You may be eligible to claim some valuable personal income tax credits available on your Maryland tax return.
The following list contains general information about some of the most commonly used credits. You may want to consult with a tax professional to review specific requirements. Some of these credits contain carryover or recapture provisions and, in some cases, you may have to seek certification from another state agency. For more information, see Form 502CR
Tax Credits for Homeowners and Renters
The Earned Income Tax Credit, also known as Earned Income Credit (EIC), is a benefit for working people with low to moderate income. If you qualify for the federal earned income tax credit and claim it on your federal return, you may be entitled to a Maryland earned income tax credit on the state return equal to 50% of the federal tax credit. The Maryland earned income tax credit (EITC) will either reduce or eliminate the amount of the state and local income tax that you owe.
Detailed EITC guidance for Tax Year 2023, including annual income thresholds can be found here. If you are not certain if you qualify, both the Comptroller of Maryland and the Internal Revenue Service have electronic assistants that can help. By answering questions and providing basic income information, taxpayers can use the IRS EITC Assistant to:
Use the Comptroller of Maryland EITC Assistant to determine if you are eligible for the state Earned Income Tax Credit. The Assistant is available in English or en Español.
The IRS has the EITC Assistant in English version and a Versión en Español.
Beginning in 2022, senior citizens are eligible for a new tax credit, among other benefits they can take advantage of. We have created a convenient tax tip detailing these opportunities. Additionally, seniors should consult our filing guidelines for seniors containing pertinent information and answers to your most frequently asked questions.
A credit is allowed for cost of new aquaculture oyster floats that are designed to grow oysters at or under an individual homeowner's pier. The devices must be buoyant and assist in the growth of oysters for the width of the pier. The credit amount is limited to the lesser of the individual's state tax liability for that year or the maximum allowable credit of $500.
If the credit is more than the tax liability, the unused credit may not be carried forward to another tax year.
To claim the credit, you must complete Part D of Form 502CR and attach to your Maryland income tax return. You must also report the credit on Maryland Form 502, Form 505 or Form 515.
The First-Time Homebuyer Savings Account Subtraction may be claimed on Form 502SU by a Maryland resident who has not owned or purchased, either individually or jointly, a home in the State in the last 7 years and who has contributed money to a first-time homebuyer savings account.
For a period not to exceed 10 years, an account holder may claim a subtraction for up to $5,000 of the amount contributed by the account holder to their account during the taxable year for which the subtraction is claimed plus earnings for the taxable year, up to $50,000 of earnings accrued over the 10-year period. Funds must be used within 15 years following the date the account was established. Any funds in the account for which a subtraction was claimed and not expended on eligible costs by December 31 of the last year following the 15-year period is subject to taxation as ordinary income. Eligible costs are the down payment and allowable closing costs for the purchase of a home in the State by an account holder.
Any account established with a financial institution can qualify as a "first-time homebuyer savings account" so long as the account is established for the sole purpose of paying or reimbursing eligible costs for the purchase of a home by the account holder in the state of Maryland. An account holder may not be the account holder of more than one account.
If the account holder withdraws any funds from the account for which a subtraction has been claimed for a purpose other than eligible costs for the purchase of a home, the funds are considered taxable ordinary income for the tax year in which they were withdrawn and the account holder must pay a penalty equal to 10% of the amount withdrawn. (For information on how to report this addition and penalty, refer to Instructions 12 and 22 in the Maryland Resident tax booklet.) There are three exceptions to this: rollover, bankruptcy, and administrative costs charged by the financial institution.
An account holder who withdraws money from the account and, within 60 days, deposits the money in a new first-time homebuyer savings account held by a different financial institution or the same financial institution is not subject to the tax and penalty.
A disbursement of any assets of a first-time homebuyer savings account under a filing by an account holder for protection under the United States Bankruptcy Code, 11 U.S.C. §§101—1330, does not subject the account holder to the tax and penalty associated with use of funds for purposes other than eligible costs.
A use of the account funds to pay a financial institution’s administrative costs is not considered a withdrawal from the account subject to tax and penalty if the administrative costs are disclosed by the financial institution, in writing, to the account holder at the time the account is opened and do not inure to the benefit of the account holder.
An account holder claiming a subtraction must file a list of transactions for the account during the taxable year with the income tax return on which the subtraction is claimed, and each subsequent year, whether or not the subtraction is claimed in each subsequent year, until the funds are used for eligible costs. Each spouse on a joint return who is the sole account holder of a first-time homebuyer savings account may claim up to the full amount of the subtraction. The amount claimed by each spouse is limited to their contributions to the account on which they are the account holder and earnings on the account on which they are the account holder.
On withdrawal of funds from the account to purchase a home, an account holder must submit to the Comptroller with their income tax return copies of statements provided by the account holder’s financial institution and the settlement statement related to the purchase of the home showing the eligible costs toward which the account funds were applied and a statement of the amount of funds remaining in the account, if any.
If you donated an easement to the Maryland Environmental Trust, the Maryland Agricultural Land Preservation Foundation or the Maryland Department of Natural Resources to preserve open space, natural resources, agriculture, forest land, watersheds, significant ecosystems, view sheds or historic properties, you may be eligible for a tax credit.
You may be eligible for the credit if:
The credit is equal to the difference in the fair market values of the property reduced by payments received for the easement. The credit amount is limited to the lesser of the individual's state tax liability for that year of the maximum allowable credit of $5,000, per owner, who qualifies to claim the credit. The credit can be claimed on Maryland forms Form 502, Form 504, Form 505 or Form 515.
If the property is owned jointly by more than one individual such as a husband and wife, each individual owner is entitled to the credit based on their percentage of ownership. Individual members of a pass-through entity are not eligible for this credit.
In the case of a joint return, each spouse must calculate their own state tax liability for limitation purposes. Use the rules for filing separate returns in Instruction 8 of the Maryland resident tax booklet. In the case of a fiduciary return, the fiduciary will complete the column for Taxpayer B only.
If the individual's allowable credit amount exceeds the maximum of $5,000, the excess may be carried forward up to 15 years or until fully used. Complete lines 1-7 of Part F on Form 502CR. If you itemize deductions, see Instruction 14 in the Maryland resident tax booklet.
For additional information, contact the Maryland Environmental Trust at 410-514-7900, the Maryland Agricultural Land Preservation Foundation at 410-841-5860, or the Department of Natural Resources at 410-260-8367.
A credit may be allowed for substantial expenditures incurred in a 24-month period to rehabilitate a certified heritage structure located in Maryland. The credit is available for owner-occupied residential property, as well as income-producing property.
For additoinal information, contact the Maryland Environmental Trust at 410-514-7900, the Maryland Agricultural Land Preservation Foundation at 410-841-5860, or the Department of Natural Resources at 410-260-8367.
If you are a qualified teacher, you may be able to claim a credit against your State tax liability for tuition paid to take graduate-level courses required to maintain certification. This credit applies to individuals who:
Note: Qualified juvenile facilities are: the Alfred D. Noyes Children's Center; the Baltimore City Juvenile Justice Center; the Charles H. Hickey, Jr. School; the Cheltenham Youth Facility; the J. DeWeese Carter Center; the Lower Eastern Shore Children's Center; the Thomas J.S. Waxter Children's Center; the Victor Cullen Center; the Western Maryland's Children's Center; and the youth centers.
Only the unreimbursed portion qualified for the credit. The courses taken must be required to maintain certification and the cost of the courses must exceed any amount reimbursed by the county or Baltimore City.
The maximum amount of credit allowed is $1,500 for each qualifying individual. The credit is limited to the amount paid, less any reimbursement, up to the maximum allowed credit. See Page 3 of the Instructions for Form 502CR to learn how to calculate the credit. Each spouse that qualifies may claim this credit. Complete a separate column on Form 502CR Part C for each spouse.
The credit can be claimed on Maryland forms 502, Form 505 or Form 515.
If the credit exceeds your tax liability, the unused credit may not be carried forward to any other tax year.
If you were eligible for a Child and Dependent Care Credit on your federal income tax return, Form 1040 for the tax year, you may be entitled to a credit on your Maryland state income tax return. The credit starts at 32% of the federal credit allowed, but is phased out for taxpayers with federal adjusted gross incomes above $103,650* ($161,100* for individuals who are married filing joint income tax returns). This credit is in addition to the subtraction modification available on the Maryland return for child and dependent care expenses.(See above)
To claim the credit, you must complete Part B of Form 502CR and submit with your Maryland income tax return. You must report the credit on Maryland Form 502, Form 505 or Form 515.
You can use the tables below to determine the percentage of the federal credit that can be claimed on your Maryland return:
If the credit is more than your tax liability, and your federal adjusted gross income does not exceed $55,750 ($83,650 for individuals who are married filing jointly), you may be entitled to claim a refund of any excess credit. Refer to Worksheet 21B in the instructions for Form 502CR. Enter any refundable credit in Part CC of Form 502CR.
