Economic Development (GEC) — Title 6. Economic Development Tax Incentives

“Central services” means the performance of central management or administrative functions.

“Central services” includes:

“Qualified business entity” means a person conducting or operating a trade or business in the State that is certified in accordance with § 6–303 of this subtitle as qualifying for the tax credit under this subtitle.

For a person engaged in a business activity described in § 6–303(b)(1)(ii)13 of this subtitle, “qualified business entity”:

“Qualified position” means:

“Qualified position” does not include a position that is:

For a person engaged in a business activity described in § 6–303(b)(1)(ii)13 of this subtitle, “qualified position” does not include any position other than a position engaged in:

is a veteran; and

is a qualified veteran as defined under § 51(d)(3)(A) of the Internal Revenue Code for purposes of the federal Work Opportunity Tax Credit.

an enterprise zone designated by the Secretary under § 5–704 of this article;

an enterprise zone designated by the United States government under 42 U.S.C. §§ 11501 through 11505;

an empowerment zone or enterprise community designated by the United States government under 26 U.S.C. §§ 1391 through 1397F;

a sustainable community, as defined in § 6–301 of the Housing and Community Development Article; or

a Tier I county.

a municipal corporation;

Baltimore City;

a sustainable community, as defined in § 6–301 of the Housing and Community Development Article;

an enterprise zone designated by the Secretary under § 5–704 of this article;

an enterprise zone designated by the United States government under 42 U.S.C. §§ 11501 through 11505;

those areas of the State located between Interstate Highway 495 and the District of Columbia;

those areas of the State located between Interstate Highway 695 and Baltimore City;

any area in a county designated by the county as a priority funding area under § 5–7B–03(c) of the State Finance and Procurement Article;

that portion of the Port Land Use Development Zone, as defined in § 6–501 of the Transportation Article, that has been designated as an area appropriate for growth in a county comprehensive master plan; and

a qualified opportunity zone designated under § 1400Z–1 of the Internal Revenue Code in Allegany County, Garrett County, Somerset County, or Wicomico County.

The Secretary or the Secretary’s designee shall certify a person as a qualified business entity if the person meets the requirements of this section.

A person may not be certified as a qualified business entity under subsection (b)(1) of this section unless the person notifies the Department of its intent to seek certification before hiring any qualified employees to fill the qualified positions necessary to meet the requirements of subsection (b)(1)(i) of this section.

a person shall establish or expand a business facility in the State that:

a small business shall hire at least one qualified veteran employee for a full–time position in the State.

To be certified as a qualified business entity for a tax credit under subsection (b)(1) of this section, a person shall submit to the Department an application that specifies:

To be certified as a qualified business entity for a tax credit under subsection (b)(2) of this section, a small business shall submit to the Department an application that specifies:

A qualified business entity may claim a tax credit in the amount determined under this section.

The Department shall certify the amount of the tax credit for which a qualified business entity is eligible under this section.

The qualified business entity shall submit to the appropriate State units, with the tax return on which the credit is claimed, certification from the Department that the business entity has met the requirements of this subtitle and is eligible for the credit in the amount certified by the Department.

Except as provided in this section, the credit earned under this section by a qualified business entity under § 6–303(b)(1) of this subtitle:

The credit earned by a qualified business entity under this subtitle may not exceed $1,000,000 for any credit year.

The total amount of credits certified by the Department for qualified business entities in a taxable year may not exceed $4,000,000.

The same credit cannot be applied more than once against different taxes by the same taxpayer.

If the credit allowed under this subtitle exceeds the total tax otherwise due from a qualified business entity in a taxable year, the qualified business entity may apply the excess as a credit for succeeding taxable years until the earlier of:

The credit under this subtitle may not be carried back to a preceding taxable year.

the credit shall be recomputed and reduced by the percentage reduction of the number of qualified employees;

the recomputed credit shall be subtracted from the amount of credit previously allowed; and

the qualified business entity shall pay the difference as taxes payable to the State for the taxable year in which the number of qualified positions falls more than 5% below the average number of qualified positions during the credit year.

each insurer claiming the credit against the insurance premium tax under § 6–114 of the Insurance Article;

the total amount of credits claimed by insurers under § 6–114 of the Insurance Article; and

the number of insurers claiming the credit.

a business entity may be considered for eligibility for the tax credit authorized under this subtitle based on positions filled before termination of this subtitle, provided that the other requirements of the subtitle are satisfied; and

tax credits earned may be carried forward and are subject to recapture in accordance with § 6–305 of this subtitle.

establishes or expands a business facility within a Tier I county; and

is approved for a project tax credit in accordance with this subtitle.

