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One Maryland Tax Credit

Changes were made to the One Maryland Tax Credit, effective for any business that applies for Final Certification beginning July 1, 2018. Program changes are described below. If your business received a Final Certificate of Eligibility prior to July 1, 2018, click here for a copy of the statute in effect prior to July 1, 2018.

One Maryland Jurisdictions

The following counties are Tier 1 for the One Maryland Tax Credit.

  • Allegany
  • Baltimore City
  • Caroline
  • Dorchester
  • Garrett
  • Kent
  • Somerset
  • Washington
  • Wicomico
  • Worcester

​BENEFIT

The amount of income tax credit that a business will qualify for depends on the amount of capital investment it makes in the project and the number of new qualified jobs it creates in a 24 month period.  A business may qualify for the following maximum credit amounts:
  • For businesses that create 10-24 qualified positions: maximum $1 million in credits based on eligible project costs.
  • For businesses that create 25-49 qualified positions: maximum $2.5 million in credits based on eligible project costs.
  • For businesses that create at least 50 qualified positions: maximum $5 million in credits based on eligible project costs.


ELIGIBILITY​

  • Location - A business must locate or expand in a "Priority Funding Area" (PFA) in a Tier 1 County. Tier 1 Counties are subject to change. Please verify with the Maryland Department of Commerce (Commerce) that the project location is in a PFA and Tier 1 County.

  • Declaration of Intent - A business may not claim any expenses incurred or jobs created prior to notifying Commerce in writing of its intent to seek certification for a One Maryland Tax Credit.

  • Certification - A business must be certified as a qualified business entity eligible for the One Maryland Tax Credit. Applications for certification are available from Commerce.

  • Job Creation Minimums - The business must create at least 10 new, full-time qualified positions at the project within 24 months. However, to receive the maximum $5 million credit, the business must have at least 50 new qualified positions within 24 months.

  • The positions must be full-time, pay 120% of State Minimum Wage, be filled for 12 months, and be a "net new" job to Maryland. The business must create the minimum number of jobs in a 24-month period.
    • As of July 1, 2018, 120% of State Minimum Wage is  $12.12/hour

  • Have at least $500,000 of eligible costs.

  • The facility must be engaged in an eligible activity.

The business may not claim both the One Maryland Tax Credit and Job Creation Tax Credit in the same tax year.

APPLY

The application process requires the business to declare its intent to Maryland Commerce in writing prior to incurring eligible costs or creating new, qualified jobs. After submitting a Notice of Intent form, Applicants must apply through Commerce's online system. Please first register for an account, then login to complete your application. 

The business should submit a Preliminary Application. The business must be certified as eligible for the tax credit by submitting a Final Application.

RESOURCES


For Businesses Certified Before July 1, 2018
​

​CONTACT

For more information about the One Maryland Tax Credit contact:

Jason Sobel, Tax Specialist
Maryland Department of Commerce, Office of Finance Programs

FREQUENTLY ASKED QUESTIONS​

The following Q & As apply to businesses receiving a Final Certificate of Eligibility from the Department of Commerce after July 1, 2018.

  • What is the One Maryland Tax Credit Program?

    • The One Maryland Tax Credit is an income tax credit for businesses that invest in an economic development project in a Tier 1 County and create a minimum number of qualified jobs. The amount of tax credit a business qualifies for depends on the number of jobs it creates and qualified costs it incurs. 

      Legislation was passed during the 2018 session of the General Assembly that made changes to the One Maryland tax credit program. The changes affect any business that receives a Final Certificate of Eligibility beginning July 1, 2018. These changes impact the credit amount a business may qualify for, the requirements to qualify and how the business may claim the credit. Businesses that submitted their intent prior to that date are not grandfathered in. Any business that is certified BEFORE July 1, 2018 is subject to the existing statute.

  • What is the benefit?

    • The One Maryland Project Tax Credit is a state income tax credit of up to $5 million based on job creation and eligible project costs related to the cost of acquiring, constructing, rehabilitating, installing, and equipping an economic development project. It also includes costs related to moving a business from outside Maryland and the costs to furnish and equip the new location.