Individual taxpayer, if your federal adjusted gross income is: | Decimal Amount (multiply by federal credit) | Married Taxpayer, if your federal adjusted gross income is: | ||
---|---|---|---|---|
At least | But less than | Decimal Amount | At least | But less than |
>$0 | $30,001 | 0.3200 | $0 | $50,001 |
$30,001 | $32,001 | 0.3168 | $50,001 | $53,001 |
$32,001 | $34,001 | 0.3136 | $53,001 | $56,001 |
$34,001 | $36,001 | 0.3104 | $56,001 | $59,001 |
$36,001 | $38,001 | 0.3072 | $59,001 | $62,001 |
$38,001 | $40,001 | 0.3040 | $62,001 | $65,001 |
$40,001 | $42,001 | 0.3008 | $65,001 | $68,001 |
$42,001 | $44,001 | 0.2976 | $68,001 | $71,001 |
$44,001 | $46,001 | 0.2944 | $71,001 | $74,001 |
$46,001 | $48,001 | 0.2912 | $74,001 | $77,001 |
$48,001 | $50,001 | 0.2880 | $77,001 | $80,001 |
$50,001 | $52,001 | 0.2848 | $80,001 | $83,001 |
$52,001 | $54,001 | 0.2816 | $83,001 | $86,001 |
$54,001 | $56,001 | 0.2784 | $86,001 | $89,001 |
$56,001 | $58,001 | 0.2752 | $89,001 | $92,001 |
$58,001 | $60,001 | 0.2720 | $92,001 | $95,001 |
$60,001 | $62,001 | 0.2688 | $95,001 | $98,001 |
$62,001 | $64,001 | 0.2656 | $98,001 | $101,001 |
$64,001 | $66,001 | 0.2624 | $101,001 | $104,001 |
$66,001 | $68,001 | 0.2592 | $104,001 | $107,001 |
$68,001 | $70,001 | 0.2560 | $107,001 | $110,001 |
$70,001 | $72,001 | 0.2528 | $110,001 | $113,001 |
$72,001 | $74,001 | 0.2496 | $113,001 | $116,001 |
$74,001 | $76,001 | 0.2464 | $116,001 | $119,001 |
$76,001 | $78,001 | 0.2432 | $119,001 | $122,001 |
$78,001 | $80,001 | 0.2400 | $122,001 | $125,001 |
$80,001 | $82,001 | 0.2368 | $125,001 | $128,001 |
$82,001 | $84,001 | 0.2336 | $128,001 | $131,001 |
$84,001 | $86,001 | 0.2304 | $131,001 | $134,001 |
$86,001 | $88,001 | 0.2272 | $134,001 | $137,001 |
$88,001 | $90,001 | 0.2240 | $137,001 | $140,001 |
$90,001 | $92,001 | 0.2208 | $140,001 | $143,001 |
$92,001 | $94,001 | 0.2176 | $143,001 | $146,001 |
$94,001 | $96,001 | 0.2144 | $146,001 | $149,001 |
$96,001 | $98,001 | 0.2112 | $149,001 | $152,001 |
$98,001 | $100,001 | 0.2080 | $152,001 | $155,001 |
$100,001 | $102,001 | 0.2048 | $155,001 | $158,001 |
$102,001 | $103,651 | 0.2016 | $158,001 | $161,001 |
‐‐‐ | ‐‐‐ | 0.1984 | $161,001 | $161,101 |
$103,651 | and up | 0.0000 | $161,101 | and up |
*NOTE: The FAGI figures indicated have been adjusted as required by Maryland Law.
Are you a Maryland taxpayer with college loan debt? If so, you are encouraged to apply for the Student Loan Debt Relief Tax Credit for tax year 2024. The deadline to submit your application is September 15, 2024.
Since the program’s introduction in 2017, more than 58 thousand tax credits have been awarded totaling more than $67 million.
The program is administered by the Maryland Higher Education Commission (MHEC) which provides an income tax credit for Maryland residents who are making eligible undergraduate and/or graduate education loan payments.
To be eligible, you must claim Maryland residency for the 2024 tax year, file 2024 Maryland state income taxes, have initially incurred at least $20,000 in undergraduate and/or graduate student loan debt, and have at least $5,000 in outstanding student loan debt at the time of applying for the tax credit.
Those who receive the tax credit will be required to prove they used the full amount of the tax credit for the repayment of their eligible student loans. Otherwise, the recipient will have to return the credit.
To apply, go to the Maryland Higher Education Commission’s website at: https://mhec.maryland.gov/preparing/pages/studentloandebtrelieftaxcredit.aspx
Individuals who hunt and harvest an antlerless deer in compliance with State hunting laws and regulations, and donate the processed meat to a venison donation program administered by a qualified tax exempt organization, may claim a credit against their State personal income tax for up to $50 of qualified expenses to butcher and process an antlerless deer for human consumption. The total amount of the credits may not exceed $200 in any taxable year unless the individual harvested each deer in accordance with a deer management permit.
Any unused portion of the qualified expenses may not be carried over to another taxable year.
To claim the credit, you must complete Part G of Form 502CR and attach to your Maryland income tax return. You must also report the credit on Maryland Form 502, 505 or 515.
An individual may claim a credit against their Maryland State income tax equal to 50% of the qualified expenses incurred during a taxable year to install accessibility and universal visitability features to or within a home.
"Accessibility and universal visitability features" means components of renovation to an existing home that improves access to or within the home for individuals with disabilities. "Qualified expenses" means costs incurred to install accessibility and universal visitability features to or within a home.
For any taxable year, the credit may not exceed the lesser of: (i) $5,000; or (ii) the State income tax imposed for the taxable year calculated before the application of the credits allowed under §§ 10-701, 10-701.1, and 10-741 of the Tax-General Article but after the application of any other credit allowed. The unused amount of the credit may not be carried over to any other taxable year. The credit amount is limited to the lesser of the individual's state tax liability for that year or the maximum allowable credit of $5,000.
The qualified expenses incurred must be certified by the Maryland Department of Housing and Community Development. To claim the credit, an individual shall: (i) file an amended income tax return for the taxable year in which the qualified expenses were incurred; and (ii) attach a copy of the Maryland Department of Housing and Community Development's certification of the approved credit amount to the amended income tax return.
To claim the credit, you must complete Part K of Form 502CR and attach to your Maryland income tax return. You must also report the credit on Maryland Form 502, Form 505 or Form 515.
For more information, contact:
Maryland Department of Housing and Community Development
7800 Harkins Road
Lanham, Md. 20706
301-429-7400
dhcd.maryland.gov/Pages/Contact-Us.aspx
[email protected]
If you are a qualified licensed physician or a qualified nurse practitioner who served without compensation as a preceptor, you may be eligible to claim a nonrefundable credit against your State tax liability. There are two credits for qualified preceptors. The first credit on line 1 of Part J on Form 502CR is only available for licensed physicians. The second credit on line 2 of Part J on Form 502CR is available for both licensed physicians and nurse practitioners.
A licensed physician who served as a physician preceptor in a preceptorship program authorized by an accredited medical school in Maryland may claim a credit on line 1 of Part J on Form 502CR in the amount of $1,000 for each student for whom the licensed physician served as a physician preceptor without compensation. For purposes of claiming the credit on line 1 of Part J on Form 502CR, "preceptorship program" means an organized system of clinical experience that, for the purpose of attaining specified learning objectives, pairs an enrolled student of a liaison committee on medical education-accredited medical school in Maryland or an individual in a postgraduate medical training program in Maryland with a licensed physician who meets the qualifications as a preceptor. To qualify for the credit, the licensed physician must have worked in an area of Maryland identified as having a health care workforce shortage by the Maryland Department of Health (MDH). The licensed physician must have worked a minimum of three rotations, each consisting of 160 hours of community-based clinical training. The amount of this credit may not exceed $10,000.
A nurse practitioner or licensed physician who served as a preceptor in a preceptorship program approved by the Maryland Board of Nursing may claim a credit on line 2 of Part J on Form 502CR in the amount of $1,000 for each nurse practitioner student for whom the nurse practitioner or licensed physician served as a preceptor without compensation. For purposes of claiming the credit on line 2 of Part J on Form 502CR, "preceptorship program" means an organized system of clinical experience that, for the purpose of attaining specified learning objectives, pairs a nurse practitioner student enrolled in a nursing education program that is recognized by the Maryland Board of Nursing with a nurse practitioner or licensed physician who meets the qualifications as a preceptor. To qualify for the credit, a nurse practitioner or licensed physician must have worked in an area of Maryland identified as having a health care workforce shortage by the Maryland Department of Health. The nurse practitioner or licensed physician must have worked a minimum of three rotations, each consisting of at least 100 hours of community-based clinical training. The amount of this credit may not exceed $10,000.
A health care practitioner (i.e., a licensed physician, a physician assistant, or a registered nurse practitioner) who served as a preceptor in a preceptorship program approved by the Maryland Department of Health may claim a credit on line 3 in the amount of $1,000 for each physician assistant student rotation for which the health care practitioner served as a physician assistant preceptor without compensation. For purposes of claiming the credit on line 3, "preceptorship program" means an organized system of clinical experience that, for the purpose of attaining specified learning objectives, pairs an enrolled student of a physician assistant program in the State with a health care practitioner who meets the qualifications of a preceptor. To qualify for the credit, a health care practitioner must have worked in an area of Maryland identified as having a health care workforce shortage by the Maryland Department of Health. The health care practitioner must have worked a minimum of three rotations, each consisting of at least 100 hours of community-based clinical training in family medicine, general internal medicine, or general pediatrics. The amount of this credit may not exceed $10,000.
NOTE: A copy of the required certification from the Maryland Department of Health must be included with Form 502CR.
Eligibility for these credits is limited to funds budgeted. Applicants seeking certification will be approved on a first-come, first-served basis. Go to the Maryland Department of Health website at health.maryland.gov for more information.
