Maryland State Tax Credits

Maryland Enterprise Zone Tax Credit Summary

Overview:
Maryland’s Enterprise Zone Tax Credit Program offers income and property tax incentives to businesses located in designated Enterprise Zones or Focus Areas that invest in capital improvements and/or hire new employees. The goal is to stimulate job creation and economic growth in targeted communities.

Who It’s For:
Businesses operating in one of Maryland’s 36 Enterprise Zones or 7 Focus Areas that are expanding operations or hiring new, qualifying employees.

Four Key Highlights:

1. Tax Incentives for Job Creation
   Businesses earn $1,000–$1,500 in income tax credits per new employee—or up to $9,000 over 3 years for hiring certified economically disadvantaged individuals.

2. Substantial Property Tax Relief
   Receive an 80% property tax credit for 5–10 years on improvements to real property, depending on zone type, with Focus Areas offering the most generous benefits.

3. Certification is Mandatory
   Businesses must be certified by the local Enterprise Zone administrator to claim credits and must meet strict employee hour and wage requirements.

4. Location Matters
   Use the Enterprise Zone Map to determine zone eligibility before applying for benefits.

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 One Maryland Tax Credit

Overview:
The One Maryland Tax Credit incentivizes businesses to invest and create jobs in economically distressed areas. It provides substantial tax credits—up to $5 million—for qualified job creation and capital expenditures in Priority Funding Areas within Tier 1 Counties.

Who It’s For:
Businesses expanding or establishing operations in designated Tier 1 Counties in Maryland that plan to invest at least $500,000 and create 10 or more full-time jobs.

Four Key Highlights:

1. High-Value Tax Credits
   Businesses may claim up to $1M–$5M in credits based on the number of full-time jobs created (minimum of 10), with higher amounts for greater job creation.

2. Significant Investment Support
   Eligible project costs include land, equipment, construction, legal fees, and relocation costs—a minimum of $500,000 must be invested to qualify.

3. Strict Timing Requirements
   Companies must file a Declaration of Intent before starting, begin the project within 12 months, complete it within 3 years, and create jobs within 24 months post-completion.

4. Geographic Focus
   Limited to businesses in Tier 1 Counties like Baltimore City, Allegany, Garrett, Washington, and others, supporting growth in economically challenged areas.

Maryland Registered Apprenticeship Tax Credit

Overview:
This tax credit supports Maryland employers who hire and train registered apprentices by offering $1,000 per eligible apprentice in their first year of employment. It encourages workforce development through state-approved apprenticeship programs.

Who It’s For:
Employers in Maryland who are either Registered Apprenticeship Sponsors or participating employers in a program approved by the Maryland Apprenticeship and Training Council.

Four Key Highlights:

1. $1,000 Per Apprentice
   Employers can claim a $1,000 tax credit for each eligible apprentice employed for at least 7 months, hired on or after January 1, 2017.

2. No Apprentice Cap Per Employer
   There’s no limit on the number of apprentices an employer can claim, though the statewide cap is $500,000 per year—awarded on a first-come, first-served basis.

3. Credit Carryforward
   Unused credits can be carried forward until fully used, providing continued tax relief across future taxable years.

4. Must Be State-Registered
   Both employers and apprentices must be officially registered with the Maryland Apprenticeship and Training Program before applying for the credit.

More Jobs for Marylanders Incentive Program

Overview:
This program provides refundable income tax credits for qualifying Maryland businesses that create high-quality jobs, especially in manufacturing and Opportunity Zones. While new applications are no longer accepted, businesses with an Enrollment Certificate issued before June 1, 2024 remain eligible for ongoing benefits.

Who It’s For:
Manufacturing businesses statewide and non-manufacturing businesses located in Maryland Opportunity Zones—only if they enrolled before June 1, 2024.

Four Key Highlights:

1. Long-Term Tax Credit Per Job
   Eligible businesses receive a refundable tax credit equal to 4.75% of wages per Qualified Position—for up to 10 years in Tier 1 areas and 5 years in Tier 2 areas.

2. High-Quality Job Requirements
   Jobs must be full-time (35+ hrs/week) and pay:

   • At least 150% of Maryland's minimum wage for manufacturers.

   • At least $50,000 annually for non-manufacturers.
     Each position must be filled for 12 months before qualifying.

3. Strict Enrollment & Wage Deadlines
   Only businesses with Enrollment Certificates issued before June 1, 2024 can continue. Wages must meet rising thresholds:

   • $18.75/hr (2022), $19.88/hr (2023), $22.50/hr (2024).

4. Priority-Based Annual Credit Distribution
   Credits are subject to fiscal year caps and issued by a priority order—favoring Tier 1 projects and returning applicants. Ongoing compliance and annual applications are required.

Maryland Innovation Investment Tax Credit (IITC)

Overview:
The Maryland Innovation Investment Tax Credit encourages equity investments in early-stage, tech-focused Maryland companies by offering up to 50% in refundable tax credits to qualifying investors. The program supports innovation in key sectors while stimulating regional growth through special zone enhancements.

Who It’s For:
Individual or corporate investors making a minimum $25,000 investment in a Qualified Maryland Technology Company (QMTC)—especially those investing in Opportunity Zones or RISE Zones.

