Job Creation Tax Credit (JCTC)

​​​​Businesses that create a minimum number of new full-time positions may be entitled to state income tax credits of up to $1,000 per job or $1,500 per job in a "revitalization area." 

BENEFIT

An income tax credit of 2.5% of aggregate annual wages for all newly created, full-time jobs up to $1,000 per new job. In revitalization areas, the credit increases to 5% of annual wages, up to $1,500 per new job. Credits may not exceed $1 million per credit year. If the credit is more than the tax liability, the unused credit may be carried forward for five years.

ELIGIBILITY

  • Declaration of Intent – A business may not claim any employees hired prior to the business notifying the Department of Business and Economic Development (DBED) of its intent to seek certification for the Job Creation Tax Credit.
  • Certification – A business must be certified as a qualified business entity eligible for the tax credit. To be certified, a business must submit applications to DBED (see below).
  • Job Creation Minimums – The business must create 60 new, full-time jobs at the facility during a 24-month period. In designated JCTC Priority Funding Areas (JCTC PFAs), the minimum is 25. Outside JCTC PFAs the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new employees exceeds 60 multiplied by the State's average annual salary. 
  • The positions must be filled for 12 months.
  • Qualified positions are full-time and pay at least 150% of federal minimum wage.
  • The facility must be engaged in an eligible activity.
  • The expansion or establishment of a business must be at a single location in the state. A single firm may have more than one eligible location, if each is certified and meets the requirements of the statute.

APPLY

The Job Creation Tax Credit remains in effect until January 1, 2020, subject to extension by the Maryland General Assembly. 

The application process requires the business to declare its intent to DBED prior to creating new, qualified jobs. The business is encouraged to submit a Preliminary Application, along with the Employment Affidavit. The business must be certified as eligible for the tax credit by submitting a Final Application.

JCTC Application Materials:

RESOURCES

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CONTACT

For more information about JCTC contact:

Stacy Kubofcik, Tax Specialist
DBED, Office of Finance Programs
(410) 767-4980
(877) 821-0099

Mark A. Vulcan, Director, Tax Incentives
DBED, Office of Finance Programs
(410) 767-6438
(877) 821-0099

FREQUENTLY ASKED QUESTIONS

  • What Is the Job Creation Tax Credit?
    • ​An income tax credit of up to $1,000 or $1,500 for each new, full-time job. The purpose of these tax credits is to encourage businesses to expand or relocate in Maryland. Tax credits are more valuable than deductions because credits are subtracted directly from income tax liability.

  • What is the Benefit?
      • The credit is 2-1/2% of aggregate annual wages for all newly created, full-time jobs up to $1,000 per new job.
      • In a “Revitalization Area”, defined as a state enterprise zone, a federal empowerment zone, or a Department of Housing and Community Development sustainable community, the credit is increased to 5% of annual wages for all newly created full-time jobs, up to $1,500 per new job.
      • The credit earned by a qualified business entity may not exceed $1 million per credit year.
      • The unused credit may be carried forward for 5 years.

  • How do I qualify for the Job Creation Tax Credit?
      • Declaration of Intent Requirement. A business may not be certified as qualifying for the tax credit unless the business notifies DBED of its intent to seek certification BEFORE hiring qualified employees.
      • Business Certification Requirement. A business must be certified as a qualified business entity eligible for the tax credit. Applications for certification are available from the Department of Business and Economic Development (DBED).
      • Job Creation Minimums.
        • The business must create 60 new, full-time jobs at the expanding or new facility during a 24-month period.
        • In designated “JCTC Priority Funding Areas” (JCTC PFAs) the minimum is 25.
        • Outside “priority funding areas,” the requirement may be reduced to as few as 30 new jobs if the aggregate payroll for the qualified positions is greater than 60 X the State’s average annual salary.
      • The new or expanded facility must be engaged in an eligible activity.
      • The jobs must be full-time and at least 150% of federal minimum wage.
      • The job must be filled for 12 months before it is qualified for the tax credit.
      • 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, provided that each location is certified and meets the requirements of the statute.

  • How do I apply for the Job Creation Tax Credit?
      • Submit an intent letter to DBED. The business may only count 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 DBED 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 JCTC.
      • Submit a final application to DBED after the minimum number of jobs has been created and the jobs have been filled for 12 months.
      • Additional information may be requested by DBED’s Internal Audit office.

  • What is a JCTC Priority Funding Area (PFA)?
    • ​The minimum job threshold for businesses located in a JCTC PFA drops from 60 new jobs to 25 new jobs.

