March 21, 2019
Maryland Business Tax Credits and Incentives – Updated for 2019
It’s tax season, Maryland! Here’s everything you need to know about Maryland business tax credits and incentives for the 2019 filing season.
If you would like additional information about Maryland business tax deductions, credits and incentives, visit Maryland Business Taxes or the Maryland Department of Business & Economic Development.
Who Must File
All corporations and associations with income allocable to the State of Maryland are required to file an income tax return with the state on Form 500. The corporate tax rate is 8.25 percent of the net income allocable to Maryland.
When and How to File
Business income tax returns for the year 2018 must be filed by April 15 or by the original due date required for filing the federal return. Maryland form 500 must be filed electronically to claim business income tax deductions and credits.
Business Personal Property and Local Taxation Requirements
In Maryland, businesses must pay an annual tax based on the value of their business personal property, including furniture, fixtures, tools, machinery, equipment, etc. The state Department of Assessments and Taxation (DAT) administers the valuation process, however individual counties and towns collect the tax based on the location of the property.
The DAT automatically registers corporations, limited liability companies, limited partnerships and limited liability partnerships for this tax when these legal entities form. All other businesses, such as sole proprietorships and general partnerships, that own or lease personal property or need a business license are required to:
- Obtain an identification number by registering with the DAT; and
- File an annual Maryland business personal property return.
Tax credits provide new and existing businesses in various industries and geographic locations the opportunity to reduce costs, spur investment and create jobs through targeted corporate tax incentives. There are four new business tax credits available for the 2019 filing season:
Small Business Relief Tax Credit: Allows that small businesses which employ a qualified employee may claim a credit against state income tax for certain benefits provided to that employee. A qualified employee is one who earns wages equal to or less than 250% of the annual federal poverty guidelines for a single-person household.
Cybersecurity Incentive Tax Credit: A credit is available for an investment in a qualified Maryland cybersecurity company (QMCC). A qualified investor is an individual or entity that invests at least $25,000 in a QMCC that is required to file an income tax return in any jurisdiction.
Entergy Storage Systems Tax Credit: For certain costs to install an energy storage system paid or incurred during the taxable year. You must obtain a tax credit certificate from Maryland Energy Administration before claiming this credit.
More Jobs for Marylanders Tax Credit: Allows that a manufacturing business which is located within Maryland may be entitled to a 10-year income tax credit based on the total amount of wages paid for each qualified position at an eligible facility.
Two business tax credits have been modified for the 2019 filing season:
- Single Sales Factor Apportionment: For apportioning income to the state for corporate income tax purposes, a single sales factor formula will be phased in over a five-year period beginning in tax year 2018.
- One Maryland Economic Development Tax Credit: The eligibility requirements have been expanded. The number of new jobs required has been lowered to 10 qualifying positions for eligibility for a maximum credit of $1,000,000. Tax credit may be claimed against the entire income of the business, rather than only the income from the One Maryland project.
Maryland offers a variety of corporate tax incentives, write-offs, exemptions and credits to help businesses grow and prosper, including:
- Aerospace, Electronics or Defense Contract
- Apprentice Employee
- Biotechnology Investment Incentive
- Businesses that Create New Jobs
- Cellulosic Ethanol Technology Research and Development
- Clean Energy Incentive
- Community Investment
- Cybersecurity Investment Incentive Tax Credit
- Employer Provided Long-Term Care Insurance
- Endow Maryland Tax Credit
- Enterprise Zone Tax Credit
- Film Production
- Green Building Tax Credit
- Health Enterprise Zone Hiring Tax Credit
- Heritage Structure Rehabilitation
- Job Creation
- Maryland Disability Employment
- Maryland Employer Security Clearance Costs
- Mined Coal
- One Maryland Economic Development
- Oyster Shell Recycling
- Qualified Vehicle Tax Credit
- Small Business Research and Development
- Wineries and Vineyards
In addition to the tax incentives and credits for businesses listed above, Maryland offers the following benefits:
- No gross receipts tax on manufacturers
- No corporate franchise tax
- No unitary tax on profits
- No income tax on foreign dividends (if the corporation owns 50 percent or more of the subsidiary)
- No tax on intangible property
- No separate school taxes
Maryland also offers specialized financing and tax incentive resources for small businesses, veteran-owned businesses and minority- and woman-owned businesses to help with a variety of needs including:
- Modernization of manufacturing equipment
- Land acquisition and infrastructure improvements
- Machinery and equipment purchases
- Development of commercial opportunities
- Financing for the economically disadvantaged
Let Revere help you make filling your Maryland corporate tax return easier. Click here to learn about how Revere helps keep your business banking accounts in order, so you have a stress-free tax season.
This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Websites not belonging to this organization are provided for information only. No endorsement is implied.