A taxpayer who makes a donation to a qualified permanent endowment fund at an eligible community foundation may be eligible for a credit against the Maryland State income tax. The taxpayer must apply to the Maryland Department of Housing and Community Development (DHCD) for a certification for the donation. This certification must be attached to the Form 502CR at the time the Maryland income tax return is filed.
Individuals who are eligible to claim the Endow Maryland income tax credit, and who are not PTE members may elect to claim this credit on Part I of Form 502CR, instead of claiming the credit on Form 500CRW. However, an individual may not claim this credit on both Form 500CRW and Form 502CR. PTE members who are eligible for this credit must claim the credit on Business Income Tax Credit Form 500CRW.
Individuals who anticipate having a carryover of the Endow Maryland income tax credit are advised to use Form 500CRW, instead of Form 502CR.
The credit is limited to 25% of the approved donation (in cash or publicly traded securities) not to exceed $50,000.
NOTE: A copy of the required approval from the DHCD must be included with Form 502CR.
This credit is not refundable and is applied only against the Maryland State income tax. To the extent the credit is earned in any year and it exceeds the State income tax, you are entitled to an excess carryover of the credit until it is used, or it expires five years after the credit was earned, whichever comes first.
NOTE: The amount of donation shown on line 2 of Part I on Form 502CR requires an addition to income. See Instruction 12 in the Maryland Resident Instruction Booklet.
For more information contact:
Department of Housing and Community Development
Division of Neighborhood Revitalization
2 N. Charles St., Suite
Baltimore, MD 21202
410-209-5800
Email: [email protected]
Donors that make a donation to a qualified permanent endowment fund held at an eligible institution of higher education may be eligible for a credit against the Maryland State income tax. The tax credit terminates December 31, 2028.
Cash donations made by the taxpayer to a qualified permanent endowment fund that meet certain requirements are eligible for tax credits. Donations must be made to a qualifying fund at any of the following institutions: Bowie State University, Coppin State University, Morgan State University, or University of Maryland Eastern Shore. In each tax year, the Comptroller may award a maximum of $60,000 in tax credits to each of the four institutions.
The credit is 25% of the value of a proposed donation to a qualified permanent endowment fund. The donor must apply to the Comptroller of Maryland for a certification of the donation.
Donors seeking the tax credit must apply to the Comptroller for a tax credit certificate in the calendar year that the donation is made.
Applications must be sent by e-mail and are approved on a first-come, first-serve basis until the maximum amount of authorized credits have been approved.
HBCU Tax Credit Application will be accepted beginning July 1 of the tax year in which the donation is made.
An acknowledgement letter is issued when an application for the proposed donation is received. Donors are required to submit documentation from the institution showing proof of donation within 30 days before a final tax credit certificate is issued.
Applications are accepted by e-mail only; and should be sent to [email protected]
All fields on the application are required to be completed fully. Incomplete applications will not be processed.
Donors claim the credit by including the certification at the time the Maryland income tax return is filed. Individuals that are eligible to claim the income tax credit and are not PTE members may elect to claim the credit using Form 502CR, instead of Form 500CR. However, a donor may not claim the credit on both Form 500CR and Form 502CR. PTE members that are eligible for the credit must claim it on the Business Income Tax Credit Form 500CR. Corporations and Fiduciaries that are eligible to claim the credit must use Form 500CR to do so.
A taxpayer claiming the credit is required to add back the amount of the credit claimed to Maryland adjusted gross income or Maryland modified income, to the extent excluded from federal adjusted gross income.
Comptroller of Maryland
HBCU Tax Credit Office
Businesses or individuals who contribute to approved Community Investment Programs may be eligible for a credit against the Maryland State income tax. Contributions must be made to a nonprofit organization approved by the Department of Housing and Community Development (DHCD). The taxpayer must apply to and receive approval by the DHCD for each contribution for which a credit is claimed.
Individuals who are eligible to claim the Community Investment Tax Credit (CITC), and who are not PTE members may elect to claim this credit on Part H of Form 502CR, instead of claiming the credit on Form 500CR. However, an individual may not claim this credit on both Form 500CR and Form 502CR. PTE members who are eligible for this credit must claim the credit on Business Income Tax Credit Form 500CR.
Individuals who anticipate having a carryover of the CITC are advised to use Form 500CR instead of Form 502CR. Individuals who have an existing carryover on their 2017 Form 500CR may elect to use Form 502CR if their Excess Carryover Credit is attributable only to the CITC.
The credit is limited to 50% of the approved contributions (including real property) not to exceed $250,000.
NOTE: A copy of the required approval from the DHCD must be included with Form 502CR.
This credit is not refundable and is applied only against the Maryland State income tax. To the extent the credit is earned in any year and it exceeds the State income tax, you are entitled to an excess carryover of the credit until it is used or it expires five years after the credit was earned, whichever comes first.
For more information contact:
Department of Housing and Community Development
Division of Neighborhood Revitalization
2 N. Charles St., Suite
Baltimore, MD 21202
410-209-5800
[email protected]
Businesses in Maryland may be able to take advantage of several tax credits. At the bottom of the page are links to the details of each tax credit.
For tax years beginning after December 31, 2012, you must file your tax return electronically in order to claim a business tax credit unless you submit a waiver from the electronic filing requirement. To request a waiver from filing the Form 500CR electronically, you must submit a completed Form 500CRW Waiver Request For Electronic Filing of Form 500CR and it must be attached to Form 500CR in the filing of your return.
Businesses or individuals who operate an Aerospace, Electronics, or Defense Contract Tax Credit Project may be eligible for an income tax credit. The income tax credit is based on the number of qualified positions created or retained for an Aerospace, Electronics, or Defense Contract Tax Credit Project. The maximum credit amount is $2,500,000 per Aerospace, Electronics, or Defense Contract Tax Credit Project.
To qualify for the tax credit, the individual or business must be a qualified business entity. A qualified business entity is an individual or business conducting or operating a for-profit trade or business in Maryland that is certified by the Maryland Department of Commerce as qualifying for the income tax credit. A government entity does not qualify for the Aerospace, Electronics, or Defense Contract Tax Credit.
A business entity operating a project must create or retain at least 10,000 qualified positions in Maryland and submit a budget evidencing the business entity will expend at least $25,000,000 in qualifying expenditures in Maryland during the credit year for the project to be certified by the Maryland Department of Commerce as an Aerospace, Electronics, or Defense Contract Tax Credit Project. A qualified business entity may receive up to three designations for Aerospace, Electronics, or Defense Contract Tax Credit Projects in a fiscal year.
A qualified position is a full-time position of indefinite duration with an annual salary of at least $85,000, including associated benefits, is located in Maryland, is created or retained as a result of the Aerospace, Electronics, or Defense Contract Tax Credit Project of the qualified business entity and is filled. A qualified position does not include a position that is filled for a period of less than 12 months.
Qualified expenditures are capital expenditures that have been expended or will be expended by a qualified business entity and that the Maryland Department of Commerce determines have met the requirements for an Aerospace, Electronics, or Defense Contract Tax Credit Project.
For questions on application and certification processes or for additional information on this credit program, contact:
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438
Certain taxpayers may be eligible for an income tax credit for the first year of employment of eligible apprentices. The income tax credit is based on the number of eligible apprentices employed by the taxpayer.
"Eligible apprentice" means an individual who is enrolled in an apprenticeship program registered with the Maryland Apprenticeship and Training Council. Eligible apprentices must have been employed by the taxpayer for at least 7 full months of the taxable year.
This Senate Bill 751/House Bill 1457 Apprenticeship Start-Up Act of 2020, alters the definition of "eligible apprentice" for the purpose of claiming a tax credit for the employment of eligible apprentices.
For the first five apprentices claimed, a credit is allowed of $1,000 for apprentices employed through a youth apprenticeship program and $3,000 for eligible apprentices not employed through a youth apprenticeship program. This also allows a credit of $1,000 for apprentices beyond the first five claimed. The credit is limited to $15,000 for the taxable year, per taxpayer
General Requirements A credit is available for an investment in a qualified Maryland biotechnology company (QMBC). To qualify, a company can be any entity of any form (except a sole proprietorship) that is duly organized and existing under the laws of any jurisdiction for the purpose of conducting business for profit, and must be primarily engaged in, or within 2 months will be primarily engaged in, the research, development, or commercialization of innovative and proprietary technology that comprises, interacts with, or analyzes biological material including biomolecules (DNA, RNA, or protein), cells, tissues or organs.
See Form 500CR instructions for requirements and recapture information.
Qualified investors must contribute at least $25,000 in cash or cash-equivalent to a QMBC that is certified by the Maryland Department of Commerce (DOC).
A QMBC must:
A QMBC may include a company that has been an active business for up to 12 years, with DOC approval.
Qualified investors are also required to file an income tax return. Credits may be claimed for no more than $250,000 per investment in a qualified biotechnology company, or $500,000 if the company is located in Allegany, Dorchester, Garrett, or Somerset Counties. DOC may not certify tax credits for investments in a single qualified biotechnology company that are in the aggregate more than 10% of the total amount appropriated to the Maryland Biotechnology Investment Tax Credit Reserve Fund for that fiscal year. DOC may not issue initial credit certificates in excess of the amount appropriated to the Reserve Fund for that fiscal year in the state budget as approved by the General Assembly.
