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More Jobs for Marylanders - Manufacturing Tax Credit

​​​One of Governor Hogan’s top legislative priorities of 2017, More Jobs for Marylanders is a new program that incentivizes and encourages manufacturers to create jobs in areas of Maryland that need jobs the most.

Created for new and existing manufacturing businesses, the Program provides tax incentives tied to job creation for a 10-year period, encourages additional investment in new equipment through accelerated and bonus depreciation and helps to strengthen Maryland’s workforce.

New manufacturing businesses locating in a Tier 1 county and creating at least five news jobs may be entitled to a 10-year (1) income tax credit based on the number of jobs created; (2) State property tax exemption; (3) sales and use tax refund for specific purchases; and (4) waiver of all State Department of Assessment and Taxation fees. Tier 1 jurisdictions include Baltimore City and Allegany, Dorchester, Somerset, and Worcester Counties. Tier 2 counties that have been promoted for Tier 1 benefits, per the Secretary's approval authority to designate three counties, are Baltimore, Prince George's and Washington Counties.​

​Additionally, existing manufacturing businesses will qualify for the 10-year income tax credit if they create five jobs in a Tier 1 county or 10 jobs in a Tier 2 County. Maryland’s Tier 2 includes all remaining counties.​

BENEFITS

Provides tax incentives tied to job creation for a 10-year period

  • New businesses in Tier 1 jurisdictions receive a refundable State income tax credit (5.75% of the wage per new position); State Property Tax Credit ($0.112 per $100 assessed); refund of Sales and Use Tax; and waiver of SDAT fees for the creation of 5 or more new jobs.

  • Existing businesses in Tier 1 and Tier 2 jurisdictions receive a refundable State income tax credit of 5.75% of wage per new position, for the creation of 5 new jobs and 10 new jobs, respectively. 

Encourages additional investment in new equipment through accelerated and bonus depreciation

  • Recouples Maryland to Federal Internal Revenue Code Section 179 and 168(k).

  • Frees up capital more rapidly, for application into facility upgrades, hiring and other growth-related initiatives.

  • Most effective with small manufacturers that need capital to reinvest in their businesses.


  • For tax years beginning after 12/31/2018, under IRC Section 179 manufacturers can expense capital expenditures up to $510,000/year, with the expensing option phased out after $2,030,000 for 2019. 

  • Bonus depreciation under IRC Section 168(k) is independent from IRC Section 179.  Bonus depreciation allows a business to deduct as a depreciation expense, 30% of the adjusted basis of certain qualified property in the year that the property is placed in service after 2019. 

Strengthens Maryland’s Workforce 


  • $1 million for Partnership for Workforce Quality (PWQ)​, providing matching grants to manufacturers that provide incumbent worker training programs. 


  • $1 million for Workforce Development Scholarships to eligible students enrolled in job training programs at community colleges. 


  • $1,000 income tax credit, per apprentice, for manufacturers that employ eligible apprentices. 

  • Additional measures to encourage high schools to provide increased vocational training programs.


ELIGIBILITY

To qualify a business must:
  • Be a manufacturer engaged in activities that according to the North American Industrial Classification System, would be included in Sector 31, 32,​ or 33, except for Refiners.
  • Offer ongoing job training or a postsecondary education program (e.g. tuition reimbursement).
  • A new manufacturer must notify Commerce of its intent to be designated eligible before it establishes a facility in the state.
  • An existing manufacturer must notify Commerce of its intent to be designated eligible for the program incentives before it creates new jobs.
  • New or existing manufacturers in Tier 1 counties must create at least 5 new qualified jobs. (A qualified job is a job that is full-time, pays at least 120% of State minimum wage and is filled for 12 months.)
  • Existing manufacturers in Tier 2 counties must create at least 10 new qualified jobs.
  • Jobs must be created within 12 months of the Notice of Intent. 
  • Be certified by Commerce as a qualified business entity.