      A business may qualify for the following maximum credit amounts:

      • For businesses that create 10-24 qualified positions: maximum $1 million in credits based on eligible project costs.
      • For businesses that create 25-49 qualified positions: maximum $2.5 million in credits based on eligible project costs.
      • For businesses that create at least 50 qualified positions: maximum $5 million in credits based on eligible project costs.

  • What are eligible project costs?

    • Eligible project costs:

      • Include land acquisition, performance and contract bonds and insurance, architectural and engineering services, environmental mitigation, utility installation, interest costs prior to and during acquisition and construction and for two years after completion of the project, and legal and accounting fees. 
      • May also include fixed telecommunication equipment, office furniture and equipment.
      • Must be at least $500,000.

  • How do I qualify for the One Maryland Tax Credit?

    • In order to qualify for the One Maryland Tax Credit, a business must meet the following requirements: 

      • Declaration of Intent Requirement. A business may not claim any expenses incurred or jobs created prior to notifying the Department of Commerce (Commerce) in writing of its intent to seek certification for a One Maryland Tax Credit. 
      • Business Certification Requirement. A business must be certified as a qualified business entity eligible for the One Maryland Tax Credit. 
      • Job Creation Minimums. The business must create at least 10 new, full-time qualified positions at the project within 24 months. However, to receive the maximum $5 million credit, the business must have at least 50 new qualified positions within 24 months.
      • Minimum Expenditure - The business must incur at least $500,000 of eligible project costs.
      • Location: A business must locate or expand in a "Priority Funding Area" (PFA) in a Tier 1 County. Tier 1 Counties are subject to change. Please verify with Commerce that the project location is in a PFA and Tier 1 County. 
        > Tier 1 Counties beginning July 1, 2018 include: Baltimore City and Allegany, Caroline, Dorchester, Garrett, Kent, Somerset, Washington, Wicomico and Worcester counties. 
      • Other:
        > The project must be primarily engaged in an eligible activity as defined by the statute. 
        > The positions must be full-time, pay 120% of State Minimum Wage, be filled for 12 months, and be a "net new" job to Maryland. The business must create the minimum number of jobs in a 24-month period.

  • How do I apply for the One Maryland Tax Credit?

      • Submit an intent letter to Commerce. The business may only count costs incurred and new qualified positions after the intent date. If the business does not submit an intent letter but does submit a preliminary application, the date the preliminary application is received by Commerce will be considered the intent date.

      • Submit a preliminary application and employment affidavit. The preliminary application asks for the business's projected job and wage data. The employment affidavit establishes the number of jobs at the facility prior to creating new jobs for the tax credit.

      • Upon acceptance of the Preliminary Application and Employment Affidavit, Commerce will issue the business a Preliminary Certificate of Eligibility if the business is projected to qualify for the tax credit.

      • The business has 12 months from its intent date to start the project. Once the project is started, it has 3 years to complete the project. If the business has not begun hiring, once the project is complete it must create the minimum required jobs in the following 24 month period.

      • The business may apply for final certification when it has incurred the eligible project costs, created at least 10 qualified jobs and those jobs have been filled for 12 months. To qualify for the maximum $5M credit, the business must have 50 qualified positions and at least $5M of eligible project costs.

      • The final application will include a list of the qualified positions and employees in those positions, list of eligible costs and other information. Commerce will require the business to provide documentation to confirm expenditures for a sample of the costs.

      • Commerce will issue the business a Final Certificate which the business will attach to its tax return. The certificate will include the amount of credit for which the business qualifies.

  • What types of business activities are eligible for the tax credit?

      • Manufacturing or Mining
      • Transportation or Communications 
      • Agriculture, Forestry, or Fishing
      • Public Utility 
      • Research, Development, or Testing
      • Biotechnology 
      • Business Services
      • Warehousing 
      • Filmmaking, Resort and Recreation 
      • Computer Programming, Data Processing or other Computer Related Services 
      • Central Financial, Real Estate or Insurance Services 
      • Operation of Central Administrative Offices or a Company Headquarters

  • What is a Priority Funding Area?

    • To qualify for the credits, the project must be located in a qualified distressed county and in a priority funding area (PFA). PFAs include: 

      • State enterprise zones
      • Federal empowerment zones
      • Department of Housing and Community Development Sustainable Communities
      • Incorporated municipalities
      • the areas between the I-495 beltway and Washington D.C. and the I-695 beltway and Baltimore City
      • Growth areas designated by each county.