At least 30 days before making an investment, the business must submit an initial credit certificate application to DOC. Upon approval (within 30 days of DOC's receipt of the application), the applicant will receive an initial credit certificate stating the amount of the tax credit and will have 30 days to make the investment. Within the following 10 days, the investor must notify DOC that the investment has been made. A final credit certificate will be issued to the applicant stating the amount of the tax credit to which the applicant is entitled. A copy of the final credit certificate must be filed with the taxpayer's income tax return.
The credit allowed is 50% of the investment in the QMBC for certificates issued before July 1, 2021 or 33% of the investment for certificates issued after June 30, 2021. If the QMBC is (1) located in Allegany, Dorchester, Garrett, or Somerset Counties, or (2) located in a Regional Institution Strategic Enterprise zone, is based on technology that was developed at a qualified institution within that zone, and has been in active business not longer than 7 years, the amount of the credit is 75% of the investment in the QMBC for certificates issued before July 1, 2021 or 50% of the investment for certificates issued after June 30, 2021, not to exceed $500,000. The amount in excess of the state tax liability may be refunded. The total amount of final tax credit certificates issued by DOC each year is limited to the amount appropriated to the Reserve Fund in the State budget. Applications are reviewed and approved on a first come, first served basis.
For taxable years beginning after December 31, 2012, this credit is available only with an electronically filed return. A copy of the certification issued by DOC must be included with the electronic return, and the Form 500CR section of the return must be completed.
Exception: Should a fiduciary become eligible to claim this credit (the fiduciary may be a member of a pass-through entity eligible to pass on the Biotechnology Investment Incentive Tax Credit to its members), the fiduciary will use Business Tax Credit Form for a Fiduciary, Form 504CR, as an electronic version of Fiduciary Income Tax Form 504 does not currently exist. A fiduciary may distribute the tax credit to its beneficiaries using Maryland Schedule K-1(504). A copy of the certification issued by DOC must be included with any Form 504CR filed.
However, beneficiaries receiving this tax credit from a fiduciary, must file electronically to claim a business tax credit unless the beneficiary happens to be a fiduciary taxpayer.
Businesses located in Maryland that create new positions and establish or expand business facilities in the state may be entitled to a tax credit. To be eligible for the tax credit, businesses must first have been granted a property tax credit by a local government of Maryland for creating the new jobs.
The credit may be taken against corporate income tax, personal income tax or insurance premiums tax. The credit may be applied to only one of these tax types in addition to the property tax.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The business must create at least 25 new positions as part of the new or expanded business facility in Maryland (5,000 square feet or more). Businesses located in smaller counties (population of 30,000 or less) must create at least 10 new positions.
An enhanced credit is instead available for businesses that create or expand a new business facility in Maryland of 250,000 square feet or more and:
In Montgomery County only, a business can:
The new positions must be:
The business must then apply for and receive certification for a property tax credit from the local government in which the facility is located.
The county or city government will notify the State Department of Assessments and Taxation (SDAT) that the property tax credit has been approved. SDAT will calculate and certify the amount of the allowable tax credit to the Comptroller.
The credits are calculated as a percentage of the local property tax liability on the new or expanded portion of the facility. Those percentages are as follows:
Property Tax Credit:
Credit against the personal or corporate income tax, or the insurance premiums tax:
The enhanced property tax credit is a flat percentage of 58.5% for the local property tax credit and 31.5% for the state tax credit in each of the first 24 tax years.
If the credit is more than the state tax liability, the unused credit may be carried forward for the next five (5) taxable years.
If, at any time during the three tax years after the year the credit was earned, the business fails to satisfy the thresholds to qualify for the credit, the credit must be recaptured. The income tax credit to be recaptured is reported on line 26, Part W in the Form 500CR section of the return and filed with the tax return for the tax year in which the business failed to satisfy the applicable thresholds.
For taxable years beginning after December 31, 2012, this credit is available only with an electronically filed return. A copy of the certification issued by the local government must be included with the electronic return and the Form 500CR section of the return must be completed.
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit, and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Businesses that use a qualified energy resource to produce electricity that is sold to an unrelated person may be entitled to an income tax credit.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
This credit is allowed if a Maryland facility is originally placed in service or initially began co-firing, during the period of January 1, 2006 through December 31, 2018 and produces electricity during the tax year primarily using qualified energy resources derived from:
The business must apply for and receive an initial credit certificate from the Maryland Energy Administration (MEA) before claiming this credit. The initial credit certificate must state the amount of electricity the taxpayer expects to produce in a qualified Maryland facility over a five-year period. The total amount of the credit specified in the initial credit certificate cannot exceed $2.5 million and must be a minimum of $1,000.
Note: MEA is prohibited from issuing initial credit certificates after December 31, 2018.
For taxable years beginning after December 31, 2012, this credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. A copy of the initial credit certificate issued by the MEA must be included with the electronic return, and the Form 500CR section of the return must be completed.
Businesses or individuals who contribute to qualified organizations' Community Investment Programs can earn credits for a portion of the value of the money, goods or real property contribution.
Community Investment Tax Credits (CITC) support nonprofit organizations serving as incentives to attract contributions from individuals and businesses to benefit local projects and services.
The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. However, the same credit may not be applied to more than one tax type.
Contributions of money, goods or real property worth $500 or more are eligible for tax credits. Contributions of services or labor are not eligible. Individuals and businesses may claim a maximum of $250,000 in credits per year, representing a contribution of no more than $500,000.
Contributions must be made to a nonprofit organization approved by the Department of Housing and Community Development (DHCD). The taxpayer must apply to and receive approval by the DHCD for each contribution for which a credit is claimed.
For any tax year, the sum of all CITCs, including any carryover credits, may not exceed the lesser of $250,000 or the total amount of tax otherwise payable by the individual and/or business for the tax year. Excess credits may be carried over for five (5) years.
A copy of the required approval from the DHCD must be attached to the appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 for individuals, electing to use Form 500CR. The Form 500CR section of the electronic return must also be completed.
A copy of the required approval from the DHCD must be attached to Form 502 for those individuals, electing to use Form 502CR.
Insurance premiums tax
The contributor and the non-profit partner must complete the Certification of Contribution for Tax Credit and submit it to the Maryland Department of Housing and Community Development along with a copy of the check or documentation of the value of donated goods. Businesses claiming the credit against this tax must include their North American Industry Classification System (NAICS) number in the space provided on that form.
Public service company franchise tax
Form AT3-74 must be submitted with the franchise tax return (SDAT Forms 11 or 11T).
Maryland employers, including organizations exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code, may claim a tax credit for a portion of the eligible costs of providing commuter benefits to participating employees.
The credit may be taken against corporate income tax, personal income tax, state and local taxes withheld (for tax-exempt organizations) or insurance premiums tax. The same credit may not, however, be applied to more than one tax type.
Sole proprietorships, corporations, tax-exempt nonprofit organizations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The credit is applicable to the following transit instruments: MTA passes, fare cards, smart cards or vouchers used by employees to ride publicly or privately owned transit systems except taxi services, company Vanpool programs, company guaranteed Ride Home programs, and company Cash in Lieu of Parking programs.
The employer must pay a portion of the cost of an employee's travel between the employee's home and workplace, including the purchase of transit instruments (tickets, passes, vouchers, fare cards, smart cards and tokens). In addition, the workplace must be located in Maryland and travel must take place in either:
In addition, a business may also qualify for a credit for a portion of the amount paid to provide their employees a Guaranteed Ride Home and/or a parking "Cash-Out" program.
For taxable years beginning after December 31, 2012, the income tax credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. The Form 500CR section of the return must be completed.
Insurance premiums tax: Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
State and local income taxes withheld: Form MW508CR must be submitted with Form MW508, the Maryland Annual Employer Withholding Reconciliation Report to claim this credit against Maryland income tax withheld. If the tax-exempt entity is required to file the MW508 electronically, then MW508CR must be filed with an amended MW508A as the MW508CR is not available electronically at this time.
Click Here to be taken to ONLINE REGISTRATION FORM
The online registration form must be completed each time a business applies for the Commuter Tax Credit. Businesses must re-register for this tax credit annually.
For more information call 410-865-1100 or email [email protected]
Visit: CommuterChoiceMaryland.com for more information
Refundable Credit for Investors in Cybersecurity (Part H-1 of Form 500CR)
A credit is available for an investment in a qualified Maryland cybersecurity company (QMCC). The credit is claimed by a qualified investor. A qualified investor is an individual or entity that invests at least $25,000 in a QMCC that is required to file an income tax return in any jurisdiction. To qualify, a QMCC can be an entity of any form (except a sole proprietorship) that is duly organized and existing under the laws of any jurisdiction (or formed within 4 months of receiving the investment) for the purpose of conducting business for profit, and must be engaged primarily in the development of innovative and proprietary cybersecurity technology.
The QMCC must:
The amount of the credit is 33% of the investment in the QMCC, not to exceed $250,000. For a QMCC located in Allegany County, Dorchester County, Garrett County, or Somerset County, the amount of the credit is 50% of the investment in the QMCC, not to exceed $500,000. The investment cannot include debt unless it is convertible debt. The investment must be the contribution of money in cash or cash equivalents expressed in United States dollars, at risk of loss, to a QMCC in exchange for stock, a partnership or membership interest, or any other ownership interest in the equity of the QMCC, title to which the ownership interest shall vest in the qualified investor. "Qualified investor" means an individual or entity that is required to file an income tax return in any jurisdiction and invests at least $25,000 in a QMCC. However, the qualified investor may not, after making the investment, own or control more than 25% of the equity interest in the QMCC. See § 10-733 of the Tax-General Article.
