Marvin Mandel, Governor                         971

CHAPTER 412
(House Bill 996)

AN ACT to repeal and re-enact with amendments Section 280(c) of
Article 81 of the Annotated Code of Maryland (1969 Replacement
Volume), title "Revenue and Taxes," subtitle "Income Tax," to
provide THAT ANY INCOME SUBJECT TO FEDERAL TAX-
ATION BUT UNDER THE LAWS OF THE UNITED STATES
IS EXEMPT FROM TAXATION BY THE STATES AND that
distributions to a beneficiary of accumulated income on which
the fiduciary has paid income tax be subtracted from federal ad-
justed gross income in arriving at the State taxable net income.

Section 1. Be it enacted by the General Assembly of Maryland,
That Section 280(c) of Article 81 of the Annotated Code of Mary-
land (1969 Replacement Volume), title "Revenue and Taxes," sub-
title "Income Tax," be and it is hereby repealed and re-enacted with
amendments to read as follows:

280.

(c) There shall be subtracted from federal adjusted gross income:
(1) interest or dividends on obligations of the United States and its
territories and possessions or of any authority, commission or in-
strumentality of the United States AND ANY OTHER INCOME to
the extent includable in gross income for Federal Income Tax pur-
poses, but exempt from State Income Taxes under the Laws of the
United States; (2) to the extent included, undistributed corporate in-
come attributed to individuals from small business corporations, as
defined by Section 1371 of the Internal Revenue Code, as amended
from time to time, which elected to be taxed in accordance with the
provisions of subchapter "S" of the Internal Revenue Code; (3) pay-
ments received by policemen and firemen from pension systems for
injuries or disabilities arising out of and in the course of their em-
ployment as policemen or firemen; and (4) for all taxable years end-
ing after December 31, 1966, amounts received by an individual who
has attained the age of 65 years before the close of the taxable year,
as an annuity, pension, or endowment under a private, municipal,
state or federal employee retirement system, and included in such in-
dividuals federal adjusted gross income, this subtraction not to exceed
$1,200.00 less the amount of old age, survivors, or disability benefits
received under the Social Security Act, the Railroad Retirement Act,
or both, as the case may be; and (5) in the case of persons retired
prior to January 1, 1967, payments received which represent unrecov-
ered contributions to a retirement system over and above any amount
of such contributions remaining to be recovered tax-free on the Fed-
eral Return, limited to an amount which together with the amount of
any tax-free exclusion in the Federal Return does not exceed the ex-
clusion which was permitted under the Laws and Regulations of this
State prior to the year 1967; and (6) to the extent included, the
amount of any refunds of income taxes paid to the State of Maryland,
any other State, the District of Columbia, and any political subdivi-
sion of the State of Maryland and of any other State; [and] and (7)
to the extent included, distributions to beneficiaries of accumulated
income on which income tax has been paid by a fiduciary to this State.