APPLY 

  • A manufacturer may submit its Notice of Intent​ beginning June 1, 2017. A new manufacturer must provide notice before establishing its facility in Maryland and an existing manufacturer must provide notice before it begins creating new jobs.
  • Upon receipt of the Notice of Intent, Commerce will provide the business with an application to enroll its project in the More Jobs for Marylanders Incentive Program.
  • Businesses that meet the requirements to enroll their project in the program will be certified by Commerce as a Qualified Business Entity eligible for the applicable incentives available under the program.

Effective Dates 

  • July 1, 2017 – Tax Credit on Property Tax
  • January 1, 2018 – Tax Credits on State Income Tax, Sales & Use Tax
  • January 1, 2019 – Accelerated and Bonus Depreciation
  • Program will sunset on June 1, 2020.  Businesses who have been certified to receive benefits under the program will receive for full ten year duration, subject to appropriation.  Commerce will not certify any additional business after June 1, 2020.


Application Materials 

RESOURCES

CONTACT

For more information, please contact:
 
 
Mark A. Vulcan, Program Manager, Tax Incentives
Maryland Department of Commerce, Office of Finance Programs
401 E. Pratt St, 15th floor
Baltimore, MD 21202​
410-767-6438
877-821-0099
 
 

FREQUENTLY ASKED QUESTIONS

  • What is a Qualified Distressed Jurisdiction (QDC)? How is this determined? Does this change and if so how frequently?
    • ​The following counties are Qualified Distressed Counties, as defined by the Economic Development Statute, Section 1-101(e): Allegany, Baltimore City, Dorchester, Somerset, and Worcester Counties. 

      Qualified distressed counties are counties with average unemployment rate 150% higher than state average unemployment in a 24-month period; or per capita personal income not exceeding 67% of state average in a 24-month period.​

  • How do I apply for Partnership for Workforce Quality (PWQ) funding?
  • Are all manufacturers eligible?
    • ​Manufacturers who are classified under the North American Industrial Classification​ System (NAICS) United States Manual, United States Office of Management and Budget, 2012 Edition, Sector 31, 32, and 33 are eligible for the program.​

  • What is a qualified position?
    • ​A qualified position is one that the employee earns 120% state minimum wage, is full-time, is newly created, and was not moved or transferred from another facility.​

  • How many jobs must be created by businesses in Tier 1 vs. Tier 2?
    • ​Businesses in Tier 1 jurisdictions must create at least 5 new, qualified positions AND offer ongoing job training or postsecondary education program. 

      Businesses in Tier 2 jurisdictions must create at least 10 new, qualified positions AND offer ongoing job training or postsecondary education program.

  • How will Commerce certify that the manufacturer provides a training program?
    • ​As part of a business’ application to the More Jobs for Marylanders program, applicants must answer a brief questionnaire on the training program provided by their facility.​

  • What information must a business submit to Commerce, and when?
    • ​Businesses must submit a Notice of Intent​ prior to creating new jobs. The Notice of Intent must include the anticipated number of jobs to be created and where the facility will be located in the State. Once submitted, a business must create and fill the positions within 12 months of notifying the Department. The Department will begin accepting Notices of Intent after June 1, 2017.​

      Following the Notice of Intent, the business must submit an application with information such as: the anticipated date of establishment and nature of operations; expected location of facility; estimated number of qualified positions to be created; any other info the department requires. 

      Existing businesses must submit all of the above required information, as well as the number of full time positions before the expansion and payroll; estimated number of positions to be created and payroll.

      Additionally, a business must submit their State Department of Assessments and Taxation Entity Identification Number, with Certificate of Status (Certificate of Good Standing)​.

