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Maryland Tax Incentives

Tax incentives are available to Maryland businesses through the following Maryland Department of Commerce programs:

  • Biotechnology Investment Tax Credit
    Maryland’s Biotechnology Investment Tax Credit program provides income tax credits for individuals, corporations and qualified Maryland venture capital firms that invest in qualified Maryland biotechnology companies.  This tax credit program was passed to offer incentives for investment in seed and early stage, privately held biotech companies.  The value of the credit is equal to 50% of an eligible investment made in a qualified Maryland biotechnology company during the taxable year.  The maximum amount of the credit cannot exceed (1) $50,000 for individual investors; and (2) $250,000 for corporations and qualified Maryland venture capital firms.
  • Job Creation Tax Credit
    Maryland's Job Creation Tax Credit program provides income tax credits to businesses that create new jobs to encourage them to expand or relocate in Maryland.
  • Calculating the Credit
    In most cases, the credit is 2.5 percent of annual wages for all newly created, full-time jobs, subject to a limit of $1,000 per new job. In a state enterprise zone, a federal empowerment zone, or a Maryland Department of Housing and Community Development designated neighborhood, the credit is increased to five percent of annual wages for all newly created full-time jobs, subject to a limit of $1,500 per new job.  The credit earned by a qualified business entity may not exceed $1 million per credit year.
  • Qualifying for the Credit
    Job Creation Minimums: The business must create 60 new, full-time jobs at the expanding or new facility during a 24-month period. In designated “Priority Funding Areas” (defined below), the minimum is 25 jobs.  Outside Priority Funding Areas the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new employees exceeds $2.66 million.  The positions must be filled for 12 months. The expansion or establishment of a business must be at a single location in the state. A single firm may have more than one eligible location, provided that each is certified and meets the requirements of the statute.

Eligible Business Activities
To qualify a business must be primarily engaged in:

  • Manufacturing
  • Transportation or communications
  • Agriculture, forestry, fishing or mining
  • A public utility
  • Warehousing
  • Research, development, or testing
  • Biotechnology
  • Computer programming, data processing or other computer related services
  • Central financial, real estate or insurance services
  • The operation of central administrative offices or a company headquarters
  • Business services firms (only located in a "Priority Funding Area")

A business may also be engaged in the operation of entertainment, recreation, cultural or tourism related activities in a multi-use facility located within a revitalization area if the facility generates a minimum of 1,000 new full-time equivalent filled positions in a 2-year period.

Job Creation Tax Credit Priority Funding Areas
A business that locates or expands in a “Priority Funding Area” must only create a minimum of 25 new positions to qualify for the Job Creation Tax Credit.  A “priority funding area” is defined for the purposes of the Job Creation Tax Credit as:

    • State Enterprise Zones
    • Federal Empowerment Zones
    • DHCD Designated Neighborhoods
    • Incorporated Municipalities
    • Areas inside the I-495 and I-695 beltways
    • A single growth area designated by each county for the purpose of this credit
  • Research and Development Tax Credit
    Businesses that incur qualified research and development expenses in Maryland may be entitled to Maryland R&D tax credits. For a business to be eligible, it must apply to and be certified by the Maryland Department of Commerce (DOC). 
  • Basic R&D Tax Credit
    The Basic R&D tax credit is three percent of eligible R&D expenses that do not exceed the firm’s average R&D expenses over the last four years.  However, if the total amount of credits claimed by all firms exceeds $3 million, the Basic R&D tax credit will be prorated. 
  • Growth R&D Tax Credit
    The Growth R&D tax credit is 10 percent of eligible R&D expenses that exceed the firm’s average R&D expenses over the last four years.  However, if the total amount of credits claimed by all firms exceeds $3 million, then the Growth R&D tax credit will be prorated.

 

 

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