Listen to this article
Maryland’s reputation as a place to retire has been historically undesirable. In a recent survey, Bankrate ranked states based on several categories, including affordability, well-being, weather, crime, and culture and diversity. Maryland’s lack of affordability ranked it 44th among the 50 U.S. States, losing only to states like California and Hawaii.
AARP Maryland, however, wants to change this perception, starting with a tax break for seniors.
Starting in tax year 2022, residents who are at least 65 on the last day of the tax year may be eligible for a nonrefundable tax credit of up to $1,000. This was a piece of legislation that AARP Maryland sponsored and helped pass in the 2022 legislative session.
“AARP was a lead supporter in these tax changes, and we view these changes as a positive to help older middle-income Marylanders age in their own homes and communities which so many want to do,” said Hank Greenberg, Maryland State Director for AARP.
Financial planner and advisor for Diverse Financial Partners, LLC, Lauren Debelius, said that the tax credit came at an incredibly crucial time.
“Considering the impact of inflation this year, this is a great move. Inflation is impacting all Marylanders, but hits especially harder for those populations, like retirees, who have fixed incomes,” Debelius said.
“This is a huge step in the right direction. It is one step, though, as we go into a new administration. I hope this is a continued effort toward making Maryland a more desirable place to live and retire with tax breaks,” Debelius said.
AARP plans to monitor the tax credit’s effectiveness and is keeping an optimistic but cautious eye on how the incoming administration plans to handle additional tax breaks for the senior population. The organization also intends to pursue additional legislation to ease financial burdens, including a tax credit for family caregivers.
Barrie Tabin, AARP’s Government Affairs Director said that the Family Care Support for Caregivers tax credit will be introduced in the 2023 Maryland legislative session.
“Caregivers spend tons of emotional time and energy and carry a big financial responsibility for caregiving. The goal of the tax credit is to help offset some of these caregiving expenses, such as home modifications, various equipment, transportation – anything they may spend their time or money on in the care of their loved ones,” Tabin said.
Some people have caregivers, are caregivers or will become a caregiver, so this tax break will benefit many, Greenberg said.
“Tax breaks for caregivers is another excellent step in the right direction. It impacts that sandwich generation that are caregivers and navigating what it means to need a caregiver themselves,” Debelius said.
For any tax break though, Debelius wants to ensure that it is a permanent solution and not just one that is available because of a budget surplus. Perceptions can be changed, but it all comes down to the true dollars and cents, Debelius said.
Overall, though, Greenberg, Tabin and Debelius wanted to note that Maryland already is a great place to retire.
It’s not just about tax breaks – which is a great benefit – Greenberg said. The big picture should be taken into consideration.
“You have to balance costs with quality of life. People make decisions on lots of different factors, like family, friends, climate, access to healthcare and overall quality of life. On the tax front, Maryland offers relief for those that need it most. And when you look at the big picture, Maryland is already a desirable place to retire for many people. We are ‘America in miniature’ with access to mountains, the ocean, and the Chesapeake Bay. The state offers a diverse ecological environment, along with a rich culture,” Greenberg said.
Greenberg also noted that Maryland does not tax social security and has access to some of the highest quality health care facilities in the nation – benefits that other states do not offer. With improved public transportation options and access to more affordable housing, Maryland may just be the number one pick.
“Maryland has a lot to offer already, and when you pair that with meeting with a financial planner, plan early and start saving early, you have a lot more options,” Debelius said.