At least 30 days prior to making an investment in a QMCC, a qualified investor must submit an application to the Maryland Department of Commerce for an initial tax credit certificate.
At least 30 days prior to receiving an investment the QMCC must submit an application to the Maryland Department of Commerce to evidence that the QMCC has satisfied the minimum requirements for consideration as a QMCC.
For questions on application and certification processes or for additional information on this credit program, contact:
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438
The credit is subject to recapture if within 2 years of the close of the taxable year in which the credit is claimed; 1) the qualified investor sells, transfers or otherwise disposes of the ownership interest in the QMCC that gave rise to the credit; 2) the QMCC ceases operating as an active business or distributes the equity investment; 3) the QMCC is not duly organized and existing within 4 months of receiving the qualified investment. The applicable recapture amount is calculated by multiplying the total amount of the credit claimed (or in the case of a sale, transfer, or other disposition of the ownership interest, the portion of the credit attributable to the ownership interest disposed of), by one of the following percentages:
100%, if the event requiring recapture of the credit occurs during the tax year for which the tax credit is claimed;
67%, if the event requiring recapture of the credit occurs during the first year after the close of the tax year for which the tax credit is claimed; or
33%, if the event requiring recapture of the credit occurs more than 1 year but not more than 2 years after the close of the tax year for which the tax credit is claimed. The amount of recapture is entered onto line 5, Part H-I.
The credit may also be subject to a recapture if the certificate is rescinded by the Maryland Department of Commerce due to the qualified investor failing to provide the required notice to the Maryland Department of Commerce of having made the investment, or if the Maryland Department of Commerce revokes the final certification due to false representations made in connection with the application for the certification.
If the credit is claimed by a qualified investor that is a PTE, the members of the PTE may claim the distributive or pro rata shares of the credit amount subject to the $250,000 limitation (or $500,000 for a QMCC located in Allegany County, Dorchester County, Garrett County or Somerset County). A PTE that earned the Cybersecurity Incentive Tax Credit must electronically file the Maryland Form 510, Form 500CR and all other required attachments for members to be permitted to claim the credit. See Form 510 instructions.
For a member of the PTE to be allowed the credit, the member must complete the Form 500CR section of their electronically-filed Maryland return and include a copy of the final certification from the Maryland Department of Commerce and Maryland Schedule K-1 (510) showing the allocated share of the credit amount.
Nonrefundable Credit for Buyers of Cybersecurity Technology and/or Cybersecurity Services (Part H-II of Form 500CR)A qualified buyer may claim a credit in an amount equal to 50% of the cost incurred during the taxable year to purchase cybersecurity technology and/or cybersecurity services from one or more qualified sellers. For any taxable year, the credit allowed may not exceed $50,000 for each qualified buyer, and the aggregate credits claimed for cybersecurity technology and/or cybersecurity services purchased from a single qualified seller may not exceed $200,000.
A "Qualified Buyer" means any entity that has fewer than 50 employees in the State and that is required to file an income tax return in the State.
A qualified buyer eligible for the credit may apply to the Maryland Department of Commerce for a credit certificate that states the amount of the credit the qualified buyer may claim. A qualified buyer must attach a copy of the credit certificate to the income tax return on which the qualified buyer claims the credit. The Maryland Department of Commerce approves each application that qualifies for a credit certificate.
A "Qualified Seller" means a cybersecurity business that:
A "Cybersecurity Business" means an entity organized for profit that is engaged primarily in the development of innovative and proprietary cybersecurity technology or the provision of cybersecurity service.
A "cybersecurity service" is an activity that is associated with a category or subcategory identified under the framework core established by the National Institute of Standards and Technology's Cybersecurity Framework.
"Cybersecurity technology" means products or goods intended to detect or prevent activity intended to result in unauthorized access to, exfiltration of, manipulation of, or impairment to the integrity, confidentiality, or availability of an information system or information stored on or transiting an information system.
An employer, including organizations exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code, that provides long-term care insurance as part of an employee benefit package may claim a credit for costs incurred during the taxable year.
The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. The same credit may not, however, be applied to more than one tax type.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The company must provide long-term care insurance benefits to one or more employees during the taxable year as part of an employee benefits package.
The credit allowed is 5% of employer's cost which may not exceed the lesser of $5,000, or $100 for each employee in the State covered by long-term care insurance provided under the employee benefits package.
If the credit is more than the tax liability, the unused credit may be carried forward for the next five (5) tax years.
For taxable year beginning after December 31, 2012, taxpayers must file their income tax return electronically (Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 or 505 for Individuals). They must complete the Business Tax Credit Form 500CR section of the electronic return to claim this tax credit.
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Businesses or individuals who make a donation to a qualified permanent endowment fund at an eligible community foundation may be eligible for a credit against the Maryland State income tax.
The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. However, the same credit may not be applied to more than one tax type.
The credit is 25% of the value of the approved donation. Each business or individual may claim a credit of up to $50,000. Businesses and individuals claim the Endow Maryland Tax Credit by filing an electronic tax return supporting Business Income Tax Credit Form 500CR. An electronic return must be filed to claim this credit against the Maryland income tax. See exception below.
Exception: Individuals who are eligible to claim the Endow Maryland Tax Credit, and who are not PTE members may elect to claim this credit on Part I of Form 502CR, instead of claiming the credit on Part V of Form 500CR. Taxpayers electing to use Form 502CR to claim the Endow Maryland Tax Credit are not required to file their return electronically. However, an individual may not claim this credit on both Form 500CR and Form 502CR. PTE members who are eligible for this credit must claim the credit on Business Income Tax Credit Form 500CR.
Individuals who anticipate having a carryover of the Endow Maryland Tax Credit are advised to use Form 500CR instead of Form 502CR.
See Form 500CR Instructions for specific line-by-line instructions. Form 500CR must still be filed electronically.
Whenever the Endow Maryland Tax Credits are claimed against the income tax, an addition modification must be included for the amount deducted as a donation to the extent that the amount of donation is included in an application for the Endow Maryland Tax Credit.
Donors that make a donation to a qualified permanent endowment fund held at an eligible institution of higher education may be eligible for a credit against the Maryland State income tax. The tax credit terminates December 31, 2028.
Cash donations made by the taxpayer to a qualified permanent endowment fund that meet certain requirements are eligible for tax credits. Donations must be made to a qualifying fund at any of the following institutions: Bowie State University, Coppin State University, Morgan State University, or University of Maryland Eastern Shore. In each tax year, the Comptroller may award a maximum of $60,000 in tax credits to each of the four institutions.
The credit is 25% of the value of a proposed donation to a qualified permanent endowment fund. The donor must apply to the Comptroller of Maryland for a certification of the donation.
Donors seeking the tax credit must apply to the Comptroller for a tax credit certificate in the calendar year that the donation is made.
Applications must be sent by e-mail and are approved on a first-come, first-serve basis until the maximum amount of authorized credits have been approved.
HBCU Tax Credit Application will be accepted beginning July 1 of the tax year in which the donation is made.
An acknowledgement letter is issued when an application for the proposed donation is received. Donors are required to submit documentation from the institution showing proof of donation within 30 days before a final tax credit certificate is issued.
Applications are accepted by e-mail only; and should be sent to [email protected]
All fields on the application are required to be completed fully. Incomplete applications will not be processed.
Donors claim the credit by including the certification at the time the Maryland income tax return is filed. Individuals that are eligible to claim the income tax credit and are not PTE members may elect to claim the credit using Form 502CR, instead of Form 500CR. However, a donor may not claim the credit on both Form 500CR and Form 502CR. PTE members that are eligible for the credit must claim it on the Business Income Tax Credit Form 500CR. Corporations and Fiduciaries that are eligible to claim the credit must use Form 500CR to do so.
A taxpayer claiming the credit is required to add back the amount of the credit claimed to Maryland adjusted gross income or Maryland modified income, to the extent excluded from federal adjusted gross income.
Comptroller of Maryland
HBCU Tax Credit Office
Businesses located in a Maryland Enterprise Zone or in a Regional Institution Strategic Enterprise (RISE) zones, as defined in Section 5-1401(e) of the Economic Development Article, may be eligible for income tax credits based upon wages paid to qualifying employees.
Go to the Department of Commerce (DOC) to see the list of Maryland Enterprise Zones by region.
There are two types of income tax credits for firms in an enterprise zone; a general income tax credit and a larger income tax credit for hiring economically disadvantaged employees.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The business must hire at least one employee who:
If the individual is economically disadvantaged, the business must obtain certification from the Maryland Department of Labor, Licensing and Regulation.
Enterprise Zone | Focus Area | |
First Year | $3,000 | $4,500 |
Second Year | $2,000 | $3,000 |
Third Year | $1,000 | $1,500 |
A qualified film production entity may be entitled to a refundable Maryland income tax credit for certain costs incurred in the State that are necessary to carry out a film production activity in the State. This credit is available for tax years beginning after December 31, 2010.
This credit expired as of December 31, 2011 and no new applications are being accepted. Businesses that constructed or rehabilitated a building conforming to specific standards intended to save energy and to mitigate environmental impact may have been able to take a credit for a portion of the cost. The total amount of initial credits certified for all taxpayers each year were subject to statutory limitations.
