgage payment if your lender pays them from an escrow account. However, you can deduct the taxes themselves — your mortgage statement should show how much of your payment went to taxes versus principal and interest. If you are unsure, contact your lender and ask for a breakdown of your escrow account.

Assessments for local improvements — such as a new sidewalk or sewer line — are not deductible as property taxes. These are treated as capital improvements and may affect your home's basis if you sell. Your property tax bill should separate regular property taxes from special assessments, so check your bill carefully.

Frequently Asked Questions

Can I deduct property taxes if I take the standard deduction?

No. The standard deduction and itemized deductions are mutually exclusive — you choose one or the other. If you take the standard deduction, you cannot deduct property taxes. Most seniors benefit from the standard deduction because it is higher than their total itemized deductions, so they do not deduct property taxes on their federal return.

Does Maryland's homestead credit reduce my federal deduction?

No. The Maryland homestead credit is a state tax credit that reduces your Maryland tax bill. It does not affect your federal deduction or your federal return. You can claim both in the same year — they are separate calculations on separate returns.

What if I paid property taxes late in December or early in January?

You deduct property taxes in the year you actually paid them, not the year they were assessed. If you paid in January 2025 for 2024 taxes, the deduction goes on your 2025 return. Some people pay early in December to claim the deduction in an earlier year, but check with a tax professional first, as timing rules can be complex.

Do I need to file Form 502 every year?

Yes, if you want to claim Maryland's homestead credit, you must file Form 502 with your state return each year. The credit does not carry over automatically. However, if your income or property taxes change significantly, your credit amount may change, so you should file even if you claimed it in previous years.

What if my income is slightly over the homestead credit limit?

You do not may have access to. Maryland's homestead credit has a hard income cutoff — if you are even one dollar over the limit, you cannot claim it. There is no partial credit or phase-out. If you are close to the limit, double-check your income calculation and the current year's limit on Form 502.