If your business is creating new full-time jobs in Maryland, you may be entitled to state income tax credits. The Maryland Job Creation Tax Credit rewards businesses that create a minimum number of new full-time positions in Maryland before January 1, 2020.
1. What Are the Credit Details?
The Maryland Job Creation Tax Credit amount varies based on the location of the jobs created.
Revitalization Areas
In revitalization areas, the credit allows for a 5% credit of total annual wages for all newly created, full-time jobs, with a maximum of a $1,500 credit per new job. Businesses must create at least 60 new, full-time jobs or 30 new, high-paying (aggregate annual salary exceeds 60 multiplied by the state’s average annual salary), full-time jobs to qualify for the credit. Revitalization areas include:
- State enterprise zones (get the list of Maryland enterprise zones)
- Federal empowerment zones (currently includes Baltimore, MD)
- Sustainable communities (get the list of sustainable communities in Maryland)
Priority Funding Areas
In priority funding areas, businesses who create more than 25 new, full-time positions can receive up to $1 million in income tax credit per year, with any unused credit being carried forward for five years. Priority funding areas include:
- Incorporated municipalities
- Areas inside the I-495 (Washington, D.C.) and/or I-695 (Baltimore) beltway
- Baltimore City
- Growth areas designated by each county for the purposes of the credit
- Areas already designated as enterprise zones
The Rest of the State
Outside of revitalization and priority funding areas, businesses can receive an income tax credit up to 2.5% of total annual wages for all newly created, full-time jobs in Maryland, with a maximum of a $1,000 credit per new job. Businesses must create at least 60 new, full-time jobs or 30 new, high-paying, full-time jobs to qualify for the credit.
2. How Do I Know If My Businesses Is Eligible?
In order to be eligible to receive a Maryland Job Creation Tax Credit, the following eligibility requirements must be met:
- You must notify the Maryland Department of Commerce of your business’s intent to seek certification for the credit
- Your business must be certified as a qualified business and engage in an eligible activity
- Your business must create 60 new, full-time jobs or 30 new, high-paying, full-time at your facility during a 24-month period, with the following exceptions:
- In designated priority funding areas, the minimum is 25 new jobs.
- Outside of priority funding areas, the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new employees exceeds 60 multiplied by the state's average annual salary.
- The qualified positions your business creates must be:
- Full-time
- Filled for 12 months
- Pay at least 150% of federal minimum wage ($7.25) for a total of $10.88 per hour (as of December 2016)
3. How Do I Claim the Credit?
Once you have received approval from the Maryland Department of Commerce, the credit may be taken for your business. Half of the allowable credit is claimed in the first year, and the remaining half in the following taxable year. If at any time during the three tax years after the year the credit was earned, the average number of qualified positions falls more than 5% below the average number of qualified positions during the year in which the credit was earned, a portion of the credit will be recaptured for the tax year in which this occurs.
Need Help?
To get application materials for the Maryland Job Creation Tax Credit, visit the Maryland Department of Commerce website. If you have questions about applying the credit, or to find out whether your business is eligible, contact us online or call 800.899.4623.
