Maryland enacted several changes to the “One Maryland” economic development credit against income and insurance premiums taxes. The amendments apply to credit certifications issued after June 30, 2018.
Changes to the Credit
In legislation, Maryland has:
- repealed the start-up credit;
- reduced the carry-forward period from 14 years to 10 years;
- increased the minimum wages for a qualifying job from 150% of the federal minimum wage to 120% of the Maryland minimum wage;
- established a tiered structure for project credits based on the number of qualifying jobs;
- required taxpayers to create at least 50 (instead of 25) qualified jobs to claim the maximum credit amount;
- limited the maximum credit amount to $2.5 million or $1 million if the taxpayer creates at least 25 or 10 qualified jobs, respectively;
- allowed credits to be claimed against the entirety of the taxpayer’s income, rather than solely against income attributable to the “One Maryland” project;
- prevented taxpayers from claiming the “One Maryland” credit and the job creation credit at the same time;
- required taxpayers to report the amount of the credit it claims each year to the state Department of Commerce; and
- replaced the term “qualified distressed county” with “Tier I county.”
Current Credit at a Glance
The current “One Maryland” credit is for eligible project and start-up costs of businesses that:
- establish or expand facilities in qualified distressed counties; and
- create 25 or more new full-time jobs.
The project credit is the lesser of:
- 100% of eligible project costs (up to $5 million), less any credits taken in previous years; or
- the state tax liability for the tax year on income from the project.
The start-up credit is the lesser of:
- 100% of eligible project costs (up to $500,000), less any credits taken in previous years; or
- $10,000 multiplied by the number of employees that have filled the newly created jobs.
Unused credits may be carried forward up to 14 years.
Ch. 583 (S.B. 989), Laws 2018, effective July 1, 2018, applicable as noted; Ch. 584 (H.B. 1295), Laws 2018, effective July 1, 2018, applicable as noted