HB 694 Maryland House of Delegates · 2026 Regular Session

Income Tax - Addition Modification for Federal Tax-Exempt Income - Study

HB 694 modifies Maryland's income tax calculation by excluding certain foreign earned income from the state tax addition. Specifically, it removes the requirement to include income exempt from federal tax under IRS Section 911 (for overseas workers) when calculating Maryland adjusted gross income. This change directly affects Maryland residents who work abroad and qualify for the federal foreign earned income exclusion. The bill takes effect July 1, 2026, for tax years beginning after December 31, 2025.

Issues: ✓ Budget & Taxes

Bill status passed 3 of 5 stages cleared

Introduction

Feb 2026

Committee Review

Apr 2026

House of Delegates Passage

Apr 2026

Senate Passage

Governor

Introduced Feb 2, 2026 Last action Apr 10, 2026

Maddy AI version diff · 1 comparison

What changed between versions

First - Income Tax - Addition Modification for Federal Tax-Exempt Income - Alterations → Third - Income Tax - Addition Modification for Federal Tax-Exempt Income - Study · 4 edits

MODERATE

The bill was amended to change its purpose from enacting permanent tax alterations to requiring a study on the taxation of federal tax-exempt income. The bill now mandates the Office of the Comptroller to report findings to the Governor and General Assembly by December 1, 2026, regarding the number of residents with foreign earned income, the amounts exceeding federal limits, and the countries where this income was earned.

Scope change

The bill's scope shifted from immediate legislative action (enacting tax changes) to a research and reporting requirement. The substantive tax rules regarding foreign earned income remain unchanged in the text, but the bill no longer enacts them; instead, it directs officials to study the issue first.

REQUIREMENT

Added a new requirement for the Office of the Comptroller to conduct a study and submit a report to the Governor and General Assembly by December 1, 2026.

TIMELINE

Established a specific deadline of December 1, 2026, for the completion of the study and submission of the report.

SCOPE

Removed the language stating that the bill repeals and reenacts specific sections of the tax code, effectively removing the immediate enactment of tax alterations.

Changed the bill's stated purpose from providing permanent tax modifications to requiring a study on the taxation of federal tax-exempt income.

Floor votes · House of Delegates Mar 24, 2026

How they voted

134–0

Passed · 8 other

Total votes 142

Mar 24, 2026

D Democratic103

96 Yea 7

93% Yea

R Republican39

38 Yea 1

97% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Apr 10, 2026

Committee

Referred Rules

upper

Apr 9, 2026

Lower · Passed

Third Reading Passed

lower

Apr 9, 2026

Lower · Passed

Favorable with Amendments {

lower

Apr 9, 2026

Lower · Passed

Favorable with Amendments Report by Ways and Means

lower

Mar 24, 2026

House Of Delegates · Passed

House of Delegates Vote: pass (134-0-8)

house of delegates

Feb 2, 2026

Committee

First Reading Ways and Means

lower

1 primary · 0 co-sponsors