Businesses can qualify for up to $5.5 million in income tax credits under the One Maryland Income Tax Credit Program.  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
Project tax credits of up to $5 million are based on qualifying costs and expenses incurred by the business entity in connection with the acquisition, construction, rehabilitation, installation, and equipping of an eligible economic development project.  Eligible costs may include, among others, land acquisition, performance and contract bonds, insurance, architectural and engineering services, environmental mitigation, and utility installation.  Eligible project costs must be at least $500,000; project costs in excess of $5 million are not eligible for the project tax credit.

Start-up Tax Credit
The start-up tax credit is for the expense of moving a business from outside Maryland and for the costs of furnishing and equipping a new location for ordinary business functions. Examples of eligible start-up costs include the cost of fixed telecommunications equipment, office equipment, or office furnishings. The start-up credit earned may not exceed the lesser of $500,000 of eligible start-up costs or $10,000 times the number of new, qualified positions created.

Qualifying for the Credits
In order to claim the One Maryland project and start-up tax credits, a business entity must meet the following requirements:

• Location:  A business must locate or expand in a “Priority Funding Area” in a “qualified distressed county.” Qualified Distressed Counties include:  Baltimore City, Allegany, Dorchester, Garrett, Caroline, and Somerset counties.
• Declaration of Intent:  A business may not claim any employees hired or any project or start-up expenses incurred prior to notifying the Department of Business and Economic Development (DBED) of its intent to seek certification for the One Maryland tax credits.
• Certification:  A business must be certified as a qualified business entity eligible for the One Maryland tax credits.  To be certified, a business must submit applications to DBED.
• Job Creation Minimums:  The business must create at least 25 new, full-time positions at the project within 24 months of the date the project is placed in service, and the positions must be filled for 12 months. 
• The project must be engaged in an eligible activity.

Claiming the 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.
• If the majority of the positions created are paid at 250 percent or more of the federal minimum wage and the first notice of intent to seek certification is filed with DBED on or after July 1, 2002, the excess credit may be used against the tax on non-project income or refunded two years earlier than normally permitted.
• Special provisions apply to non-profits and insurance companies.

For more information on the One Maryland Tax Credit Program, download a copy of the Statute, Regulations, and Frequently Asked Questions.