Maryland Opportunity Zone Enhancement Credits

About this page. This page explains the Maryland Opportunity Zone Enhancement Credits program in plain language. The program is established at Economic Development Article §§6-1001 through 6-1007, created by Senate Bill 581 (Chapter 211) - PDF - 518.5 KB and amended by House Bill 45 (Chapter 38, 2020) - PDF. Federal definitions come from Internal Revenue Code §1400Z-2. If anything on this page conflicts with the statute, the statute controls.

Important — program sunset

Opportunity Zone enhancements apply to taxable years beginning after December 31, 2018 but before January 1, 2027, under House Bill 45 (Chapter 38, 2020) - PDF - 126.09 KB.

Tax year 2026 is the last year for which an enhancement is available, unless the Maryland General Assembly extends the program.

Businesses considering an Opportunity Zone enhancement should confirm timing with Commerce before relying on the enhanced credit amount in financial planning.

Program Status

The program is currently active for taxable years beginning before January 1, 2027.

Enhancement applications are submitted as an addendum (Addendum A) to the application for the underlying tax credit program.

This is not a standalone credit. Opportunity Zone Enhancement is an enhancement layered on top of certain other Maryland tax credit programs. A business must first qualify under one of those underlying programs to receive an enhancement. The enhanced credit amount is in SUBSTITUTION of (not in addition to) the standard credit amount.

What This Program Does

Maryland provides enhanced tax credit amounts for businesses located in Maryland Opportunity Zones that meet certain requirements. The Opportunity Zone Enhancement program operates as an add-on to several existing Commerce tax credit programs, increasing the credit amount when the business meets the additional Opportunity Zone criteria.

Businesses can apply for Level 1 (basic enhancement) or Level 2 (larger enhancement with additional community engagement requirements). The enhanced credit replaces the standard credit — it is not stacked on top.

How This Works

The Opportunity Zone Enhancement is not a separate credit you apply for on its own. To use it:

Determine whether the business qualifies under one of the underlying tax credit programs (see “Underlying Programs and Enhanced Amounts” below).
Confirm the business is in a Maryland Opportunity Zone, is a Qualified Opportunity Zone Business under IRC §1400Z-2, and has received an investment from a Qualified Opportunity Fund.
Apply to the underlying credit program as normal.
Attach Addendum A (the Opportunity Zone Enhancement Tax Credit Application) to that application, requesting either Level 1 or Level 2 enhancement.
If approved, Commerce certifies the enhanced (higher) credit amount in place of the standard credit amount.

Who This Is For

This enhancement is for businesses that:

are located in a Maryland Opportunity Zone
are a Qualified Opportunity Zone Business under IRC §1400Z-2
have received an investment from a Qualified Opportunity Fund under IRC §1400Z-2, AND
are already qualified for one of the underlying credit programs (or in the case of BIITC, the Qualified Opportunity Fund is the qualified investor)

Use the Maryland Opportunity Zones map (DHCD) to check whether a business address is in an Opportunity Zone.

Definitions

Maryland Opportunity Zone. A federally-designated low-income census tract under the federal Opportunity Zones program created by the 2017 Tax Cuts and Jobs Act. See the DHCD Maryland Opportunity Zones map.

Qualified Opportunity Zone Business (QOZB). A business defined under Internal Revenue Code §1400Z-2 that operates substantially within an Opportunity Zone and meets specific federal tests around income, property, and employees.

Qualified Opportunity Fund (QOF). An investment vehicle organized as a corporation or partnership for the purpose of investing in Qualified Opportunity Zone Property, defined under IRC §1400Z-2.

Level 1 Enhancement. The basic Opportunity Zone Enhancement. Requires the business to be a QOZB with QOF investment, plus Addendum A documentation and (where applicable) the county wage requirement.

Level 2 Enhancement. The larger Opportunity Zone Enhancement. Requires everything in Level 1, plus community engagement (community board members or community benefits agreement) AND local government approval (municipality or county resolution/letter).

Underlying Programs and Enhanced Amounts

The table below shows the standard credit amount and the enhanced amounts (Level 1 and Level 2) for each program that participates in the Opportunity Zone Enhancement.

	Level 1 Enhancement	Level 2 Enhancement
Base eligibility	Business must first qualify under one of the underlying credit programs AND be a Qualified Opportunity Zone Business that received investment from a Qualified Opportunity Fund.	Must meet all Level 1 requirements.
Application materials	Submit Addendum A with the application for the underlying tax credit, including: date and amount of QOF investment, total project/business investment, business address and census tract, NAICS code, impact report.	All Level 1 materials, plus the community engagement and local government materials below.
County wage requirement	If the business is in an Opportunity Zone in a county whose minimum wage exceeds the State minimum wage, it must pay each employee more than the greater of 120% of the State minimum wage or 120% of the county minimum wage.	Same requirement applies.
Community engagement (Level 2 only)	Not required.	Provide ONE of: (1) names and addresses of OZ-resident community members serving on the Governing Board or Advisory Board, or (2) a community benefits agreement negotiated with community groups or strategic industry partnerships and the Qualified Opportunity Fund.
Local government approval (Level 2 only)	Not required.	Provide a resolution or letter approving the enhanced tax credits from the municipality (if the OZ is within a municipality) OR the County (if the OZ is not in a municipality).

How to qualify for Level 1

Submit Addendum A (the Opportunity Zone Enhancement Tax Credit Application) with the application for the underlying tax credit. The Addendum must include:

Date of the Qualified Opportunity Fund’s investment in the Qualified Opportunity Zone Business and the amount of that investment.
Total project or business investment, including leverage.
Address and census tract of the business and/or fund.
NAICS code of the business.
An impact report, including qualitative and quantitative data on the investment and, as applicable, its progress toward the goals listed below.
Any other information required by Commerce.

