Maryland Economic Development Directory

Maryland State Incentives

INVEST MARYLAND: Designed to unlock capital for early-stage companies, InvestMaryland will fuel investment in our innovation economy, capitalize small and minority businesses, and replenish the DBED-administered Maryland Venture Fund. The program is effective January 2011 with first round of funds available by June 2012. The program will provide $100 million in insurance premium tax credits that will be auctioned to raise venture capital for the State’s entrepreneurs. Two-thirds of the funds will be invested on behalf of the State by private venture capital firms, while the Maryland Venture Fund and the Maryland Small Business Development Financing Authority will administer the remaining one-third. The bill also allocates $250,000 to the Rural Maryland Council, an organization that promotes the State’s natural resource based industries.

STATE SMALL BUSINESS CREDIT INITIATIVE: Passed as part of President Obama’s Small Business Jobs Act of 2010, this initiative awarded Maryland with $23 million to strengthen existing financing programs that support lending to small businesses. The State is allocating the funds to programs that leverage private lending to help finance small businesses that are creditworthy, but are not getting the loans they need to expand and create jobs.

MARYLAND ECONOMIC DEVELOPMENT ASSISTANCE AUTHORITY AND FUND: There are five financing capabilities offered through the Maryland Economic Development Assistance Authority and Fund (MEDAAF), with assistance being provided to the business community and political jurisdictions. To qualify for assistance from MEDAAF, applicants are restricted to businesses located within a priority funding area and an eligible industry sector. With a few exceptions, assistance cannot exceed 70 percent of the total project costs.

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM: Provides funding to commercial and industrial economic development projects. Program funds are dispersed to a local jurisdiction in the form of a conditional grant and are then used for public improvements or loaned to a business.

MARYLAND VENTURE FUND: A state-funded seed and early-stage equity fund; an evergreen fund that receives annual allocations from the Maryland State Legislature. The Fund makes direct investments in technology and life science companies and indirect investments in venture capital funds. Approximately 60 percent of the Fund is invested in technology companies in the areas of software, communications, and IT security, and 40 percent of the Fund is invested in life sciences companies in the areas of therapeutics, medical devices, and diagnostics.

CHALLENGE INVESTMENT PROGRAM: Provides financing for seed-stage companies to cover a portion of the initial costs associated with bringing new products to market. Initial investments of $50,000 to $100,000 are made with incremental investments to a maximum of $150,000. These incremental investments are awarded based upon the client’s performance and the client’s ability to achieve milestones set by the Maryland Venture Fund at the time of the initial closing.

BIO-HEATING OIL TAX CREDIT: Allows an individual or corporation to claim a credit for each gallon of heating oil blended with biodiesel purchased for space or water heating. For any tax year, the credit allowed under this section may not exceed $500, or the state income tax for that tax year. It is available for the tax years beginning after December 31, 2007, but before January 1, 2018 and remains effective for 10 years. Sole proprietorships, corporations and pass through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.

BIOTECHNOLOGY INVESTMENT TAX CREDIT: An individual or business may be allowed a tax credit of up to 50 percent of the amount contributed to a qualified Maryland biotechnology company, not to exceed $250,000. The credit may be 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, may claim the tax credit.

BUSINESSES THAT CREATE NEW JOBS CREDIT: 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.

CELLULOSIC ETHANOL TECHNOLOGY R&D TAX CREDIT: Businesses that incur qualified research and development expenses for cellulosic ethanol technology in Maryland are entitled to a tax credit. The total credits for all businesses may not exceed $250,000 per year. This credit is available for tax years beginning after December 31, 2007, but before January 1, 2017. The credit may be 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 may claim the tax credit.

CLEAN ENERGY INCENTIVE TAX CREDIT: Businesses that use certain renewable energy sources or waste materials to produce electricity that is sold to an unrelated person may be entitled to an income tax credit. The facility must be placed in service, or co-firing with coal must begin, on or after January 1, 2006, but before January 1, 2016. Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.

