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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 the More Jobs for Marylanders Program?
    • More Jobs for Marylanders provides incentives to new and existing manufacturers to promote job growth and attract new manufacturers to the State.  The incentives are available for a 10-year period for eligible new and existing manufacturers in "Tier 1" or "Tier 2" counties in Maryland that are enrolled in the Progam before June 1, 2020, create the minimum required jobs and meet other program requirements. 

      A new manufacturer locating in a Tier 1 county is eligible for the following benefits: (a) a credit against the State's income tax; (b) a refundable credit against the State's portion of the property tax; (c) a refund of sales and use tax; and (d) a waiver of fees charged by SDAT.​

      An existing manufacturer expanding in a Tier 1 or Tier 2 county is eligible for the credit against the State's income tax.

  • What are the Tier 1 and 2 counties? What is the difference?
    • Tier 1 counties are those counties that meet the definition of a Qualified Distressed County.  (See §1-101(e) of the Economic Development Art. of the State Code for definition.)  They currently include Baltimore City, Allegany, Dorchester, Somerset and Worcester Counties.  Additionally, Commerce may designate up to three additional counties to receive Tier 1 benefits. As of July 1, 2017 Commerce has designated Baltimore, Prince George's, and Washington Counties as Tier 1 counties. 

      Tier 2 counties are: Anne Arundel, Calvert, Caroline, Carroll, Cecil, Charles, Frederick, Garrett, Harford, Howard, Kent, Montgomery, Queen Anne's, St. Mary's, Talbot, and Wicomico. ​

  • Who qualifies?
    • Manufacturers 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 (except refiners), that create new jobs, offer ongoing job training and meet other program requirements. New manufacturers that establish a facility in a Tier 1 County may qualify; existing manufacturers that expand in a Tier 1 or Tier 2 county may qualify. The business must be primarily engaged in manufacturing at the facility it is establishing or expanding.

  • What is a qualified position?
    • A qualified position is a position that pays at least 120% of the State minimum wage, is full-time, is newly created, was not moved or transferred from another facility in the State and is filled for at least 12 months.​

  • How many qualified positions must be created by manufacturers in Tier 1 vs. Tier 2 counties?
      • Manufacturers in Tier 1 counties must create at least 5 qualified positions. 
      • Manufacturers in Tier 2 counties must create at least 10 qualified positions.

      To be eligible for Program benefits, manufacturers must offer ongoing job training or a postsecondary education program.

  • What is the definition of a “new” business?
    • A new business is a business entity that is not located in the State at the time of its submission of its Notice of Intent to enroll in the Program.​

  • What must a business entity submit to Commerce, and when?
    • Notice of Intent (NOI)

      New manufacturers must submit a Notice of Intent (NOI) before establishing a manufacturing facility in Maryland. They must begin hiring within 12 months after submitting their NOI to Commerce.  

      Existing manufacturers must provide an NOI to Commerce before creating new jobs to qualify for the program. They must begin hiring within 12 months after submitting their NOI to Commerce. 

      Commerce began accepting NOIs on June 1, 2017.

      Application

      When Commerce receives an NOI, it will provide the business an enrollment application. A business that meets the requirements to enroll its project will be certified by Commerce as a Qualified Business Entity eligible for the applicable benefits available under the Program. Commerce may not certify any businesses as Qualified Business Entities on or after June 1, 2020.

      Information Regarding Applicant's Training Program

      ​As part of its application to the Program, a business must provide information on its existing training programs and attach supporting documentation. The manufacturer must continue to offer training for the duration of the 10-year benefit to continue to be eligible for incentives.

  • What benefits are available to a business?
    • The benefits available will depend on the business’s location in a Tier 1 or Tier 2 county and whether it is a new or existing manufacturer in Maryland.

      • TIER 1 NEW BUSINESS: (a) a refundable credit against the State’s income tax (currently 5.75% per new position); (b) a credit against the State’s portion of the property tax; (c) a refund of sales and use tax; and (d) a waiver of fees charged by SDAT.

      • TIER 1 EXISTING BUSINESS: A refundable credit against the State’s income tax (currently 5.75% per new position). 

      • TIER 2 EXISTING BUSINESS:  A refundable credit against the State’s income tax (currently 5.75% per new position).​

  • Does the Sales and Use tax refund offered to new businesses in Tier 1 counties apply to all purchases made by the manufacturer at the project?
    • Yes, all sales and use taxes related to the project are eligible for the Sales and Use tax refund.​

  • Is there a funding and/or allocation cap on the Program? If so, how much?
    • Commerce will be able to certify Initial Tax Credit certificates for the income tax credit beginning July 1, 2018 up to the amount appropriated in the Program Reserve Fund for that fiscal year. However, the statute limits this amount to $9 million per fiscal year. The Sales and Use tax refund is limited to $1 million per fiscal year.

  • What happens if the business has to reduce its workforce during the benefit period?
    • If a business’s number of qualified positions falls below the number of qualified positions in the first benefit year (the baseline) the project is automatically removed from the Program and the business receives no more benefits. As long as the number of qualified positions remains above the baseline, the number of qualified positions may fluctuate, but the income tax credit will fluctuate accordingly.​

  • 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 faster rate. By doing so, this frees up capital to be used for other 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.​