I keep hearing the same thing from clients, neighbors, and half of my group chats: “Did you see Montgomery County eliminated the homestead tax credit?”
No. It didn’t. Let’s clear this up, because the misconception is spreading faster than the facts, and the facts matter for your wallet.
The misconceptions, one by one
Misconception #1: “The homestead tax credit was eliminated.”
False. The Homestead Property Tax Credit is a state program run through Maryland SDAT, and it is alive and well. It’s the credit that caps how much of your taxable assessment can increase each year. Maryland law allows a cap of up to 10%, and Montgomery County’s cap is 10%. If your assessed value jumps 30% at your next reassessment, the homestead credit limits how quickly that increase becomes taxable, instead of it hitting you all at once. Nothing about it changed.
Misconception #2: “So my taxes aren’t going up.”
Also false, unfortunately. What the County Council did eliminate is a different credit: the Income Tax Offset Credit (ITOC), the flat $692 credit that appeared on every owner-occupied home’s property tax bill in Montgomery County. For the tax year starting July 1, 2026, that credit is now $0. If your bill is about $692 higher than it otherwise would have been, that’s why. (Assessment changes and municipal taxes can move the total too, but the $692 piece is this.)
Misconception #3: “I should un-enroll / re-enroll / do something about my homestead application.”
Mostly false, but with one important caveat I’ll get to below. Your homestead application is a one-time filing. If it’s on record with SDAT, you’re set.
Why everyone is confusing the two
Here’s the source of the mix-up: to receive the ITOC, you were required to have an approved homestead application on file with the state. The two credits were administratively joined at the hip. So when news broke that “the tax credit tied to your homestead application” was eliminated, a lot of people heard “the homestead credit was eliminated.”
Two different credits. One got cut. One didn’t.
How this happened
This came out of the county’s FY27 budget fight this spring. County Executive Marc Elrich proposed a property tax rate increase (about 6.3 cents) dedicated to schools. The Council said no. On May 21, 2026, it passed a roughly $7.9 billion budget (9–2, with Councilmembers Friedson and Luedtke voting against) that eliminated the ITOC instead, alongside a new progressive county income tax structure.
Elrich’s office publicly criticized the move as regressive, and the math behind that critique is worth understanding: a flat $692 hit is a bigger percentage increase on a $400K condo in Silver Spring than on a $2M house in Potomac, and commercial property owners weren’t affected by the ITOC elimination because they never received that credit. The Council’s position: it avoided a rate increase that would have hit everyone’s bills permanently. Reasonable people disagree. Your bill went up either way.
What you should actually do
1. Don’t panic about your homestead status. If you’ve owned and occupied your home and filed the application, your assessment cap protection is unchanged.
2. If you’ve never filed a homestead application, file one now. This is the caveat I mentioned. It’s free, it’s one-time, and it takes ten minutes at onestop.md.gov. It protects you from assessment spikes, and here’s the kicker: if the county ever reinstates the ITOC (it’s set to $0, not abolished forever, and election years do funny things to budgets), only homeowners with an approved homestead application on file get it. The county’s stated deadline to have your application in for future bills is May 1, 2027.
3. Recent buyers, this means you. If you bought in the last year or two, there’s a decent chance your homestead application never got filed. Check your status on SDAT’s website; it takes two minutes. This is one of the most common (and most expensive) oversights I see with new homeowners.
4. Budget for the $692. If your mortgage escrows taxes, expect your servicer to adjust your monthly payment at your next escrow analysis.
The bottom line
The homestead credit, the one that actually protects you from runaway assessments, is intact. The $692 ITOC is gone, at least for now. And the single best move most homeowners can make this month costs nothing: make sure your homestead application is on file.
Nothing here is tax or legal advice. For your specific situation, talk to your tax professional.
This article was originally published on our Substack newsletter. Subscribe to get new posts delivered to your inbox.
Licensed Real Estate Agent · The Feldman Group at RLAH@properties
Serving Montgomery County, MD — including Potomac, Bethesda, Rockville, and beyond. Get in touch · 301-564-3058
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