Job Creation Tax Credit
Maryland provides a $1,000 tax credit to businesses that create new jobs to encourage businesses expanding or relocating to Maryland.
Calculating the Credit
The credit is 2.5% of aggregate annual wages for all newly created, full-time jobs - $1,000 per new job. In a revitalization area, increased to five percent of annual wages, up to $1,500 per new job. Credits can not exceed $1 million per credit year. If the credit is more than the tax liability the unused credit may be carried forward for five years.
Qualifying for the Credit
Declaration of Intent – A business may not claim any employees hired prior to the business notifying the Department of Business and Economic Development (DBED) of its intent to seek certification for the Job Creation Tax Credit.
Certification – A business must be certified as a qualified business entity eligible for the tax credit. To be certified, a business must submit applications to DBED.
Job Creation Minimums – The business must create 60 new, full-time jobs at the expanding or new facility during a 24-month period. In designated “Priority Funding Areas” (defined below), the minimum is 25. Outside “Priority Funding Areas” the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new employees exceeds 60 multiplied by the State’s average annual salary ($2.85 million for 2009). The positions must be filled for 12 months.
The facility must be engaged in an eligible activity.
The expansion or establishment of a business must be at a single location in the state. A single firm may have more than one eligible location, provided that each is certified and meets the requirements of the statute.
Eligible Business Activities
- Transportation or communications
- Agriculture, forestry, fishing or mining
- A public utility
- Research, development, or testing
- Computer programming, data processing or other computer related services
- Central financial, real estate or insurance services
- The operation of central administrative offices or a company headquarters
- Business services firms (only located in a "Priority Funding Area")
A business may also be engaged in the operation of entertainment, recreation, cultural or tourism related activities in a multi-use facility located within a revitalization area if the facility generates a minimum of 1,000 new full-time equivalent filled positions in a two-year period.
Job Creation Tax Credit Priority Funding Areas
A business that locates or expands in a “Priority Funding Area” must only create a minimum of 25 new positions to qualify for the Job Creation Tax Credit. A “priority funding area” is defined for the purposes of the Job Creation Tax Credit as:
- State Enterprise Zone
- Federal Empowerment Zone
- DHCD Designated Neighborhood
- Incorporated Municipality
- Areas inside the I-495 and I-695 beltways
- County designated growth area
Applications & Certifications
The Job Creation Tax Credit remains in effect until January 1, 2020, subject to extension by the Maryland General Assembly.
Frequently Asked Questions