  • What is a full-time job?

    • A full-time position requires at least 840 hours of an employee's time during at least 24 weeks in a 6-month period. This is an average workweek of 35 hours per week.

  • What do you consider a new job?

    • The job must be a "net new" job to the State. You may not count a job if it is created through a change in ownership of a trade or business, through a consolidation, merger, or restructuring of a business entity; or when an employment function is contractually shifted from an existing business entity in the state to another business entity.

  • What is the state minimum wage?

    • A qualified position must pay at least 120% of State minimum wage. As of July 1, 2018, 120% of State minimum wage is $12.12 per hour. If the State minimum wage increases, the wage required for a position to continue to be qualified also increases. During the carry forward period, the business may only count qualified positions.

  • How does a business claim the project tax credits?

      • The business applies the credit against its State income tax liability. Insurance companies apply it against the insurance premiums tax.
      • Project tax credit may be carried forward for 10 years after the credit year.
      • Beginning 4 years following the credit year, the business may apply the credit against its state income tax liability (or insurance premiums tax) and claim a refund. The amount of the refund is limited annually to the payroll withholding of the qualified positions.

  • What if a business receiving the tax credit must reduce its workforce?

    • The purpose of this tax credit is to encourage construction of new business facilities in Tier 1 counties, as well as to generate new, permanent, full-time jobs for Maryland workers. A reduction in the workforce does not mean forfeiture of the credit but will affect the business's ability to use it. The rules are as follows:

      • If the business maintains its required job number, it may continue to claim the credit during the carry forward period. 
      • If the number of qualified positions falls below the required job number, the business may be able to claim a prorated credit, as long as:
        > The number of qualified positions does not fall below 10.
        > The business maintained the required number of jobs (25 for a maximum $2.5M credit, 50 jobs for a maximum $5M credit) for five years.

  • Can nonprofits benefit from the One Maryland Tax Credit?

      • A nonprofit corporation may apply the project credit against its State income tax obligations. 
      • Beginning 4 years following the credit year, a nonprofit corporation may claim an income tax refund based on the state income tax withholding of its qualified employees.

  • Do lease costs qualify as eligible project costs?

    • The business may be able to count some or all of the lease costs. To determine whether the lease costs qualify as an eligible project cost, the lease must be reviewed and approved by Commerce.

  • What if a business purchases an existing facility instead of constructing a new facility?

    • The purpose of the One Maryland Tax Credit program is to encourage new capital investment. However, in some cases the purchase of an existing building may be allowed as an eligible project cost if the Secretary determines that the acquisition of the existing building is being made in connection with a project to reuse a vacant or underused facility. If you plan to purchase an existing building and count the cost as an eligible project cost, please notify Commerce before committing to the project.

  • Can the business move from one location in Maryland into a Tier 1 County and apply for the tax credit?

    • If you are moving your business from one location in Maryland into a Tier 1 County, the regulations state that the Secretary will decide whether or not to approve the tax credit for the business based on whether approving the tax credit would have a significant deleterious effect on another State location. This is considered based on the facts and circumstances of each situation.

  • Can various income tax credit benefits be combined?

    • For any Tax Year the business claims the One Maryland Tax Credit, it may not also claim the Job Creation Tax Credit.

  • What records must a business maintain?

    • The business, in accordance with standard tax records procedures, must maintain information on the costs claimed for the credit, employment records to show that the required number of qualified positions were created and maintained, and withholding information for qualified employees if a credit refund is being claimed.

  • Is there a reporting requirement?

    • The business must submit an annual report to Commerce each year it claims the credit during the carry forward period. It must report each year to Commerce how much project tax credit the business claims on its tax return each year. Failure to report this information to Commerce will disqualify the business from claiming the One Maryland tax credit in future years.

  • Is business information submitted to the Department confidential?

    • Generally yes, subject to the provisions of the Maryland Public Information Act and the Maryland Code, Tax-General Article, Title 13, Subtitle 2. In addition, the company consents to the release of certain information in the tax credit application.