Maryland’s RELIEF Act repeals state and local taxes on UI benefits, prevents small businesses from facing major tax increases
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Tuesday, March 2, 2021

Maryland’s RELIEF Act repeals state and local taxes on UI benefits, prevents small businesses from facing major tax increases

By Payroll and Entitlements Editorial Staff

On December 10, 2020, Governor Larry Hogan issued an executive order to prevent small businesses from facing major increases in their unemployment taxes. Under this order, an employer’s 2021 tax rate will be calculated based on their nonpandemic experience by excluding the 2020 fiscal year, and instead by using the last three fiscal years of 2017, 2018, and 2019. A change in law is necessary to enable this policy to remain in place beyond the state of emergency. Combined, the executive order and the RELIEF Act provide $326 million in relief.

In addition, the legislation would allow small businesses and nonprofits with fewer than 50 employees to defer unemployment insurance tax payments in calendar year 2021 to January 2022.

Finally, the RELIEF Act will repeal all state and local income taxes on unemployment benefits for tax years 2020 and 2021, helping people get more refunds during tax filing season. Marylanders will save more than $400 million over the next two years as a result (Ch. 39, L. 496, 2/15/2021).

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