The tax credit is limited to the State portion of the income tax. Excess credits can be carried over for up to 10 years beginning with the tax year in which the credit was earned.
The credit was taken against corporate income tax or personal income tax. Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts were eligible to claim or pass on the tax credit. Note: This tax credit is no longer applicable to pass-through entities because once the credit is earned and passed on to the members, the members (and not the pass-through entity) will track any carryover period. claim the tax credit.
During the 2016 Legislative Session, the legislative evaluation committee created by the Tax Credit Evaluation Act of 2012 was required to review the Sustainable Communities Tax Credit. The credit was amended and renamed the Heritage Structure Rehabilitation Tax Credit.
A refundable credit may be allowed to homeowners for renovating historic homes and to business taxpayers for a portion of substantial expenditures incurred to rehabilitate certified structures in Maryland on or after June 1, 2010, but before July 1, 2022. In addition, the Maryland Historical Trust certifies "Small Commercial Projects," which will help fund modest rehabilitation projects such as roof repair and façade restoration. Business taxpayers who begin their work prior to January 1, 2015 will not be eligible for certification.
Homeowners of single-family, owner-occupied residences may be eligible for a tax credit for up to 20 percent of eligible rehabilitation costs, including repairs such as:
Owners of income-producing properties may be eligible for a state income tax credit for renovating historic buildings. The program offers property owners a tax credit up to 20 percent of eligible expenses, up to a total $3 million, for substantial rehabilitation projects. An additional 5 percent credit may be earned for high performance properties that achieve a LEED Gold certification or equivalent.
The credit may be taken against the corporate income, personal income or insurance premium tax.
Sole proprietorships, corporations, tax-exempt non-profit organizations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
A homeowner must undertake the rehabilitation of a single-family, owner-occupied residential structure; and the rehabilitation expenses must exceed $5,000. The buildings that are being rehabilitated must be certified as historic, defined as having at least one of the following designations:
The credit for homeowners is capped at $50,000 in a 24-month period.
Businesses must undertake substantial rehabilitation of income-producing buildings. "Substantial rehabilitation" means the greater of the adjusted basis of the structure or $25,000. The same expenditures may not be used to qualify for a credit in any other tax year. In addition, these buildings must be certified as historic, defined as having at least one of the following designations:
Some businesses may qualify as a "small commercial project." Businesses must undertake the rehabilitation of income-producing buildings and contain no more than 75 percent residential rental use. A main street business with a top floor apartment is an example of a small commercial property. In addition these buildings must be certified as historic, defined as having at least one of the designations above for business taxpayers.
Small commercial rehabilitations cannot exceed $500,000 in expenses, and the credit is capped at $50,000 in a 24-month period.
The business must receive certification from the Maryland Historical Trust (MHT). A credit will not be approved if work has already begun on a project prior to submission of the application, or if the applicant for a commercial rehabilitation has previously submitted three or more applications for commercial rehabilitations exceeding a total of $500,000 in the same year.
An individual or business may claim a tax credit for:
Small Commercial Projects do not qualify for the additional 5% credit for being a high performance building.
For certified commercial rehabilitation projects, the credit is limited to $3 million. For all other certified rehabilitation projects, the credit is limited to $50,000. The amount of the credit that exceeds tax liability in the year the credit is claimed may be refunded.
A pro-rated percentage of the credit is subject to recapture if disqualifying work is performed, or the certified rehabilitation is disposed of, during a five-year period that begins with the year in which the certified rehabilitation was completed.
Within 18 months of a credit certificate being issued, the business or individual undertaking the rehabilitation must notify the Maryland Historical Trust that work on the project has begun. In general, without additional approval by the MHT, commercial rehabilitations must be completed within 30 months of the issuance of the initial credit certificate.
Corporations: For Tax Years beginning after December 31, 2012 Maryland Corporations must file their Maryland corporation return electronically and complete the Heritage Structure Rehabilitation Credit Form 502S and Form 500CR sections of the electronic corporation return and submit a pdf of the Maryland Historical Trust certification to claim this refundable credit.
Pass-Through Entities: For Tax Years beginning after December 31, 2012 Maryland Pass-Through Entities(PTEs) must file their Maryland Form 510 electronically and complete the Heritage Structure Rehabilitation Credit Form 502S and Form 500CR sections. PTEs must submit a pdf of the Maryland Historical Trust certification to pass this credit on to its members. In addition the PTE must provide Form 510 Schedule K-1 which separately states each member's distributive or pro rata share of the credit, and the MHT certification to each member.
Individuals (including fiduciaries): Form 502S must be completed and submitted with the income tax return (Form 502, Form 505 or Form 504) along with the MHT certification. For Tax Year 2013 and 2014, individuals are not required to file electronically to claim the Heritage Structure Rehabilitation Credit if they have no other business tax credit. Individuals will also complete and attach Form 502CR when filing Form 502S.
Insurance premium tax: Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, upon request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit, and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Maryland Historical Trust
100 Community Place
Crownsville, MD 21032-2023
For information about the Homeowner and Small Commercial Project Tax Credit:
Contact: Megan Klem, [email protected], 410-514-7688
mht.maryland.gov/Pages/funding/tax-credits-homeowner.aspx
mht.maryland.gov/Pages/funding/tax-credits-small-commercial.aspx
For Commercial Rehabilitations:
Contact: Collin Ingraham, [email protected], 410-514-7671
mht.maryland.gov/Pages/funding/tax-credits.aspx
Video IRS Direct Pay Tax Credit for Tax Exempt Entities
IRA Clean Energy Tax Credits for Local Governments and Nonprofits - 8/13/2024
Certain businesses that create new qualified positions in Maryland before January 1, 2020 may be eligible for tax credits based on the number of qualified positions created.
The credit may be taken against corporate income tax, personal income tax, insurance premium tax or public service company franchise tax. The same credit may not, however, be applied to more than one tax type. Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The income tax credit is not refundable and is applied only against the Maryland State income tax.
The business facility must be certified as having created at least 60 qualified positions, 25 qualified positions if the business facility established or expanded is in a Maryland Priority Funding Area or 10 qualified positions in a county with an annual average employment that is less than 75,000 or a median household income that is less than two-thirds of the statewide median household income.
A qualified position is a full-time position which pays at least 120% of the State minimum wage, is located in Maryland, is newly created as a result of the establishment or expansion of a business facility in a single location in the state and is filled.
Qualified business entities are those that are certified as such by the Maryland Department of Commerce. A qualified employee is an employee filling a qualified position.
Before filling these new positions, the company must notify the Maryland Department of Commerce to seek certification.
The credit allowed depends on where in Maryland the facility is located:
The total credit earned by any one company may not exceed $1 million for any credit year. If the credit is more than the State portion of the income tax liability, the unused credit may be carried forward for the next five (5) tax years, or until it is fully used, whichever comes first.
If, at any time during the three tax years after the year the credit was earned, the average number of qualified positions falls more than 5% below the average number of qualified positions during the year in which the credit was earned, a portion of the credit will be recaptured for the tax year in which this occurs.
The amount to be recaptured is the amount originally claimed as a tax credit multiplied by the percentage reduction in the number of qualified employees. The income tax credit to be recaptured is reported on the line specified for recaptures in the Business Tax Credit Summary of Form 500CR.
For taxable years beginning after December 31, 2012, the income tax credit is available only with an electronically-filed return. A copy of the certification issued by the Maryland Department of Commerce must be included with the electronic return, and the Form 500CR section of the return must be completed.
Insurance premium tax:
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4980
E-mail: [email protected]
Businesses that employ persons with disabilities, as determined by the Division of Rehabilitation Services (DORS) in the Maryland State Department of Education and/or by the Maryland Department of Labor, may be eligible for a tax credit for wages paid to, and for childcare expenses and for transportation expenses paid on behalf of qualified employees. Qualifying child care expenses are those expenses incurred by a business to enable a qualified employee with a disability to be gainfully employed.
The credit may be taken against corporate income tax, personal income tax, state and local taxes withheld (for certain tax-exempt organizations only), insurance premiums tax or public service company franchise tax. The same credit may not, however, be applied to more than one tax type.
Sole proprietorships, corporations, tax-exempt nonprofit organizations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
To qualify for the credit, the company must hire an individual with a disability and obtain a determination from the Division of Rehabilitation Services (DORS) in the Maryland State Department of Education, or the Maryland Department of Labor for a disabled veteran, that the individual is a qualified employee with a disability.
A "Qualified Employee" with a disability means:
A business may not claim the credit for an employee: (1) who is hired to replace a laid-off employee or to replace an employee who is on strike, or (2) for whom the business simultaneously receives federal or state employment training benefits.
The credit is allowed for the first 2 years of employment of the disabled individual for both the wages paid and the child care or transportation expenses paid on behalf of the employee as follows:
First Year |
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Second Year |
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If the credit is more than the tax liability, the unused credit may be carried forward for up to 5 tax years.
A 501( c)(3) tax-exempt organization may estimate the amount of the tax credit for qualifying employees for the tax year. The total amount of the estimated credit should be divided evenly over the number of periods for filing withholding returns (Form MW506). For example, if quarterly returns are required, then the total estimated credit should be divided by four. Each payment to the Comptroller would be reduced by the pro rata amount of the credit.