COMMUNITY INVESTMENT TAX CREDIT: Businesses and individuals that donate to qualified organizations’ approved projects can earn credits equal to 50 percent of the value of the money, goods or real property contribution operated by tax exempt organizations (under Internal Revenue Code section 501(c)(3)) are eligible for a tax credit of up to $250,000. This credit is in addition to any charitable contribution deduction that is allowed for these contributions on both the state and federal income tax returns. 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.

COMMUTER TAX CREDIT: Maryland-based businesses that provide commuter benefits for employees may be entitled to a tax credit for a portion of the amounts paid during the taxable year. Commuter benefits include certain costs for an employee’s travel to and from home and the workplace, a Guaranteed Ride Home program or a parking “Cash-Out” program. 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.

EMPLOYER-PROVIDED LONG-TERM CARE INSURANCE TAX CREDIT: Employers who provide long-term care insurance as part of an employee benefit package may claim a credit for costs incurred. 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.

EMPLOYMENT OPPORTUNITY TAX CREDIT: Businesses that hire an individual who is receiving Aid to Families with Dependent Children (AFDC) or Family Investment Program (FIP) entitlements may be entitled to a tax credit for wages paid to the employee and for child care and transportation expenses paid on behalf of the employee. The credit may be claimed for individuals hired before July 1, 2009. 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.

ENTERPISE ZONE TAX CREDIT: Businesses located in a Maryland enterprise zone may be entitled to a tax credit for wages paid to newly hired employees. The local enterprise zone administrator must certify the business to qualify for the credit. The credit may be taken against corporate income tax or personal income tax.

JOB CREATION TAX CREDIT: Businesses that expand or establish a facility in Maryland before January 1, 2013, resulting in the creation of new positions in the state may be entitled to a tax credit. The amount of the tax credit is based on the number of positions created or on the wages paid to the new employees hired to fill those positions.

MARYLAND DISABILITY EMPLOYMENT TAX CREDIT: Businesses that hire people with disabilities may be entitled to a tax credit for wages paid to the employees and for child care or transportation expenses paid on behalf of the employees. A person with a disability includes a veteran released from the armed forces for a service-related disability. The credit may be claimed for individuals hired before July 1, 2012.

MARYLAND-MINED COAL TAX CREDIT: A 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.

ONE MARYLAND ECONOMIC DEVELOPMENT TAX CREDIT: Certain businesses that establish or expand a business facility in a priority funding area or as part of a project approved by the Board of Public Works, and that are located in a “distressed” Maryland county, may be entitled to a tax credit for costs related to the new or expanded facility. A “distressed” county has, for the most recent 24-month period, an average rate of unemployment that is 150 percent higher than the statewide average or an average per-capita personal income that is equal to or less than 67 percent of the statewide average, and includes a county (including Baltimore City) that no longer meets one of these requirements, but did so at some time during the preceding 12-months.

R&D TAX CREDIT: Businesses that incur qualified research and development expenses in Maryland are entitled to a tax credit. The total credits for all businesses may not exceed $6 million per year.

SUSTAINABLE COMMUNITIES TAX CREDIT: This credit replaces the Heritage Structure Rehabilitation Tax Credit as of June 1, 2010. This credit is an expansion of the Heritage Structure Tax Credit and alters eligibility requirements of the credit. A refundable credit may be allowed for substantial expenditures incurred to rehabilitate certified structures in Maryland on or after June 1, 2010, but before July 1, 2014.

TELECOMMUNICATIONS PROPERTY TAX CREDIT: A telecommunications company that is a public utility is allowed a credit for a portion of the total property taxes paid by the company on its operating real property in Maryland, other than operating land, that is used in its telecommunications business. The credit may be taken only against corporate income tax. Only corporations may claim the tax credit.

WORK-BASED LEARNING PROGRAM TAX CREDIT: Businesses that hire students as part of an approved work-based learning program in the state may be entitled to a tax credit for a portion of the wages paid to the individuals. The credit may be claimed only for tax years beginning after December 31, 2008. The tax credit is in effect for five years and ends June 30, 2013.