Impact report — progress toward

Economic Development Article §6-1001(b) specifies the areas the impact report should address, as applicable:

creating and retaining jobs
promoting entrepreneurship, including among women- and minority-owned businesses
providing affordable housing
creating access to healthy food
promoting environmental sustainability
benefiting the communities in the Opportunity Zone in other ways

County wage requirement

If the Qualified Opportunity Zone Business is located in an Opportunity Zone in a county whose minimum wage exceeds the State minimum wage, the business must pay each employee wages that exceed the greater of:

120% of the State minimum wage, or
120% of the county minimum wage

This applies to Opportunity Zones in counties that set their own higher minimum wage. Confirm the current State and county rates with the Maryland Department of Labor before applying.

How to qualify for Level 2

Meet all Level 1 requirements, then provide:

Community engagement (choose ONE)

Names and addresses of Opportunity Zone community residents who serve on the Governing Board or Advisory Board of the Qualified Opportunity Zone Business, OR
A community benefits agreement negotiated and agreed to by community groups or strategic industry partnerships in the Opportunity Zone and the Qualified Opportunity Fund

Local government approval (provide ONE)

If the Opportunity Zone is within a municipality: a resolution or letter from the municipality approving the enhanced tax credits, OR
If the Opportunity Zone is NOT within a municipality: a resolution or letter from the County approving the enhanced tax credits

Other information

Any other information required by Commerce

Key Eligibility Requirements

To receive an Opportunity Zone Enhancement, a business must meet all of these requirements:

Timing: the enhancement must relate to a taxable year beginning before January 1, 2027.
Underlying program: first qualify under one of the participating credit programs (JCTC, One Maryland, More Jobs for Marylanders, Enterprise Zone, Enterprise Zone Focus Area, or BIITC).
Opportunity Zone location: the business must be located in a Maryland Opportunity Zone.
Qualified Opportunity Zone Business: the business must qualify as a QOZB under IRC §1400Z-2.
Qualified Opportunity Fund investment: the business must have received an investment from a QOF as defined in IRC §1400Z-2.
County wage requirement: where the county minimum wage exceeds the State minimum wage, the business must pay each employee more than the greater of 120% of the State minimum wage or 120% of the county minimum wage.

BIITC — different test

For the BIITC enhancement, the eligibility test works in reverse: the investor must itself be a Qualified Opportunity Fund, and the Qualified Maryland Biotechnology Company receiving the investment must be in an Opportunity Zone.

Note. Economic Development Article §6-1006(b) states that the biotechnology company must, on or after March 1, 2018, be NEWLY ESTABLISHED IN or EXPAND INTO an Opportunity Zone. Commerce’s current program page describes this more simply as being “located in” an Opportunity Zone. Confirm with Commerce which standard applies to your investment.

Documents You Will Need to Apply

With the underlying credit application

All documents required by the underlying credit program (JCTC, One Maryland, MJM, EZ, or BIITC).

With the Opportunity Zone Enhancement Addendum (Level 1)

Opportunity Zone Enhancement Tax Credit Application (Addendum A) (PDF) - PDF - 608.7 KB
Documentation of the QOF investment date and amount
Documentation of total project/business investment, including leverage
Business address and census tract
Business NAICS code
Impact report addressing the goals listed under “How to qualify for Level 1”
Payroll documentation supporting the county wage requirement, if applicable

Additional documents for Level 2

Names and addresses of Opportunity Zone community Board/Advisory Board members, OR a community benefits agreement
Municipal or county resolution/letter approving the enhanced tax credits

Commerce may request additional documentation to verify eligibility.

How to Apply

Confirm the business qualifies under one of the underlying credit programs.
Confirm the business is in a Maryland Opportunity Zone using the DHCD Opportunity Zones map.
Confirm the business is a Qualified Opportunity Zone Business and has received QOF investment per IRC §1400Z-2.
Download and complete Addendum A - PDF - 608.7 KB, indicating whether the business is applying for Level 1 or Level 2 enhancement.
Submit Addendum A together with the application for the underlying credit program. The Addendum is processed alongside the underlying application.
For Level 2: include the community engagement and local government approval materials with the Addendum.

Application Review Timeline

Review timeline depends on the underlying credit program and the completeness of the Addendum A submission. Contact Commerce for an estimated timeline based on the underlying credit.

How You Claim the Credit

The enhanced credit is claimed the same way as the underlying credit. Commerce issues a certification reflecting the enhanced credit amount in place of the standard amount. The business attaches the certification to its Maryland state income tax return and claims the enhanced credit on Form 500CR.

Refer to the underlying credit’s page for specifics on how to file, carryforward rules, refundability rules, and any limitations.

Program Transparency

Economic Development Article §6-1002(c) requires Commerce to publish information about the program and information reported by qualified opportunity funds receiving enhanced tax credits. That information must be itemized by qualified opportunity zone and summarized in the aggregate, and may not include proprietary or confidential information.

Frequently Asked Questions

Legal Notices and Required Language

This program is established at Economic Development Article §§6-1001 through 6-1007.

Enacting and amending legislation:

Senate Bill 581 (Chapter 211) - PDF - 518.5 KB — created the program
House Bill 45 (Chapter 38, 2020) - PDF - 126.09 KB — extended the applicable taxable years through 2026, added the county wage requirement, expanded the impact report, and added website publication requirements

Related federal authority:

Internal Revenue Code §1400Z-2 (federal Opportunity Zones)

Program resources:

Applicants should consult the statute and applicable regulations for the complete legal requirements governing this program. The underlying credit program rules also apply.

Contact

Office of Finance Programs
Maryland Department of Commerce
Email: [email protected]

For questions specific to the underlying credit, contact the program manager listed on that program’s page.