Alternatively, the tax-exempt organization could apply the credit against the tax on unrelated business taxable income.
Whenever this credit is claimed against the income tax, an addition modification must be made in the amount of the credit claimed.
This credit is available only with an electronically-filed return. A copy of the determination from DORS or the Maryland Department of Labor must be included with the electronic return, and the Form 500CR section of the return must be completed.
State and local income taxes withheld:
Form MW508CR must be submitted with Form MW508, the Maryland Annual Employer Withholding Reconciliation Report. A copy of the determination from DORS or the Maryland Department of Labor must be included with the MW508CR. If the tax-exempt employer is required to file its MW508 electronically, then the employer should submit Form MW508CR and documentation with a paper Form MW508A after the electronic Form MW508 is transmitted.
Insurance premiums tax:
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).
Maryland State Department of Education
Division of Rehabilitation Services
2301 Argonne Drive
Baltimore, MD 21218
Phone: 1-888-554-0334 or 410-554-9442 or
Maryland Department of Labor
Division of Employment and Training
1100 N. Eutaw Street, Room 201
Baltimore, MD 21201
Phone: 410-767-2047
Businesses may be eligible to claim a credit against the State income tax for a portion of the costs incurred to obtain federal security clearances and to construct or renovate certain sensitive compartmented information facilities.
Businesses must submit an application to the Maryland Department of Commerce (DOC) by September 15 of the calendar year following the end of the tax year for which the costs were incurred. DOC shall certify the amount of the approved credit by December 15 of the calendar year following the end of the tax year in which the costs were incurred.
The credit can be taken for tax years beginning after December 31, 2012, but before January 1, 2022.
The Department of Commerce may not exceed $2 million in credits for any calendar year. If the total amount of credits applied for by all businesses exceeds $2 million, the credits will be approved on a pro-rata basis.
The credit is the sum of:
If the credit is more than the State tax liability, the unused credit may be carried forward for succeeding tax years until fully used.
Whenever a credit is claimed against the income tax for Security Administrative Expenses or the costs associated with a SCIF, an addition modification must be made in the amount of the credit claimed in Part J-I, line 3 of the Form 500CR. The add back requirement does not apply to a Qualified Small Business claiming the credit for First-Year Leasing Costs.
During the 2103 Legislative Session, the Maryland General Assembly amended certain provisions of the bill which authorized this tax credit that were effective for Tax Years beginning in 2013. As a result, there are some special provisions that apply when claiming the 2013 tax credit. Contact DOC, or go to their website, if you are claiming the 2013 credit and need more information.
To claim the ESCC tax credit, a business must submit an application to the Maryland Department of Commerce by September 15th following the tax year in which the related expenses and costs were incurred. By December 15th of that year, the Maryland Department of Commerce will certify the approved amount. To claim the credit, the applicant must: 1) file an electronic Maryland income tax return with the Comptroller of Maryland for any taxable year after the taxable year in which the costs were incurred; or 2) file an electronic amended Maryland income tax return with the Comptroller of Maryland. A copy of the Maryland Department of Commerce certification must be included with the return.
Maryland Department of Commerce (DOC)
Division of Business Development, Tax Incentives Group
World Trade Center
401 East Pratt Street, 17th Floor
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041
A qualified co-generator, a public service company, or an electricity supplier that purchases coal mined in Maryland on or before December 31, 2020, may be eligible for a tax credit.
The credit may be taken against corporate income tax or personal income tax, public service franchise tax. The same credit may not, however, be applied to more than one tax type.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
The business must purchase Maryland-mined coal during the tax year. To take the credit against the income tax, an application must be submitted to the State Department of Assessments and Taxation (SDAT).
An electricity supplier must not have been an electric company before July 1, 1999, and both co-generators and electricity suppliers must not be subject to the public service company franchise tax. The total amount of credits approved by SDAT for the tax years 2007 and later are limited. In addition, $2,250,000 of the credits must be reserved for Maryland-mined coal for use in a Maryland facility.
The credit is $3 per ton of Maryland-mined coal purchased during the tax year, but cannot exceed the credit amount approved by SDAT.
The co-generator or electricity supplier may only apply the credit against the State income tax for the tax year in which the credit was earned. The amount of the credit may not exceed the State income tax for that tax year.
An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012.
See Form 500CR Instructions for specific line-by-line instructions.
An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012. The appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and 510 Schedule K-1 for Pass-Through Entities, and Form 502 or 505 for Individuals must be filed to claim this credit. A copy of the certification by the State Department of Assessments and Taxation (SDAT) must be included with the electronic return
Public service company franchise tax:
Computation and schedule must be submitted with the franchise tax return (SDAT Form 11 or 11T).
State Department of Assessments and Taxation
301 West Preston Street
Baltimore, MD 21201-2395
Phone: 410-767-1191
E-mail: [email protected]
Credits may be claimed for eligible project costs incurred to establish, relocate or expand a business facility in a Tier I Maryland county. To qualify for the credit for project costs, a minimum of $500,000 must be spent on eligible project costs. At least 50 newly hired qualified employees must be employed for at least one year at the new or expanded facility for eligibility for the maximum credit of $5,000,000, or at least 25 but fewer than 50 for eligibility for a maximum credit of $2,500,000, or at least 10 but fewer than 25 for eligibility for a maximum credit of $1,000,000. This credit may also be claimed by tax-exempt nonprofit organizations that are qualified business entities against their unrelated business taxable income. If claiming a credit for multiple projects, complete a separate Part P of Form 500CR for each project.
For information on Tier I counties, qualified employees, eligible costs and other requirements businesses must satisfy to qualify for credit, contact:
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438 or 410-767-4980
A business cannot be certified as a qualified business entity by the Secretary of the Maryland Department of Commerce unless the business notifies the Maryland Department of Commerce of its intent to seek certification before hiring any qualified employees to fill the qualified positions.
The qualified business entity must report to the Maryland Department of Commerce the amount of the project tax credit that the entity claims on the entity's tax return for each taxable year that the entity claims any portion of the project tax credit. Failure of the qualified business entity to report the amount claimed disqualifies the entity from claiming any unclaimed amount of the project tax credit.
For any taxable year, if a qualified business entity claims the project tax credit, the qualified business entity cannot also claim a Job Creation Tax Credit authorized under Section 6-304 of the Maryland Economic Development Article.
Pass-through entities (PTEs), filing Maryland Form 510 with eligible project costs must follow the additional instructions following Part P-IV Summary of Form 500CR.
Note: A qualified business entity, which has been certified for the tax credit, may claim a prorated share of this credit, if: (1) the number of qualified positions falls below the minimum number of qualified positions required to qualify for the project tax credit, but does not fall below 10, and (2) the qualified business entity has maintained at least the minimum number of qualified positions required to qualify for the project tax credit for at least five years.
Generally, at any time after the 4th taxable year in which the qualified business entity claims the project tax credit, the business may request a refund of any excess credit. For any taxable year, the total amount claimed as a refund must not exceed the amount of tax that the qualified business entity is required to withhold for the taxable year from the wages of qualified employees under Section 10-908 of the Maryland Tax- General Article.
Credits may be claimed for eligible project costs and for eligible start-up costs incurred to establish, relocate or expand a business facility in a distressed Maryland county. To qualify for the credit for project costs, a minimum of $500,000 must be spent on eligible project costs. At least 25 newly hired qualified employees must be employed for at least one year at the new or expanded facility.
This credit may also be claimed by tax-exempt nonprofit organizations that are qualified business entities against their unrelated business taxable income.
If claiming a credit for multiple projects, complete a separate Part P of Form 500CR for each project.
For information on distressed counties, qualified employees, eligible costs and other requirements, businesses must satisfy to qualify for credit, contact:
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438 or 410-767-4980
Pass-through entities (PTEs), filing Maryland Form 510 with eligible project costs and eligible start-up costs must follow the additional instructions following Part P-IV Summary of Form 500CR.
Note: For tax years beginning after December 31, 2010, a qualified business entity, which has been certified for the tax credit, may claim a prorated share of this credit, if: (1) the number of qualified positions falls below 25, but does not fall below 10, and (2) the qualified business entity has maintained at least 25 qualified positions for at least five years.
Generally, at any time after the 4th tax year but before the expiration of the 15th tax year after the project was placed in service or the business locates to a qualified distressed county, the business may apply the excess to the entity's total Maryland State income tax liability and may request a refund of any excess credit. If the majority of the qualified positions are paid at least 250% of the federal minimum wage, then the refundable years will begin after the 2nd tax year rather than the 4th tax year.
An individual or corporation may claim a credit against the State income tax in an amount equal to $5 for each bushel of oyster shells recycled during the tax year. The credit may not exceed $1,500 per taxpayer.
The credit may be taken against corporate income tax, or the State portion of the personal income tax. A credit may not be allowed against more than one type of tax. Any unused credit amount for the tax year may not be carried forward to any other tax year.
No credit may be earned for any tax year beginning on or after January 1, 2023.
Sole proprietorships, corporations, and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
To claim the credit, an individual or corporation must submit certification from the Maryland Department of Natural Resources, which verifies the amount of oyster shells recycled during the year.
The Comptroller of Maryland will allow a Maryland income tax credit for the amount certified by the Department of Natural Resources, not to exceed the lesser of $1,500 per taxpayer or the amount of the State income tax liability. If the credit is more than the state tax liability, the unused credit may not be carried forward to any other tax year.
