Changes were made to the Job Creation Tax Credit (JCTC) that impact qualified positions that were filled on or after Oct. 1, 2021.
JCTC provides an income tax credit to eligible businesses that locate or expand in the state and create a minimum number of net new full-time positions. The credit is equal to $3,000 per new job. The credit increases to $5,000 per new job if the business locates or expands in a revitalization area (state enterprise zone, federal empowerment zone, DHCD Sustainable Community, or Tier 1 County). The credit increases if the new full-time position is filled by a qualified veteran employee. The enhanced credit is equal to $4,000 per job that is filled by a qualified veteran employee or $6,000 per job that is filled by a qualified veteran employee in a revitalization area.
JCTC also provides an income tax credit to small businesses that hire at least one qualified veteran employee to fill a net new full-time position. The credit is equal to $2,500 for each qualified veteran employee who has filled the position for at least one year. A small business may not claim the credit for more than five qualified veteran employees in a credit year, or for a qualified veteran employee who is hired to replace a laid-off employee or an employee who is on strike, or for a Qualified Veteran Employee who has filled the position for less than one year. This credit is available starting in tax year 2021. For prior tax years, a small business may be eligible for the Hire Our Veteran Tax Credit.
Note 1: Tier 1 Counties include: Allegany, Baltimore City, Caroline, Dorchester, Garrett, Kent, Somerset, Washington, Wicomico and Worcester Counties.
To qualify for JCTC:
- Declaration of Intent - A business may not claim any employees hired prior to the business notifying the Department of Commerce ("Commerce") of its intent to seek certification for the JCTC.
- Certification - A business must be certified as a qualified business entity eligible for the tax credit. To be certified, a business must submit an application to Commerce. Commerce will calculate the credit amount that the business entity is entitled to claim.
- Job Creation Minimums to Qualify:
- 60 jobs anywhere in the state
- 25 jobs in a JCTC Priority Funding Area
10 jobs in counties with (1) annual average employment less than 75,000 or (2) median household income less than two-thirds of the statewide median household income: Allegany, Baltimore City, Calvert, Caroline, Carroll, Cecil, Charles, Dorchester, Garrett, Kent, Queen Anne's, Saint Mary's, Somerset, Talbot, Washington, Wicomico, and Worcester Counties. This list is updated annually and subject to change.
- The facility must be primarily engaged in a qualifying activity.
- The expansion or establishment of a business must be at a single location in the state. A single business may have more than one eligible location if each is certified and meets the requirements of the statute.
- The business must create the minimum number of "net new" jobs within a 24-month period.
- The positions must be filled for 12 months before the business applies for final certification.
- The position must be paid at least 120% or 150% of the state minimum wage. For positions filled before Oct. 1, 2021, the position must pay at least 120% of state minimum wage.
For positions filled on or after Oct. 1, 2021, the position must:
Pay at least the prevailing wage rate for an employee classification for which there is a prevailing wage rate under State Finance and Procurement Article 17-201, or 150% of the state minimum wage for any other employee classification;
Provide career advancement training;
Afford the employee the right to collectively bargain for wages and benefits;
Provide paid leave;
Be considered covered employment for the purposes of the unemployment insurance benefits in accordance with Title 8 of the Labor and Employment Article;
Entitle the employee to workers' compensation benefits in accordance with Title 9 of the Labor and Employment Article;
Offer employer-provided health insurance benefits with monthly premiums that do not exceed 8.5% of the employee's net monthly earnings; and
Offer retirement benefits.
Please see the state minimum wage schedule below:
*The Fair Wage Act of 2023 accelerates the increase in the State minimum wage rate for all employers to $15.00 per hour beginning January 1, 2024.
State Minimum Wage||
120% State Minimum Wage||
150% State Minimum Wage|
To qualify for JCTC (small business hiring a qualified veteran employee):
- Certification - A small business must apply for and receive certification to claim the JCTC.
- Minimum Job Creation - The small business must hire at least one qualified veteran employee. A small business may not claim the credit for more than five qualified veteran employees in a credit year.
- A "small business" is an individual, partnership, limited partnership, limited liability partnership, limited liability company, or corporation that employs 50 or fewer total full-time employees.
- "Qualified veteran employee" means:
- Is honorably discharged or released under honorable circumstances from active military, naval, or air service; and
- Qualifies as a "qualified veteran" for purposes of the Federal Work Opportunity Tax Credit.
- The Job Creation Tax Credit remains in effect until Jan. 1, 2027, subject to extension by the Maryland General Assembly.
- Credits are certified on a first-come, first-served basis based on when the Maryland Department of Commerce receives the final application and the availability of credits.
- A business may not earn more than $1 million in a credit year.
- The program is capped at $4 million in tax credits in a calendar year.
- Unused credits may be carried forward through the fifth taxable year following the credit year.
- A business may not be certified for both the One Maryland Tax Credit and Job Creation Tax Credit for the same qualified positions.
- A small business may not claim the credit for more than five qualified veteran employees in a credit year, or for a qualified veteran employee who is hired to replace a laid-off employee or an employee who is on strike, or for a qualified veteran employee who filled the position for less than one year.
- If you are a small business, you may submit a Final Application when the qualified veteran employee has filled the position for at least one year.
- If you are not a small business, you must declare your intent to Commerce prior to creating new qualified jobs, and you are encouraged to submit a Preliminary Application and Employment Affidavit to determine preliminary qualification for JCTC. The business must be certified as eligible for the tax credit by submitting a Final Application.
JCTC Application Materials:
For more information about JCTC contact:
Abigail McKnight, Tax Specialist
Maryland Department of Commerce, Office of Finance Programs
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