The Maryland Homestead Tax Credit caps how much the taxable assessment on your principal residence can rise from one year to the next, so a jump in your home’s market value doesn’t translate into an equal jump in your property tax bill. The state ceiling is 10%, but most counties set a lower cap, and a few go as low as 0%. You claim the credit by filing a one-time application with the State Department of Assessments and Taxation (SDAT). Once approved, it stays in effect for as long as you own and live in the home.1Maryland Department of Assessments and Taxation. Maryland Homestead Property Tax Credit Program
What the Credit Actually Caps
Maryland reassesses every property at least once every three years, and increases are phased in over the three years that follow. The Homestead credit sits on top of that phase-in. It limits the year-over-year growth in your taxable assessment to a fixed percentage, no matter how much the phased-in market value rose.
You don’t get a check. The credit reduces the assessed value your tax bill is calculated from. The gap between what you would owe at the full phased-in assessment and what you actually owe at the capped assessment is the credit, and that gap tends to widen each year in a rising market.
Who Qualifies
The property has to be your principal residence. That means you live there at least six months of the year, including July 1 of the tax year in question. Illness or a need for special care that temporarily keeps you out of the home is an exception, and federal employees stationed outside Maryland can keep eligibility for up to six consecutive years while deployed, with the credit recalculated as though it had continued uninterrupted when they return.2Maryland General Assembly. Maryland Code Tax-Property 9-105
Ownership qualifies in several forms: sole ownership, joint tenancy, tenancy in common, tenancy by the entireties, membership in a housing cooperative, a land installment contract, and a life estate. Homes held in trust qualify if you are the settlor, grantor, or beneficiary, legal title is in the trust or its trustees, and you live in the home without paying rent to the trust.2Maryland General Assembly. Maryland Code Tax-Property 9-105
Properties titled to an LLC or other corporate entity, where the occupant doesn’t hold one of the recognized legal interests above, do not qualify. Homeowners who deeded their house to an LLC for liability reasons sometimes discover this after the fact. Restructuring ownership back into an eligible form is the only fix.
Your County’s Cap Sets the Savings
The state cap is 10%, and every county and Baltimore City sets its own cap at or below that number. Where you live determines how tightly your taxable assessment is held down. Representative caps for the 2025–2026 tax year:3Maryland Department of Assessments and Taxation. 2025-2026 Tax Rates and Homestead Credit Caps
- Talbot County caps annual growth at 0%, the strongest protection in the state.
- Anne Arundel County caps growth at 2%.
- Prince George’s, Garrett, St. Mary’s, and Worcester counties cap growth at 3%.
- Baltimore City and Baltimore, Allegany, and Cecil counties cap growth at 4%.
- Howard, Frederick, Harford, and Carroll counties cap growth at 5%, the most common cap statewide.
- Charles County caps growth at 7%.
- Calvert, Montgomery, and Somerset counties sit at the 10% state maximum, meaning no extra local cushion.
Incorporated municipalities can set their own caps too. If you live in a town within a county, the credit applies separately to the county portion and the municipal portion of your bill, so two different cap percentages may both be working in your favor.
How to Apply and Check Your Status
Apply once, through Maryland’s OneStop portal or directly through SDAT. The form asks for basic identifying details and confirmation that the property is your principal residence. There’s no filing fee. SDAT may follow up to verify residency using utility bills, voter registration, or similar records.1Maryland Department of Assessments and Taxation. Maryland Homestead Property Tax Credit Program
The application became mandatory in 2007. Before then, the credit applied automatically, and some longtime owners assume they’re still covered when they aren’t. Check by looking up your property in SDAT’s Real Property database at sdat.dat.maryland.gov/RealProperty. Choose your county, enter your address, and scroll to the bottom of the property page. “Approved” or “Application Received” means you’re covered. “No Application” means you need to file one. Catching a gap before your next reassessment is much better than catching it on the bill.1Maryland Department of Assessments and Taxation. Maryland Homestead Property Tax Credit Program
A Worked Example
Say your prior taxable assessment was $100,000 and this year’s phased-in assessment comes in at $120,000. Under a 10% cap, the most your taxable assessment can rise is $10,000, so your capped assessment lands at $110,000. The credit covers the $10,000 difference. At a local tax rate of $1.04 per $100 of assessed value, that saves you $104 for the year.1Maryland Department of Assessments and Taxation. Maryland Homestead Property Tax Credit Program
The number grows. Each following year, the capped assessment becomes the new baseline the cap applies to, and the gap between capped and market value widens if values keep rising. After several assessment cycles in a fast-appreciating area, savings can run into the hundreds or thousands of dollars a year.
Selling, Buying, or Rebuilding
The credit does not travel with the house. When a home changes hands, the credit resets. The new owner’s taxable assessment starts at the current full market value, and they have to file their own application to begin building credit again.2Maryland General Assembly. Maryland Code Tax-Property 9-105
That reset matters most to buyers. If the seller held the property for years while values climbed, their capped assessment may have been well below market. Your first tax bill can be a lot higher than what they were paying. Pulling the property’s assessment history from SDAT’s database before you make an offer is worth the few minutes it takes.
If you’re rebuilding on the same lot or doing renovations that force you to move out, you can hold onto the credit for the tax year construction starts plus one additional year, provided you owned and occupied the home as your principal residence for at least three years before the work began.2Maryland General Assembly. Maryland Code Tax-Property 9-105
Penalty for Claiming It on the Wrong Property
If SDAT concludes the credit was claimed on a property that wasn’t actually your principal residence, it removes the credit retroactively and adds a 25% penalty on the credit amount you received to your revised tax bill.4Department of Assessments and Taxation. Letter for Homestead Removal With 25 Percent Penalty
SDAT cross-references property records, tax returns, and other public data to verify eligibility. If you own more than one property, only your actual primary residence should carry an active homestead application. The most common trouble comes from owners who buy a new home without withdrawing the credit on the old one. Updating your records with SDAT when your living situation changes is the simplest way to stay clear of the penalty.