The Small Business Relief Tax Credit is a refundable tax credit available to small businesses that provide their employees with paid sick and safe leave.
Small businesses may claim a refundable tax credit for the accrued paid sick and safe leave for each employee earning paid sick and safe leave up to $500 per employee, or $7,000 per small business.
To qualify for the tax credit, a small business must employ 14 or fewer employees whose primary work location is in Maryland, and provide its employees with paid sick and safe leave in accordance with the Maryland Healthy Working Families Act. Under the Maryland Healthy Working Families Act, employees earn 1 hour of paid sick and safe leave for every 30 hours worked, and sick and safe leave is paid at the same rate as an employee's normal hourly wages.
Qualified employee(s) earning wages paid by the small business must be equal to or less than 250% of the annual federal poverty guideline for a single-person household. For Tax Year 2022, the annual poverty guideline is $33,975/year or $16.33/hour.
- The Department of Commerce will begin accepting applications for the Small Business Relief Tax Credit on January 1, 2023 for Tax Year 2022. Small businesses applying for the tax credit must submit an application along with copies of employee(s) W-2 or pay stubs, and statement of accrued paid sick and safe leave provided to employee(s), for each employee for whom the tax credit is being claimed.
- Commerce will certify or deny an application within 45 days after the receipt of a complete application.
CLAIM TAX CREDIT
After receiving the tax credit certification from Commerce, the employer must file a tax return with the Comptroller of Maryland for the taxable year in which the certification was issued using Maryland Tax Form 500CR. Maryland Tax Form 500CR must be filed electronically with an attached copy of the certification from Commerce. Please note that the credit can be taken against the State income tax ONLY. It is not taken against the county income tax "add-on". For more information regarding the tax forms and tax return instructions, please visit the
Comptroller of Maryland website.
If the employer needs tax information or guidance beyond the scope of the information which is required to apply for the Small Business Relief Tax Credit program, please contact the
Comptroller of Maryland. Commerce cannot dispense tax advice.
For more information about the Small Business Relief Tax Credit contact:
Cindy Zeng, Tax Specialist, Tax Incentives
Maryland Department of Commerce, Office of Finance Programs
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