Job Creation Tax Credit

Maryland's Job Creation Tax Credit program provides income tax credits to businesses that create new jobs to encourage them to expand or relocate in Maryland.

Calculating the Credit
In most cases, the credit is 2.5 percent of annual wages for all newly created, full-time jobs, subject to a limit of $1,000 per new job. In a state enterprise zone, a federal empowerment zone, or a Maryland Department of Housing and Community Development designated neighborhood, the credit is increased to five percent of annual wages for all newly created full-time jobs, subject to a limit of $1,500 per new job. The credit earned by a qualified business entity 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 following the credit year. The credit may be recaptured if the business experiences job losses.

Qualifying for the Credit

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.
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 “Priority Funding Areas” (defined below), the minimum is 25. Outside Priority Funding Areas the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new employees exceeds $2.66 million (for 2007). The positions must be filled for 12 months.
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, provided that each is certified and meets the requirements of the statute.

Eligible Business Activities
To qualify a business must be primarily engaged in:

Manufacturing
Transportation or communications
Agriculture, forestry, fishing or mining
A public utility
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 headquarters
Business services firms (only located in a "Priority Funding Area")

A business may also be engaged in the operation of 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 2-year period.

Job Creation Tax Credit Priority Funding Areas
A business that locates or expands in a “Priority Funding Area” must only create a minimum of 25 new positions to qualify for the Job Creation Tax Credit. A “priority funding area” is defined for the purposes of the Job Creation Tax Credit as:

State Enterprise Zones
Federal Empowerment Zones
DHCD Designated Neighborhoods
Incorporated Municipalities
Areas inside the I-495 and I-695 beltways
A single growth area designated by each county for the purpose of this credit

The Job Creation Tax Credit remains in effect until January 1, 2010, subject to extension by the General Assembly.

Download the Employment Affidavit

Download the Preliminary Application

Download the Final Application

For more information on the Job Creation Tax Credit, download a copy of the Statute, Regulations, and Frequently Asked Questions.