Enterprise Zone Tax Credit

The EZ program provides real property and state income tax credits for businesses located in a Maryland enterprise zone in return for job creation and investments. Businesses located in Focus Areas may be also qualified for personal property tax credits on new investment in personal property and enhanced income tax credit for creating new jobs.

There are 36 Enterprise Zones in 20 jurisdictions, and 7 designated focus areas in two jurisdictions.

BENEFIT

Income Tax Credits:

There are two types of income tax credits for businesses in an Enterprise Zone:

1. The General Income Tax Credit – The one-time $1,000 tax credit for each qualified new employee filing a newly created position in an enterprise zone, or one-time $1,500 credit for each qualified new employee in an enterprise zone focus area. 
2. The Income Tax Credit for Economically Disadvantaged Employees – A three-year period tax credit for each qualified new economically disadvantaged employee, earned at the following amounts:
    

Property Tax Credits:

The property tax credits benefits differ by whether a business is located in an enterprise zone or an enterprise zone focus area:

Enterprise Zone

• Real Property Tax Credit – A ten-year tax credit against local real property taxes on a portion of real property expansion, renovation, or capital improvement. The amount of credit is 80% of the "eligible assessment" in each of the first 5 taxable years, and the credit decreases 10% annually (70%, 60%, 50%, 40%, 30%) for the subsequent 5 years.
  
  Note: For newly constructed qualified property tax that provides both office and retail space and became eligible for the real property tax credit on or after January 1, 2019, but before January 1, 2022, the benefit is a 13-year tax credit. The amount of the credit is 80% of the eligible assessment in each of the first 8 taxable years, and the credit decreases 10% annually for the subsequent 5 taxable years.
  

Enterprise Zone Focus Area

• Real Property Tax Credit for Focus Area – A ten-year tax credit against local real property taxes on a portion of real property expansion, renovation, or capital improvement within a focus area. The amount of credit is 80% of the "eligible assessment" in each year of the entire ten-year period.
  
  Note: For newly constructed qualified property that provides both office and retail space and became eligible for the real and personal property tax credit on or after January 1, 2019, but before January 1, 2022, the amount of the credit is 80% of the "eligible assessment" for each of the 13 taxable years following the calendar year that the property initially becomes a qualified property.
  
  
• Personal Property Tax Credit – A ten-year tax credit against local personal property taxes on new investment in personal property within a focus area. The amount of credit is 80% of the "eligible assessment" in each of the entire ten-year period.​
  
  

ELIGIBILITY

Not every business located in an enterprise zone is eligible to receive tax credit. In order to claim the credit, the business must be certified by the local enterprise zone administrator​ as eligible for the credit.

Income Tax Credits:

General Requirements  

Not every new employee hired by a business located in an enterprise zone is eligible for one of the enterprise zone income tax credits. The following requirements apply to both the general income tax credit and the income tax credit for hiring economically disadvantaged employees:

• The employee must have been hired after the business was located in the enterprise zone or focus area, or after the enterprise zone or focus area is designated,
• The employee must have been employed for at least 35 hours per week for six months (or 12 months in a Focus Area) before or during the taxable year in which the credit is taken,
• The employee must spend at least 50% of all work time in the enterprise zone or on activities of the business resulting from its location in the enterprise zone or focus area,
• The employee must have been hired to fill a new position. That is, the firm's number of full-time positions must increase by the number of credits taken, and
• The employee must earn at least 150% of the federal minimum wage.

Requirements for Economically Disadvantaged Employees:

The following requirements apply the income tax credit for hiring economically disadvantaged employees in addition to the general requirements:

• To claim the income tax credit for hiring the economically disadvantaged employees, the business must obtained the certification from the Maryland Department of Labor, and
• To receive the income tax credit, an economically disadvantaged employee must remain in the position for three years. 
  
  

Property Tax Credits:

In order for a business to qualify for the property tax credit, it must meet all state and local eligibility requirements. To be qualified the business must satisfy one of the two specific statutory requirements, which are that business must either (1) make and investment in capital improvements, or (2) hire new employees. The business must contact the local enterprise zone administrator regarding the local eligibility requirements because the local eligibility requirements vary by the enterprise zone.

APPLY

The business must apply to the local enterprise zone administrator for certification.

RESOURCES

• Enterprise Zone Property Tax Credit - Statute
  
• Enterprise Zone Income Tax Credit - Statute
• Enterprise Zones - Regulations​​
• Enterprise Zone Map
• Enterprise Zone - Jurisdiction Manual​
  
  
  

CONTACT

For more information about the Maryland Enterprise Zone Tax Credit contact:

FREQUENTLY ASKED QUESTIONS