The Maryland Guide to State Tax Incentives

Maryland may be a small state, but it has a bevy of government resources for businesses at every stage of growth—and in a wide range of industries. If you own a business in Maryland or you’re considering starting one, it’s important to consider the tax incentives at your disposal.

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Here’s a list of Maryland business tax incentive programs and business tax credits.

Maryland business tax incentives

Biotechnology Investment Incentive Tax Credit (BIITC)

The Biotechnology Investment Incentive Tax Credit (BIITC) is available to investors and businesses that invest in Qualified Maryland Biotechnology Companies (QMBCs). The credit amount is equal to 33% of the investment amount, up to $250,000. If the QMBC is located in Allegany, Dorchester, Garrett, or Somerset County, the credit is equal to 50% of the investment, up to $500,000.

Businesses can also get enhanced tax credits for investing in a QMBC located in a federally designated Opportunity Zone. For Level 1, the credit is 65% of the investment, up to $575,000; for Level 2, the credit is 75% of the investment, up to $750,000.

To qualify for the credit, you need to invest at least $25,000 in a QMBC. To qualify as a QMBC, the biotechnology company must have headquarters in Maryland, fewer than 50 full-time employees, have been in active business no longer than 12 years, and be certified by the Department of Commerce as a QMBC.

Learn more about the credit and how to apply here.

Brownfields Revitalization Incentive Program (BRIP)

The Brownfields Revitalization Incentive Program (BRIP) gives businesses tax credits for rehabilitating or restoring designated brownfield areas. Brownfields are properties that have been damaged by hazardous substances, pollutants, or contaminants.

Qualifying businesses can get a real property tax credit between 50–70% of the property tax attributable to the increase in the assessed value of the site. Brownfields located in the following jurisdictions are eligible:

Counties: Allegany, Anne Arundel, Baltimore, Baltimore City, Cecil, Dorchester, Frederick, Howard, Montgomery, Prince George’s, Queen Anne’s, Somerset, and Worcester
Municipalities: Colmar Manor, Cumberland, Frederick, Salisbury, and Taneytown

Apply for the program here.

Data Center Maryland Sales and Use Tax Exemption Incentive Program

Under this program, Maryland data centers that meet certain criteria can get a sales and use tax exemption on the purchase of qualified data center personal property.

To qualify, data centers need to meet the following criteria:

Create at least five qualified positions paying at or above 150% of the state minimum wage
Make a minimum investment of at least $2 million in qualified data center personal property for a business located in a Tier 1 area and $5 million for a business located anywhere else in Maryland

Learn more about the program and apply here.

Enterprise Zone (EZ) Tax Credit

Under the Enterprise Zone (EZ) Tax Credit program, businesses located in designated EZs can get tax credits for meeting certain hiring and investment minimums. There are two possible tax credits:

The General Income Tax Credit is a one-time $1,000 tax credit for each qualified new employee filing a newly created position in an enterprise zone or a one-time $1,500 credit for each qualified new employee in an enterprise zone focus area.
The Income Tax Credit for Economically Disadvantaged Employees is a three-year period tax credit for each qualified new economically disadvantaged employee hired, ranging from $1,000 to $4,500.

Businesses can also get a real property tax credit against local real property taxes on a portion of real property expansion, renovation, or capital improvement. The credit amount is 80% of the eligible assessment in each of the first five taxable years.

Get more information on the program here.

Maryland Film Production Activity Tax Credit

The Maryland Film Production Activity Tax Credit is available to film production companies that set their projects in Maryland.

Qualified film productions can get a refundable income tax credit of up to 28% of the total direct costs of a film production activity or 30% of the total direct costs for a series. The maximum credit amount per project is $10 million; for Maryland Small Films, the maximum credit amount per project is $125,000.

To qualify, film productions have to spend at least $250,000 on their project in the state of Maryland. Maryland Small Films has to spend at least $25,000.

Visit this page to learn how to apply for the credit.

Hire Our Veterans Tax Credit

Maryland’s Hire Our Veterans program offers an income tax credit to businesses that hire qualified veterans. The credit is equal to 30% of the first $6,000 of wages paid to a qualified veteran during the first year of employment, up to $1,800.

The credit only applies to tax years between 2017 and 2020. Businesses that hire qualified veterans after 2020 can apply for the Job Creation Tax Credit (more on that below).

Get more information on the credit here.

Job Creation Tax Credit (JCTC)

Maryland businesses that locate to or expand within Maryland—and create new full-time jobs—can qualify for the Job Creation Tax Credit (JCTC). The credit is equal to $3,000 per new job and $5,000 per new job if the business locates to or expands in a revitalization area.

The credit increases to $4,000 per new job if the business fills the position with a qualified veteran employee and $6,000 per job if the qualified veteran employee lives in a revitalization area.

Businesses can get an additional income tax credit of $2,500 for hiring at least one qualified veteran employee to fill a new full-time position—and retaining that employee for one year.

To qualify for the JCTC, businesses need to meet the following requirements:

Create a minimum of 60 jobs anywhere in the state, 25 jobs in a JCTC Priority Funding area, and ten jobs in counties with either an annual average employment of less than 75,000 or a median household income of less than two-thirds of the statewide median household income
Create the new jobs within a two-year period
Retain the new employees for at least one year before applying for final certification
Pay the new employees at least 120-150% of the state minimum wage

Learn more about the JCTC here.