“Eligible project cost” means the cost and expense a qualified business entity incurs to acquire, construct, rehabilitate, install, or equip an eligible economic development project.

“Eligible project cost” includes:

is certified in accordance with this subtitle as qualifying for a project tax credit under this subtitle.

“Qualified position” means a position that:

“Qualified position” does not include a position that is:

“Tier I county” means a county with:

“Tier I county” includes a county that:

To qualify for a project tax credit, a person shall be certified by the Secretary as meeting the requirements of this subtitle and as being eligible for the tax credit.

The Secretary may not certify a person as a qualified business entity unless the person notifies the Department of its intent to seek certification before hiring any qualified employees to fill the qualified positions necessary to satisfy the employment threshold under subsection (b)(2) of this section.

establish or expand a business facility that:

during any 24–month period, create at least the number of qualified positions at the new or expanded business facility specified in § 6–403(b) of this subtitle; and

be primarily engaged at the new or expanded business facility in any combination of:

the effective date of the start–up or expansion;

the number of full–time employees before the start–up or expansion and the payroll of the existing employees;

the number of qualified positions created and qualified employees hired and the payroll of the new qualified employees; and

any other information that the Secretary requires by regulation.

A qualified business entity may claim a project tax credit for the cost of an eligible economic development project in a Tier I county if the total eligible project cost for the eligible economic development project is at least $500,000.

A qualified business entity is not entitled to a project tax credit for a cost incurred before notifying the Department of its intent to seek certification as qualifying for the project tax credit.

Except as provided in subsections (d) and (e) of this section, the project tax credit allowed in a taxable year may not exceed the State tax for that year on the qualified business entity’s income.

The Department shall certify the amount of the project tax credit for which a qualified business entity is eligible.

Subject to paragraph (2) of this subsection, if the eligible project cost for the eligible economic development project exceeds the State tax on the qualified business entity’s income, the qualified business entity may apply any excess as a project tax credit for succeeding taxable years against the State tax on the qualified business entity’s income until the earlier of:

Subject to the limitation in paragraph (4) of this subsection, this subsection applies to any taxable year after the 4th credit year.

A qualified business entity other than a person subject to taxation under Title 6 of the Insurance Article may claim a refund in the amount, if any, by which the qualified business entity’s unused excess exceeds the State tax for the taxable year.

A qualified business entity that is subject to taxation under Title 6 of the Insurance Article may:

For any taxable year, the total amount claimed as a refund under this subsection may not exceed the amount of tax that the qualified business entity is required to withhold for the taxable year from the wages of qualified employees under § 10–908 of the Tax – General Article.

an individual subject to the income tax under Title 10 of the Tax – General Article; or

an organization exempt from taxation under § 501(c)(3) or (4) of the Internal Revenue Code; and

a governing board;

the governing entity of a private nonprofit institution of higher education; or

the governing entity of a regional higher education center.

“Nonprofit institution of higher education” means an institution of postsecondary education located in the State, that receives State funds in the annual operating budget and that generally limits enrollment to graduates of secondary schools and awards degrees at either the associate, baccalaureate, or graduate level.

“Nonprofit institution of higher education” includes public and private nonprofit institutions of higher education located in the State.

The Fund is a special, nonlapsing fund that is not subject to § 7–302 of the State Finance and Procurement Article.

The State Treasurer shall hold the Fund separately, and the Comptroller shall account for the Fund.

revenue distributed to the Fund under § 2–202(a)(1) of the Tax – General Article;

money appropriated in the State budget to the Fund; and

any other money from any other source accepted for the benefit of the Fund.

finance research endowments at nonprofit institutions of higher education in scientific and technical fields of study; and

pay the related administrative, legal, and actuarial expenses of the Department.

The State Treasurer shall invest the money of the Fund in the same manner as other State money may be invested.

Any investment earnings of the Fund shall be credited to the Fund.

Four members of the Authority are a quorum.

An act of the Authority shall be approved by a majority vote of the members attending a meeting at which a quorum is present.

may not receive compensation as a member of the Authority; but

is entitled to reimbursement for expenses under the Standard State Travel Regulations, as provided in the State budget.

The governing body of a nonprofit institution of higher education may invest funds deposited into the research endowment in a manner consistent with other institutional endowments managed by the institution.

