Maryland Student Loan Debt Relief Tax Credit (2025/2026 Guide)
Understand how Maryland residents who owe at least $20,000 in undergraduate student debt can claim state income tax credits of up to $1,000 to $5,000 through MHEC.
Student Loan Interest Tax Deduction Calculator
Calculate your exact deduction up to $2,500 and federal tax savings under 2025/2026 MAGI phaseouts.
Overview of Maryland's Innovative State Tax Credit
Administered by the Maryland Higher Education Commission (MHEC), the Student Loan Debt Relief Tax Credit is one of the most generous state-level financial assistance programs in the nation. It provides a direct, refundable credit against Maryland state income tax liability for eligible residents who maintain substantial higher education debt.
Key Eligibility Requirements
- Must be a current Maryland state resident for the taxable year.
- Must have incurred at least $20,000 in total undergraduate or graduate student loan debt.
- Must have at least $5,000 in outstanding student debt remaining at the time of application.
- Must submit official proof of payment showing the credit was applied directly to reduce principal.
Pair State Credits With Federal Deductions
Claiming the Maryland state credit does not prevent you from claiming your federal $2,500 interest write-off. Calculate your federal savings using our Student Loan Interest Tax Deduction Calculator.
Application Timeline & Critical Deadlines
The MHEC application portal typically opens annually on July 1 and closes strictly on September 15. Tax credit recipients are officially notified by December 15 and must submit documentation proving the tax credit funds were paid toward their loan servicer (Aidvantage, AES, etc.) within three years.
Frequently Asked Questions
Can I receive the Maryland tax credit more than once?
Yes. Eligible borrowers may apply annually as long as they meet the outstanding debt minimums and provide proof that previous credits were applied toward their student loans.