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One Maryland Tax Credit

Businesses that invest in an economic development project in a “qualified distressed county” may qualify for project tax credits of up to $5 million and start-up tax credits of up to $500,000. 

Project Tax Credit

Up to $5 million based on qualifying costs and expenses incurred with the acquisition, construction, rehabilitation, installation, and equipping of an eligible project.  Eligible costs include land acquisition, performance and contract bonds, insurance, architectural and engineering services, environmental mitigation, and utility installation.  Eligible costs must be at least $500,000. Project costs exceeding $5 million are not eligible.

Start-up Tax Credit

Expense of moving a business from outside Maryland and for the costs of furnishing and equipping a new location.  Eligible costs include the cost of fixed telecommunications, office equipment, and office furnishings.  Credit cannot exceed the lesser of $500,000 of eligible costs or $10,000 times the number of new, positions created. 

Qualifying

Business must meet the following requirements:

  • Location –  “Priority Funding Area” in a “qualified distressed county.”  Baltimore City, Allegany, Caroline, Dorchester, Somerset, Washington and Worcester counties.  Subject to change.
  • Declaration of Intent – The business must notify DBED of its intent to seek certification prior to creating jobs or incurring expenses.
  • Certification – The business must apply to and be certified by DBED as an eligible business entity.
  • Job Creation Minimums – The business must create at least 25 new, full-time positions at the project within 24 months, and the positions must be filled for 12 months.
  • The project must be engaged in an eligible activity.

Claiming Credits

A qualified business entity may claim both the project and start-up tax credits.  The business has up to 14 years after the tax-year in which the project is placed in service to take the credits.

In years one through five, the business may apply the start-up credits against its Maryland income tax liability.  In years six through 15, it may apply the start-up credits against its Maryland income tax liability and in addition, claim a refund subject to the payroll withholding of the qualified employees.

In years one through five, the business may apply the project income tax credit against the income tax arising from the project.  In years six through 15, it may apply the project credits against the income arising from the project and in addition, apply the project credits against its non-project income and claim a refund, both of which are limited to the payroll withholding of the qualified employees.

Additional Resources
Employment Affidavit
Preliminary Application
Final Application
Statute
Regulations
Frequently Asked Questions

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