One Maryland Tax Credit

​​Businesses that invest in an economic development project in a "qualified distressed county" and create at least 25 new full-time jobs may qualify for up to $5.5 million in state income tax credits. Project tax credits of up to $5 million are based on qualifying costs incurred in connection with the acquisition, construction, rehabilitation and installation of a project. Start-up tax credits of up to $500,000 are available for the expense of moving a business from outside Maryland and for the costs of furnishing and equipping the new location. The credit can be carried forward 14 years and is refundable, subject to certain limitations.

One Maryland Jurisdiction Map

Click the Legend button and browse the map below to see where One Maryland jurisdictions are located. Or enter an address in the search bar to see if your business falls within a One Maryland jurisdiction.

BENEFIT

Project Tax Credit

A business may qualify for a state income tax credit of up to $5 million of eligible project costs. Project costs include those major capital expenditures related to land acquisition, building construction, rehabilitation, installation and purchasing of equipment. A list of eligible project costs is available in the One Maryland Regulations. The business must spend at least $500,000 of project costs and costs in excess of $5 million will not qualify.

Start-up Tax Credit

The business may qualify for a state income tax credit of up to $500,000 of start-up costs. Start-up costs include the expense of moving a business from outside Maryland and for the costs of furnishing and equipping a new location for ordinary business functions. Examples of eligible start-up costs would include the cost of fixed telecommunications equipment, office equipment, or office furnishings. The start-up credit is calculated as the lesser of your eligible start-up costs or $10,000 multiplied by the number of new qualified positions.

ELIGIBILTY

  • Location- A business must locate or expand in a "Priority Funding Area" in a "Qualified Distressed County". Qualified distressed counties are subject to change. Please verify with DBED that your project location is in a PFA and a qualified distressed county.
  • Declaration of Intent- A business may not claim any expenses incurred or jobs created prior to notifying the Department of Business and Economic Development (DBED) 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 DBED.
  • Job Creation Minimums- The business must create at least 25 new, full-time qualified positions at the project within 24 months of the date the project is placed in service.
  • 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.

APPLY

The application process requires the business to declare its intent to DBED in writing prior to incurring eligible project and start-up costs or 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.

One Maryland Application Materials:

RESOURCES


​CONTACT

For more information about One Maryland Tax Credit 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 One Maryland Tax Credit Program?
    • ​The One Maryland Tax Credit Program provides two state income tax credits to businesses that invest in an economic development project in a "qualified distressed county". The One Maryland Project Tax Credit can be as much as $5 million and the One Maryland Start-Up Tax Credit can be as much as $500,000.

  • What is the benefit of the Project Tax Credit?
      • The Project Tax Credit is an income tax credit of up to $5 million based on eligible project costs related to the cost of acquiring, constructing, rehabilitating, installing, and equipping an economic development project.
      • Eligible 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. A list of eligible project costs is available in the One Maryland Regulations.
      • Eligible project costs must be at least $500,000.

  • What is the benefit of the start-up tax credit?
      • The start-up tax credit is an income tax credit of up to $500,000 of eligible start-up costs.
      • Start-up costs include the expense of moving a business from outside Maryland and for the costs of furnishing and equipping a new location for ordinary business functions. Examples of eligible start-up costs would include the cost of fixed telecommunications equipment, office equipment, or office furnishings.
      • The start-up credit is calculated as the lesser of your eligible start-up costs or $10,000 multiplied by the number of new qualified positions.

  • Can you qualify for both credits?
    • ​Yes, however, expenses claimed for one credit may not be claimed for the other.

  • How do I qualify for the One Maryland Tax Credit?
    • ​In order to qualify for the One Maryland Tax Credit, a business must meet all of the following requirements:

      • Declaration of Intent Requirement. A business may not claim any expenses incurred or jobs created prior to notifying the Department of Business and Economic Development (DBED) 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. Applications for certification are available from DBED.
      • Job Creation Minimums. The business must create at least 25 new, full-time qualified positions at the project within 24 months of the date the project is placed in service.
      • Location: A business must locate or expand in a "Priority Funding Area" in a "Qualified Distressed County". Qualified distressed counties are subject to change. Please verify with DBED that your project location is in a PFA and a qualified distressed county.
      • Other:
        • The project must be primarily engaged in an eligible activity as defined by the statute.
        • Jobs must be "net new" jobs to the State, be full-time and pay at least 150% of federal minimum wage.
        • A job must be filled for 12 months before it is a "qualified position" for the tax credit.