Before you start searching for job candidates, review these critical steps to take for hiring employees in Maryland.

Innovation Investment Tax Credit

The Innovation Investment Tax Credit rewards investors for investing in a Qualified Maryland Technology Company (QMTC).

Investors can get an income tax credit equal to 33% of their investment amount, up to $250,000; the tax credit goes up to 50% of the investment amount if the QMTC is located in Allegany, Dorchester, Garrett, or Somerset County.

Businesses can also get enhanced tax credits for investing in a QMTC located in a federally designated Opportunity Zone. For Level 1, the credit is 3% of the investment, up to $300,000; for Level 2, the credit is 50% of the investment, up to $500,000.

To qualify for the credit, you need to invest at least $25,000 in a QMTC. To qualify as a QMTC, the technology company must have headquarters in Maryland, have an aggregate capitalization of at least $100,000, and have fewer than 50 full-time employees.

Apply online here.

Maryland Commuter Tax Credit

With the Maryland Commuter Tax Credit, Maryland businesses can get a tax credit for providing their employees with commuter benefits. Those include stipends and reimbursements for public transit, company vanpools, a guaranteed ride home program, carpool programs, cash in lieu of parking, telework programs, and active transportation subsidies.

The credit is equal to 50% of the cost of commuter benefits, with a maximum of $100 per individual employee per month. Apply for the credit here.

Offering commuter benefits is just one way to practice environmental sustainability in your business—here are other ways to engage your employees with sustainability.

One Maryland Tax Credit

The One Maryland Tax Credit incentivizes businesses in Tier 1 counties in Maryland to invest in economic development projects and create new jobs. Tier 1 counties include Allegany, Baltimore City, Caroline, Dorchester, Garrett, Kent, Somerset, Washington, Wicomico, and Worcester.

The amount of tax credit a business gets depends on how much it invests and how many new jobs it creates. Here are the possibilities:

$1 million in credits for businesses that create 10-24 qualified job positions
$2.5 million in credits for businesses that create 25-49 qualified job positions
$5 million in credits for businesses that create at least 50 qualified job positions

To qualify for the credit, a business needs to meet the following criteria:

Be located in a Priority Funding Area in a Tier 1 county
Have at least $500,000 of eligible costs
Get certified by the Maryland Department of Commerce as eligible for the credit
Create at least ten new full-time positions within 24 months. The positions must be filled for 12 months and pay 120% of the state minimum wage

Apply online here.

Regional Institution Strategic Enterprise (RISE) Zone Program

The Regional Institution Strategic Enterprise (RISE) Zone Program incentivizes businesses to locate to—or expand within—a designated RISE Zone. A RISE Zone is an area with a qualified institution (such as a university) that has the potential for increased economic and community development.

The current RISE Zones are the University of Maryland Baltimore, Towson University, Montgomery College, and Greater College Park.

Businesses that start up in a RISE Zone or make substantial capital investments can take advantage of:

A real property tax credit: A five-year credit against the property tax on a portion of the real property expansion, renovation, or capital improvement. The amount of the credit is at least 50% of the “eligible assessment” in the first year and at least 10% in the second through fifth taxable years.
Income tax credit: A one-time $1,000 tax credit for each qualified new employee filling a newly created position in a RISE Zone, and a $6,000 credit claimed during a three-year period for hiring an economically disadvantaged employee in a RISE Zone.

Learn more about the program here.

Maryland Research and Development (R&D) Tax Credit

Maryland has its own Research and Development (R&D) Tax Credit for businesses that incur qualified research expenses in the state. The credit amount is equal to 10% of the eligible R&D expenses in excess of the Maryland Base Amount, not to exceed $250,000.

To qualify for the credit, Maryland businesses need to undertake R&D work that meets the federal R&D requirements: technological in nature; used to improve the functionality, performance, reliability, or quality of a new or existing business component; used to gather information that will help eliminate uncertainty around the development of a product; and involve a process of experimentation, such as testing or modeling.

Apply for the credit here.

Small Business Relief Tax Credit

Maryland’s Small Business Relief Tax Credit is available to small businesses that give their employees paid sick and safe leave. The credit is $500 per employee, up to $7,000 per business.

To qualify for the credit, a business needs to meet the below criteria:

Employ 14 or fewer employees whose primary work location is in Maryland
Provide employees with one hour of paid sick and safe leave for every 30 hours worked, paid at the same rate as an employee’s normal hourly wages

Apply for the credit and see FAQs here.

Get the full breakdown on Maryland small business taxes.

Theatrical Production Tax Credit

The Theatrical Production Tax Credit available to eligible theatrical productions that incur expenses in Maryland. Production companies can get a state income tax of 25% of qualified production costs (think: set design and operation, special and visual effects, wardrobe, makeup, sound, and lighting), up to $2 million.

To qualify, production companies must incur at least $100,000 in direct production costs in Maryland. National touring productions and pre-Broadway productions are eligible to apply.

Get more information on the credit here.

Maryland city and county tax credits

Many Maryland counties and cities have their own business tax incentive programs, so don’t forget to browse your city website for details.

Maryland business financing

The tax relief you get from business tax credits only goes so far. If you need more capital, it’s time to explore state financing resources. Maryland has innumerable grant and loan options for businesses of all sizes.

Gusto’s Maryland guide to business grants and loans breaks them all down for you.