      Applications will be accepted by the Department on an on-going basis, pending available funds.​

  • What information must be submitted to Commerce in application to the program?
    • For NEW businesses to be a certified as a "Qualified Business Entity" following the required Letter of Intent, a business must submit:

      • The anticipated date of the establishment and initial operation of the facility and nature of operations
      • The expected location of the facility
      • The estimated number of qualified positions to be created and qualified employees to be hired and the anticipated payroll of the new qualified employees
      • And any other information Commerce requires.

      For EXISTING businesses to be certified as a "Qualified Business Entity," following the Letter of Intent, a business must submit the above required information as well as the number of full-time employees existing before the expansion.

  • What benefits are received in each Tier?
      • ​TIER ONE NEW BUSINESS: Refundable State Income Tax Credit, Tax Credit for State Property Taxes, Refund of Sales and Use Taxes for goods and services solely for that facility, Waiver of all SDAT fees. 

      • TIER ONE EXISTING BUSINESS: Refundable State Income Tax Credit.

      • TIER TWO EXISTING BUSINESS: Refundable State Income Tax Credit​.

  • What happens if the employment number falls?
    • ​As stated under Section 6-804 of the Economic Development Article (statute), “if the eligible number of qualified positions at the eligible project decreases to a number less than the number established in the first benefit year, the project shall be removed from the program and all program benefits will terminate.” ​

  • Will the businesses have to use an independent CPA to verify the information?
    • ​As stated under Section 6-807 of the Economic Development Article (statute), “The Department may require that any information provided under this subtitle be verified by an independent certified public accountant that that qualified business entity and the Department select.” ​

  • Who do I contact in regards to the Maryland Higher Education Commission Workforce Development Sequence Scholarships?
    • For inquires on the MHEC Workforce Development Sequence Scholarships please contact: Donna Thomas, Director, Office of Student Financial Assistance, MHEC– 410-767-3109.

  • What is the State withholding amount listed in Section 10-105(A) of the Tax General article?
    • ​As stated under Section 10-741(B)(1) of the Tax General Statute, a Tier 1 new or existing business, or a Tier 2 existing business is eligible for a credit against the state income tax.  This is defined in Section 10-741(B)(2)(i) as being equal to the highest tax rate listed in Section 10-105(A) of the Tax General Article. In referencing this, this is equal to 5.75% of Maryland taxable income.​

  • How will this program show preference to Tier 1 counties – first come first served? All apply at one time?
    • ​Initial Notices of Intent are accepted at any time, year round. All applications for projects will be considered on an on-going basis. Manufacturing businesses located anywhere in the state will have an opportunity to potentially receive benefits under this program.​

  • What is accelerated and bonus deprecation? What is does it mean for my business that MD is recoupled to IRC 179 and 168(k)?
    • ​Expensing allows businesses to write off the full cost of capital expenditures in the year in which such investments are made, for example, when a business deducts necessary items such as rent, fuel, supplies, etc. Expensing is designed to account for the wear and tear and obsolescence of an asset. By recoupling to Federal Internal Revenue Code Section 168(k) and 179, a capital investment, such as a 3D printer, could be deducted at a higher rate. By doing so, this frees up capital to be used for further upgrades.​

      The Act also allows any manufacturer located in the State to claim (1) increased expensing amounts under the State income tax by conforming State law to the maximum aggregate costs of expensing allowed under Section 179 of the Internal Revenue Code (IRC) and (2) any bonus depreciation amounts provided under Section 168(k) of IRC.

      For tax years beginning after 12/31/2018, under IRC Section 179 manufacturers can expense capital expenditures up to $510,000/year, with the expensing option phased out after $2,030,000 for 2019. 

      Bonus depreciation under IRC Section 168(k) is independent from IRC Section 179.  Bonus depreciation allows a business to deduct as a depreciation expense, 30% of the adjusted basis of certain qualified property in the year that the property is placed in service after 2019.​

  • Are companies able to receive other Maryland business tax incentives along with this program?
    • ​Yes, eligible businesses may receive additional program incentives, pending all qualifications to that program’s requirements.​