The Oyster Shell Recycling Tax Credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. The Form 500CR section of the electronic return must be completed and must include the certification from the Department of Natural Resources.
Maryland Department of Natural Resources
Tawes State Office Building
580 Taylor Avenue
Annapolis, MD 21401
410-260-8300
An individual or corporation may claim a credit against the State income tax for the expense of registering a qualified vehicle in Maryland. The credit may not exceed the lesser of $400 for each qualified vehicle or the State income tax for the tax year.
The credit may be taken against corporate income tax, or the State portion of the personal income tax. A credit may not be allowed against more than one type of tax. Any unused credit amount for the tax year may not be carried forward to any other tax year.
No credit may be earned for any tax year beginning on or after January 1, 2020.
Sole proprietorships, corporations, and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
"Qualified vehicle" means a Class F (Tractor) vehicle described under § 13-923(a) of the Transportation Article that is titled and registered in Maryland. These "tractors" are the ones which pull trailers, as opposed to farm tractors.
For each qualified Class F tractor registered by the taxpayer in Maryland, the Comptroller will allow a Maryland income tax credit for the lesser of:
If the credit is more than the state tax liability, the unused credit may not be carried forward to any other tax year.
Businesses that invest in research and development in Maryland may be entitled to an income tax credit. The total credits for all businesses may not exceed $9 million a year.
This credit is available for tax years beginning after December 31, 1999, but before January 1, 2020.
The credit may be taken against corporate income tax or State portion of the personal income tax. Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
Research and Development tax credits certified after December 15, 2012 are refundable for a "small business" to the extent that the tax credits exceed the income tax liability for that taxable year. A "Small Business" is defined as a for-profit corporation, limited liability company, partnership or sole-proprietorship with net book value assets totaling at the beginning or the end of the tax year for which the Maryland qualified research and development expenses are incurred, as reported on the balance sheet, less than $5,000,000.
The business must invest in research and development activities in Maryland during the tax year. The business must also submit an application for the credit to the Maryland Department of Commerce (DOC) by September 15 of the year following the tax years in which the Maryland qualified expenses were incurred.
In addition to submitting the application to DOC, small businesses must submit documentation showing they had net book value assets, at the beginning or end of the tax year, as reported on the balance sheet, of less than $5 million.
If the total Basic tax credits applied for in a tax year exceed $4.5 million, the businesses' Basic tax credit will be prorated. If the total Growth tax credits applied for in a tax year exceed $4.5 million, the businesses' Growth tax credit will be prorated.
DOC will certify the amount of credit available to the business by December 15.
There are two types of research and development tax credits available to businesses:
The Maryland base amount is the average annual gross receipts of the business for the four preceding tax years multiplied by the Maryland base percentage. For most businesses, the Maryland base percentage is the percentage that Maryland research and development expenses for the preceding four tax years is of total gross receipts for those years.
If the credit allowed in any tax year exceeds the State income tax for that tax year, a taxpayer may apply the excess as a credit against the State income tax for succeeding tax year until the earlier of:
An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012.
See Form 500CR Instructions for specific line-by-line instructions. For qualified small businesses, the amount in excess of the state tax liability may be refunded.
Whenever the Research & Development Tax Credits are claimed against the income tax, an addition modification must be made for the tax year in which the research and development expenses were paid.
A copy of the required certification from DOC must be included with the appropriate electronic return: Form 500X, the Maryland Amended Corporation Income Tax Return, or Form 502X, Maryland Amended Individual Income Tax Return or Pass-Through Entities Form 510. The Form 500CR section of the electronic amended return must also be completed.
A qualified theatrical production entity may be entitled to a refundable Maryland income tax credit for certain costs incurred in the State that are necessary to carry out a theatrical production activity in the State. This credit is available for tax years beginning after December 31, 2021
To claim the credit, before beginning a theatrical production activity, a qualified theatrical production entity shall apply with the Maryland Department of Commerce (MDOC) for an initial credit certificate for the estimated production costs. To qualify as a theatrical production entity, the estimated total direct costs incurred in Maryland must exceed $100,000. The credit claimed cannot exceed the amount stated in the final certificate.
An initial application describing the anticipated theatrical production activity must be submitted to MDOC by the theatrical production entity before beginning a theatrical production activity. A Preliminary Tax Credit Certificate(s) for these credits cannot be issued until July 1st of the fiscal year from which the credits will be drawn. The Final Tax Credit Certificate(s) will be issued after DOC has reviewed all required closing documentation, including completion of the Agreed Upon Procedures process.
After the production activity is completed, the theatrical production entity must apply to MDOC for a tax credit certificate, providing proof of the total direct costs that qualify for the credit and the number of employees hired and qualifying wages paid. DOC will determine the total direct costs that qualify for a refundable Maryland income tax credit and issue a tax credit certificate for 25% of the total direct costs that qualify for the refundable income tax credit.
A theatrical production entity will not receive more credit than the amount certified by MDOC.
This tax credit is a refundable tax credit, i.e. if the tax credit allowed in any taxable year exceeds the total tax otherwise payable by the qualified theatrical production entity for that taxable year, the qualified theatrical production entity may claim a refund in the amount of the excess.
For taxable years beginning after December 31, 2021, this credit is available only with an electronically-filed return. A copy of the final certificate issued by MDOC must be included with the electronic return, and the Form 500CR section of the return must be completed.
Liz Fitzsimmons, Managing Director
Office of Tourism and Film
Maryland Department of Commerce
401 E. Pratt Street, 14th Floor
Baltimore, MD 21202
Phone: 410-767-6331
E-mail: [email protected]
The Work Opportunity Tax Credit is allowed for wages paid to an individual with barriers to employment who is employed in the State. The credit is limited to the lesser of (1) 50% of the federal Work Opportunity Tax Credit properly claimed on the employer’s federal income tax return for qualifying Maryland wages, excluding any amount carried back or forward from another taxable year, or (2) the State income tax imposed for that taxable year.
The business must qualify for the federal Work Opportunity Tax Credit allowed under § 38 of the Internal Revenue Code. Additional information about the federal credit is here. The Maryland credit is available if the business employs Maryland workers whose wages the employer uses to calculate the federal credit.
The credit is calculated on Form 500CR. Line 2 through 5 of Part O calculate the portion of the federal credit that is attributable to the business's Maryland employees. The Maryland credit entered on line 6 is 50% of the federal credit attributable to Maryland.
The business must follow all IRS procedures for claiming the federal credit, including completing federal Form 8850 (Pre-Screening and Certification Request for the Work Opportunity Credit). The business must provide the Comptroller information about its eligibility for the federal credit and its Maryland employees upon request.
Businesses may claim a credit against the State portion of the income tax for up to 25% of the qualified capital expenses made in connection with the establishment of new wineries or vineyards, or the capital improvements made to existing wineries or vineyards in Maryland.
The Wineries and Vineyards tax credit is available for tax years beginning after December 31, 2012, and no credit may be earned for any tax year beginning on or after January 1, 2021.
The credit may be taken against corporation income tax and the State portion of the personal income tax. Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
For a winery or a vineyard to claim a tax credit, an individual or corporation on behalf of the winery or vineyard must apply to and be certified by the Maryland Department of Commerce (DOC). The winery or vineyard must submit an application to DOC by September 15th following the tax year in which the qualified capital expenses were incurred.
A qualified winery is defined as an establishment licensed by the Comptroller of Maryland as either a Class 3 or Class 4 winery.
A qualified vineyard is defined as agricultural lands located in Maryland consisting of at least one contiguous acre used solely to grow grapes and other plants that will be used in the production of wine by a winery licensed by the Comptroller of Maryland.
Qualified capital expenses must be made in connection with the establishment of new wineries or vineyards, or capital improvements made to existing wineries or vineyards in Maryland.
"Qualified capital expenses" include expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or in a winery. Qualified capital expenses do NOT include the cost of construction or installation of buildings or structures, utilities, labor costs, service costs, repair costs, maintenance costs, and general supplies. "Qualified capital expenses" include expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or in a winery. Qualified capital expenses do NOT include the cost of construction or installation of buildings or structures, utilities, labor costs, service costs, repair costs, maintenance costs, and general supplies.
A list of expenses that are "qualified capital expenses" is posted on the Department of Commerce's Website
By December 15th of the year in which the application has been filed, DOC will certify the approved amount of credit. The total Maryland Wineries and Vineyards Tax Credit approved by DOC may not exceed $500,000 for any calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.
To claim the credit, the business must: 1) File an electronic Maryland income tax return with the Comptroller of Maryland for any taxable year after the taxable year in which the qualified capital expenses were incurred; or 2) File an electronic amended tax return with the Comptroller of Maryland for the year in which the expenses were incurred. A copy of the certification from the Maryland Department of Commerce must be included with the return.
DOC will certify up to 25% of the qualified capital expenses; however they may not approve more than $500,000 of tax credits in more than one calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.
If the approved credit is more than the state tax liability, the unused credit may be carried forward for up to fifteen tax years, or until used, whichever comes first.
A copy of the required certification from DOC must be included with the appropriate electronic amended return: Form 500X, the Maryland Amended Corporation Income Tax Return, or Form 502X(or Form 505X), Maryland Amended Individual Income Tax Return or Pass-Through Entities Form 510. The Form 500CR section of the electronic amended return must also be completed.
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041 or (877) 821-0099