      • state enterprise zones
      • federal empowerment zones
      • DHCD sustainable communities
      • incorporated municipalities
      • the area between the I-495 beltway and Washington D.C., or the I-695 beltway and Baltimore City
      • growth area designated by each county for the purpose of this credit.

  • What is a “Revitalization Area”?
    • ​The amount of tax credit increases to 5% of annual wages up to $1,500 per new job if the business locates in a “Revitalization Area” that includes the following:

      • state enterprise zones
      • federal empowerment zones
      • DHCD sustainable communities

  • 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 work week of 35 hours per week.

  • What if federal minimum wage increases?
    • ​The tax credit statute defines a qualified position as full-time and paying 150% of the federal minimum wage. Therefore, if the federal minimum wage increases, the wage required for a position to continue to be qualified also increases. For the Job Creation Tax Credit, a position must continue to be qualified as long as the credit is subject to recapture.

  • Can various income tax credit benefits be combined for a new job?
    • ​YES! For example, a business may also qualify for One Maryland and enterprise zone tax credits for the same new qualified positions.

  • What if I do not have enough income tax liability to use all of the credit?
    • ​The credits can be carried forward for five years after the credit year. The credit year is the taxable year in which the business claims the credit.

  • How do I claim the Job Creation Tax Credit?
    • Maryland Tax Form 500CR is used to claim this credit. Attach a copy of the Final Certificate of Eligibility to the form. Also, note that the credit is taken against the state income tax only. It is not taken against the county income tax “add-on.”

  • What types of business activities are eligible for the tax credit?
    • ​The statute limits eligibility to specific industries. These include:
      manufacturing or mining;

      • transportation or communications;
      • agriculture, forestry, or fishing;
      • a public utility or warehousing;
      • research, development, or testing;
      • biotechnology;
      • computer programming, data processing or other computer related services;
      • central financial, real estate or insurance services;
      • the operation of central administrative offices or a company HQ;
      • business services firms (only located in a JCTC PFA)
      • entertainment, recreation, cultural, or tourism–related activities in a multi–use facility located within a revitalization area if the facility:
        • generates a minimum of 1,000 new full-time equivalent filled positions in a 24-month period;
        • and is not primarily used by professional sports franchise or for gaming

  • What is a “central administrative office”?
    • ​“Central administrative offices" are defined by regulation as a facility where a business entity's central management or administrative functions are handled on either a regional or national basis. "Central administrative offices" includes offices or locations in the region where functions such as personnel, planning, general management, accounting and financial, purchasing, advertising, legal, data processing, and research and development are performed.

  • Can a not-for-profit entity qualify for the Job Creation Tax Credit?
    • ​Any Maryland business entity may qualify for the tax credit. However, the credit is of benefit only if the entity has a state income tax liability. Because most not-for-profit businesses owe no income tax, they will not benefit from the Job Creation Tax Credit. If the not-for-profit business has taxable income from business activities, it may be able to use the credit.

  • What if a business receiving the tax credit must reduce its workforce?
    • ​The purpose of this tax credit is to generate new, permanent, full-time jobs for Maryland workers. Therefore, the credit requires that jobs for which the credit is claimed must remain for at least three years following the credit year. If the number of jobs for which the credit is taken falls below the threshold (60, 30 or 25), the credits used must be repaid in full. If the number of jobs for which the credit is taken falls more than 5% but remains above the threshold, then the amount of the tax credit to be repaid is in proportion to the decline in certified employees.

  • Would employees working at an address other than the address of the facility be considered “qualified employees”?
    • ​The JCTC statute requires a business entity to establish or expand a business facility at a single address. However, in some cases, the addition of new qualified positions causes the business to outgrow its existing space and acquire additional space within close proximity of the original single facility location. Based on the facts and circumstances of the case, the Secretary may determine that new positions at multiple facilities may be counted.

  • What if the business entity is a government contractor and the new employees work at the government facility?
    • ​Generally, these employees would not be qualified for the JCTC credit. An exception might be made if the business entity leases space for a business facility from a government entity. The JCTC statute requires that “[to] qualify for the tax credit provided under this subtitle, a business entity must establish or expand a business facility, in the State” that results in the creation of a certain number of qualified positions, and a government facility is not a business facility.

  • What records must a business maintain?
    • ​The qualified business entity shall provide information verifying the jobs it created still exist during the three taxable years following the credit year. The Department requires that information submitted by the business entity at the end of the three-year “clawback” period be verified by an independent certified public accountant selected by the business entity.

  • 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.