Four Key Highlights:

1. High-Value Refundable Tax Credits
   Investors can earn:

   • 33% of their investment (up to $250K normally or $300K in Opportunity Zones – Level 1)

   • 50% (up to $500K) if:

     • Investing in specific rural counties (Allegany, Dorchester, Garrett, Somerset)

     • Investing in RISE Zones

     • Participating in Opportunity Zone Level 2

2. Strict QMTC Eligibility Criteria
   The startup must:

   • Be based and headquartered in Maryland

   • Own/license proprietary tech

   • Have fewer than 50 employees

   • Not be publicly traded or enrolled in the biotech tax credit program

3. First-Come, First-Served Program
   The program is capped by the state’s annual budget. Credits are allocated in the order applications are received, making early application essential.

4. FY2025 Application Dates to Know

   • QMTCs (Form B): Open August 20, 2024

   • Investors (Form A): Open September 3, 2024

   • Investor Queue Registration: Starts September 25, 2024

Maryland Employer-Provided Long-Term Care Insurance Tax Credit

Overview:
This Maryland tax credit rewards employers who offer long-term care insurance as part of their benefits package. The credit equals 5% of the cost paid by the employer, with a cap of $5,000 or $100 per covered employee, whichever is lower.

Who It’s For:
Maryland-based employers—including sole proprietors, corporations, nonprofits, partnerships, S-Corps, LLCs, and business trusts—that provide long-term care insurance to their employees.

Four Key Highlights:

1. 5% Tax Credit on Employer Costs

   • Covers 5% of what the employer pays toward long-term care insurance.

   • Maximum: $100 per employee or $5,000 total.

2. Broad Tax Use & Flexibility

   • Can apply to corporate or personal income tax, insurance premiums tax, or public service company franchise tax.

3. 5-Year Carryforward

   • If the credit isn’t fully used, it can be carried forward for up to five years.

4. Electronic Filing Required

   • All returns must be filed electronically using Form 500CR.

   • Additional forms may be required depending on the tax type (e.g., AT3-74 for franchise tax).

Maryland Community Investment Tax Credit (CITC)

Overview:
The CITC encourages businesses and individuals to support community nonprofits by offering a 50% Maryland income tax credit for contributions to DHCD-approved programs. This makes charitable giving more financially impactful while supporting neighborhood revitalization.

Who It’s For:
Maryland-based individuals or businesses making approved donations to eligible nonprofits in a certified Community Investment Program.

Four Key Highlights:

1. 50% Tax Credit for Donations

   • Applies to cash or real property donations.

   • Maximum credit: $250,000 per taxpayer per year.

2. Carry Forward for 5 Years

   • Non-refundable credit can be applied to future Maryland tax liabilities for up to five years.

3. Approval Required Before Claiming

   • Contributions must be pre-approved by DHCD to qualify for the credit.

4. Flexible for Individuals & Businesses

   • Individuals file with Form 502CR (Part H);
     PTE members or business entities use Form 500CR.

   • Attach DHCD approval letter with tax filing.

Endow Maryland Tax Credit

Overview:
Endow Maryland rewards donors who invest in their local communities by supporting permanent endowment funds at Maryland-based community foundations. Donors can earn a 25% Maryland income tax credit on eligible contributions that strengthen long-term charitable giving in the state.

Who It’s For:
Individuals and businesses making qualified charitable donations to permanent endowment funds at eligible Maryland community foundations.

Four Key Highlights:

1. 25% Tax Credit for Donations

   • Applies to cash or publicly traded securities.

   • Maximum credit: $50,000 per taxpayer per year.

2. Pre-Approval Required

   • Donations must be certified by DHCD before claiming the credit.

3. 5-Year Carryforward

   • Unused credit can be carried forward for up to five years.

4. Tax Filing Requirements

   • Individuals: Use Form 502CR (Part I).

   • Pass-through entities: Use Form 500CRW.

   • Attach DHCD approval letter with your return.

   • Add donation back to taxable income (per Maryland instructions).

Maryland Commuter Tax Credit

Overview:
The Maryland Commuter Tax Credit incentivizes employers to reduce traffic congestion and support greener commuting. Employers can earn a 50% tax credit (up to $100 per employee/month) for providing qualified commuter benefits like transit passes, vanpool subsidies, or cash-in-lieu-of-parking programs.

Who It’s For:
Maryland-based employers—including corporations, sole proprietors, nonprofits, and pass-through entities—who offer subsidized commuting benefits to employees.

Four Key Highlights:

1. 50% Monthly Credit for Commuter Costs

   • Covers eligible expenses such as MTA, WMATA, MARC, and vanpool programs.

   • Capped at $100 per employee per month.

2. Applies to Multiple Tax Types

   • Can be used against corporate/personal income tax, insurance premium tax, or payroll tax withholding (for nonprofits).

3. No Carryforward Allowed

   • Credit must be used in the tax year earned; unused amounts are forfeited.

4. Annual Registration & Electronic Filing Required

   • Employers must register annually and file electronically using Form 500CR (or MW508CR for payroll tax claims).