To help homeowners deal with large assessment increases on their principal residence, Maryland state law established the Homestead Property Tax Credit. The Homestead Credit limits the increase in taxable assessments each year to a fixed percentage. Every county and municipality in Maryland is required to limit taxable assessment increases to 10% or less each year.
Recently, the Worcester County Homestead Tax Credit was reduced to 0% from its previous 2.0375%. This change becomes effective on July 1, 2026. So in other words, homesteaded Worcester County residents will have their property tax rate locked from 2026 onward, after the Worcester County Commissioners voted this into effect.
The Homestead Property Tax Credit application only needs to be filed once during your time in your primary property. Homeowners can check SDAT's Real Property search page to determine if they already have a Homestead Tax Credit on file: https://sdat.dat.maryland.gov/RealProperty/. A status of Approved or Application Received means that no further action is required. If the information on your property says, “Homestead Application Status: No Application,” you can file your application online for fastest service.
As described by the state’s Department of Assessments and Taxation, the Homestead Credit does not limit the market value of the property, instead, it is actually a credit calculated on any assessment increase exceeding 10% (or the lower cap enacted by the local governments) from one year to the next. The credit is calculated based on the 10% limit for purposes of the State property tax, and 10% or less (as determined by local governments) for purposes of local taxation. In other words, the homeowner pays no property tax on the market value increase which is above the limit.
Example:
Assume that your old assessment was $100,000 and that your new phased-in assessment for the 1st year is $120,000. An increase of 10% would result in an assessment of $110,000. The difference between $120,000 and $110,000 is $10,000. The tax credit would apply to the taxes due on the $10,000. If the tax rate was $1.04 per $100 of assessed value, the tax credit would be $104 ($10,000 ÷ 100 x $1.04).
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