  • How do I apply for the One Maryland Tax Credit?
      • Submit an intent letter to DBED. 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 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 ONEMDTC.
      • 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 and have it "placed in service". Once the project is "placed in service", the business has 24 months to create at least 25 qualified jobs.
      • Submit a final application to DBED after the minimum number of jobs has been created and the jobs have been filled for 12 months. If the business qualifies for the credit, DBED will issue a Final Certificate of Eligibility that must be attached to the 500CR form when claiming the credit.
      • Additional information may be requested by DBED’s Internal Audit office.

  • 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
      • Film making, 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 if Federal Minimum Wage increases?
    • ​A qualified position must pay at least 150% of federal minimum wage. If the federal 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.

  • 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 distressed 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 at least 25 new qualified positions, it may continue to claim the credit during the carry forward period. 
      • If the business maintained at least 25 new qualified positions for five years, and if the number of qualified positions falls below 25 but does not fall below 10, the business may claim a prorated tax credit.
      • If the business did not maintain 25 qualified jobs for at least 5 years, and if the number of jobs falls below 25, it may not claim the credit that year.
      • If the carry forward period is not expired, the business may begin claiming the credit again when it has 25 qualified positions again for the remainder of the carry forward period.

  • How does a business claim the start-up tax credit?
      • Start-up tax credit may be carried forward for 14 years after the year the project is placed in service.
      • Yearly limit in years 1-5:
        • Maryland income tax liability
      • Yearly limit in years 6-14:
        • Maryland income tax liability
        • Refund limited to the payroll withholding of the qualified employees
      • Business may begin claiming the refund in year 4 if the majority of qualified positions pay at least 250% of federal minimum wage.

  • How does a business claim the project tax credits?
      • Project tax credit may be carried forward for 14 years after the year the project is placed in service.
      • Yearly limit in years 1-5:
        • Income tax arising from the project
      • Yearly limit in years 6-14:
        • Income tax arising from the project
        • Maryland non-project income and a refund, both of which are limited to the payroll withholding of the qualified employees

      Business may begin claiming the refund in year 4 if the majority of qualified positions pay at least 250% of federal minimum wage.

  • If the business has several facilities in Maryland, how does it compute the income tax from the project?
    • ​The statute allows the company to establish a separate accounting method reflecting only gross income, deductions, expenses, gains, and losses that are directly attributable to the facility or the expansion of a facility. Alternatively, if such a separate accounting method is not practical, the business may use an alternative method approved by the taxing authority.

  • How do insurance companies claim the One Maryland Tax Credit?
    • Insurance Companies - Start-up Tax Credit

      • An insurer may claim the start-up credit against the State insurance premium tax as soon as it qualifies for the credits.
      • Beginning in the sixth year (or 4th year if the business meets the wage criteria), the insurer may claim a refund of excess credit not yet taken, but the amount of the refund claimed may not exceed the State income tax withholding amount for its qualified employees at the project for that year.

      Insurance Companies - Project Tax Credit

      • An insurer may not claim the project credit against the State insurance premium tax for the first five years of the project because the project credit may only be claimed against income tax from the project.  Insurance premiums tax does not meet this definition.
      • Beginning in the sixth year (or 4th year if the business meets the wage criteria), the insurer may claim the project credit against the premium tax and, to the extent that there is excess credit, a refund, but the combined amount of the credit taken and the refund claimed may not exceed the State income tax withholding for its qualified employees at the project for that year.

  • Can nonprofits benefit from the One Maryland Tax Credit?
      • A nonprofit corporation may claim both the start-up credit and the project credit against its State income tax obligations.
      • Beginning in the sixth year (or 4th year), a nonprofit corporation may claim an income tax refund based on the state income tax withholding of its qualified employees. It may claim this refund for the start-up tax credit and again for the project tax credit.

  • 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 DBED.

  • 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 the Department before committing to the project.

  • Can the business move from one location in Maryland into a Qualified Distressed County and apply for the tax credit?
    • ​If you are moving your business from one location in Maryland into a One Maryland County, the regulations state that the Secretary will decide whether or not to approve the tax credit for the business based on the following: 1) whether approving the tax credit would have a significant deleterious effect on another State location, by inducing a business to move a substantial number of jobs from an existing State location to a project in a qualified distressed county; 2) granting the tax credit would create a vacant Maryland facility, unless the Secretary determines that the vacant facility will not have a significant deleterious effect on the area. This is considered on a case-by-case basis.

  • Can various income tax credit benefits be combined?
    • ​Yes, for example, a business may also qualify for the Job Creation Tax Credit and if it is located in an enterprise zone, the enterprise zone income tax credits.

  • 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.  In addition, the business must submit an annual report to DBED each year it claims the credit during the carry forward period.

  • 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.