Montgomery County homeowners opening property tax bills for the year that began July 1 may find them higher than last year’s, even though the county did not raise the property tax rate.
What changed
Income Tax Offset Credit (ITOC) eliminated for 2026.
The County Council voted to eliminate the Income Tax Offset Credit (ITOC) for 2026. The credit was $692 in Levy Year 2025 and appeared on tax bills as “County Property Tax Credit.” The Council reduced it to $0.
According to the county’s Department of Finance, there is no change in the property tax rate this year. However, property tax revenues are still expected to rise for two reasons. First, the average county homeowner will see a $23 monthly increase from rising assessments. Second, the ITOC is gone.
The credit applied to owner-occupied principal residences. Renters did not qualify for it.
Why assessments are also rising
There’s an important distinction here. The Maryland State Department of Assessments and Taxation (SDAT) sets property assessments, not the county. The state assesses your property, and the county sets the tax rate and credits.
SDAT reassesses each property once every three years. As a result, roughly a third of county properties are reassessed each year, and increases are phased in over the three-year cycle rather than applied all at once.
For homeowners whose properties were reassessed this cycle, a rising assessment and the loss of the ITOC can land on the same bill.
What homeowners can do
The Council set the ITOC to $0 for Levy Year 2026 but did not repeal it permanently. If the credit returns in a future year, homeowners need a Homestead Property Tax Credit application on file with SDAT to receive it.
The Homestead application is a one-time filing. According to the Department of Finance, homeowners must have it on file with SDAT by May 1, 2027 for the ITOC to appear on tax bills beginning July 1, 2027, if the Council sets the credit above $0 in future years.
The county’s guidance warns homeowners not to assume they already have a Homestead application on file. Homeowners can check their status through SDAT’s real property search at sdat.dat.maryland.gov/RealProperty and select Montgomery County.
To apply, homeowners can file online at onestop.md.gov or download a paper application from SDAT. Contact SDAT at 410-767-2165 or toll-free at 1-866-650-8783.
Relief programs for seniors and limited incomes
The Department of Finance points homeowners to several programs that may reduce their bills.
The Homeowners’ Property Tax Credit is available to residents living on limited or fixed incomes and provides credits based on household income compared to the tax bill. The county encourages everyone living on limited or fixed incomes to apply. The state determines eligibility. To apply, call 1-800-944-7403 or visit SDAT’s website.
Residents 65 and older may also qualify for a county senior tax credit, calculated as 50 percent of the combined state Homeowners’ Tax Credit and county supplement. It does not require a separate application, but homeowners must apply for the state credit to qualify.
The Homestead Property Tax Credit also caps how much a taxable assessment can rise in a single year at 10 percent for principal residences, except in the Town of Kensington, where the limit is 5 percent. Homeowners cannot claim it in the first year after buying a home.
