Every corporation and association generating income allocable to the State of Maryland is required to file an income tax return with the state. The tax rate is 8.25 percent of net income allocable to Maryland.
- Depreciation allowances in the state follow the federal Modified Accelerated Cost Recovery System.
- A corporation, in computing Maryland taxable income, may deduct from federal net taxable income dividends received from foreign subsidiaries, if the corporation owns 50 percent or more of the foreign subsidiary.
Apportionment
- Corporations whose trade or business is carried on partly within the state generally allocate business income to Maryland through the use of a three-factor, double-weighted sales factor formula of sales, property, and payroll.
- Recent legislation changes the apportionment for manufacturers (NAICS 11, 31, 32 or 33) to a single sales factor formula so that income tax liability is based solely on their percentage of in-state sales.
- Apportionment for service companies is based on the three-factor formula, and service receipts are sourced by the location of the taxpayer's customer, as opposed to the state in which the taxpayer incurred the greatest cost in providing the service.
If the formula used produces an inequitable result, the State Comptroller has the authority to alter it and to devise a more equitable basis for taxation.
State Corporate Income Tax Rates for 2008
| State |
Rate
|
| Delaware |
8.7% |
| Illinois |
7.3% |
| Maryland |
8.25% |
| New Jersey |
9.0% |
| New York |
7.1% |
| North Carolina |
6.9% |
| Ohio |
8.5% |
| Pennsylvania |
9.99% |
| Virginia |
6.0% |
| West Virginia |
8.75% |
*Top rate for states with multiple brackets.
Source: CCH.
Non Corporate Business Income Tax
Subchapter S corporations, limited liability companies, partnerships, and sole proprietorships report income on their personal income tax returns.
Significant Income Tax Incentives
Additional information on corporate taxes is available through the
Comptroller of Maryland.
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Additional tax data for states and Maryland counties can be found in the Comparisons Tool . |