Any interest or other investment earnings on the funds invested are retained by the nonprofit institution of higher education to be used for the purposes set forth in this subtitle.

the donation or pledge is expressly or specifically restricted by the donor for one or more of the eligible uses under § 6–614 of this subtitle;

the nonprofit institution of higher education accepts the donation from individuals, partnerships, associations, public or private for–profit and nonprofit corporations, or nongovernmental foundations.

any donation received by a nonprofit institution of higher education prior to October 1, 2014;

educational or general fees, auxiliary fees, or other student fees generated by the institution;

proceeds from promissory notes, bonds, loans, or other instruments evidencing an indebtedness or any other obligation of repayment by the governing body of a nonprofit institution of higher education to the maker of the instrument; or

any other funds received from the State or federal government.

The president of each nonprofit institution of higher education or the president’s designee shall make the initial determination of whether a donation constitutes a qualified donation.

The president of the nonprofit institution of higher education shall provide a report to the governing body of the institution at least once each fiscal year regarding the amount of qualified donations the institution has received.

physical sciences;

life and neuro sciences;

engineering;

mathematical and computational sciences;

regulatory science;

autonomous systems;

aeronautical and space science;

environmental sciences;

behavioral and language science;

health sciences;

agriculture; or

cybersecurity.

the payment of the base salaries of newly endowed department chairs, new professorship positions, new research scientists, or new research staff positions, including research technicians and support personnel, and to fund affiliated graduate or undergraduate student research fellowships, if the positions or fellowships are engaged in the areas of research identified in subsection (a) of this section; or

the purchase of basic infrastructure, including laboratory and scientific equipment or other essential equipment and materials, related to an area of research identified in subsection (a) of this section.

work at least 20% of the year in support of a federal laboratory or associated federal laboratory research support organization;

hold a joint appointment or secondary position at another nonprofit institution of higher education in the State; or

work at least 20% of the year in support of entrepreneurial activities with a company engaged in one or more of the research areas identified in subsection (a) of this section.

any information requested by the Authority to ensure compliance with the requirements of this subtitle; and

a demonstration of interest from qualified private donors to meet the criteria established by the Authority.

the amount requested for distribution to the nonprofit institution of higher education in accordance with subsection (a) of this section;

the amount of qualified donations designated for use in requesting the distribution of matching funds from the Fund;

an explanation of how the proposed use satisfies the criteria for eligible uses of endowment proceeds under § 6–614 of this subtitle;

an explanation of how the proposed use of the endowment proceeds furthers the purposes of this subtitle and addresses the research needs of the institution as identified in the research plan; and

a designation of the applicable research endowment into which the requested matching funds are to be deposited.

This subsection applies to a nonprofit institution of higher education that anticipates that the institution will not receive the entire amount of a qualified donation on which the institution intends to rely for purposes of requesting matching funds from the Authority before the end of the fiscal year in which the research endowment plan is approved.

Except for the type of funds set forth in § 6–613(c)(2), (3), and (4) of this subtitle, a nonprofit institution of higher education may deposit available funds from other sources within the nonprofit institution of higher education into the research endowment for purposes of satisfying the 90–day deposit requirement in subsection (a) of this section if the nonprofit institution of higher education has disclosed the following information in the research endowment plan approved by the Authority:

On or before January 1, 2016, and January 1 of each subsequent year, the Department shall submit a report on the implementation of the Program to the Governor and, in accordance with § 2–1257 of the State Government Article, the Senate Budget and Taxation Committee and the House Ways and Means Committee.

The Department shall publish the report on the Department’s website in a publicly available format.

The report published on the website may not include any proprietary or confidential information.

the name and address of the institution;

the names of the individuals making decisions on behalf of the institution regarding expenditure of the funds allocated;

the amount of funds received during the previous fiscal year;

the cumulative amount of funds received; and

the amount of funds remaining unspent at the end of the previous fiscal year.

“Business entity” means a person conducting or operating a trade or business that is:

“Business entity” does not include:

“Qualified position” means a position that:

“Qualified position” does not include a position that is:

a Tier I county, as defined in § 1–101 of this article;

a county designated by the Department that is not a county described in item (1) of this subsection, not to exceed three counties; or

an opportunity zone.

incentivize the creation of new manufacturing jobs in the State; and

attract new businesses to and encourage the expansion of existing businesses within opportunity zones.

is in a Tier I area and the business entity intends:

is in a Tier II area and the business entity intends:

The Department may not refuse to certify a business entity conducting a trade or a business as a medical cannabis grower, processor, or dispensary or any other cannabis establishment licensed by the State solely because the business entity is a cannabis establishment, if the business entity otherwise satisfies the requirements of this subtitle.

If, before July 1, 2023, a business entity described under paragraph (1) of this subsection was denied certification under this subtitle solely because the business entity was a cannabis establishment, the business entity may reapply to the Department for certification.

A new business entity may not be certified as a qualified business entity unless the new business entity:

The Department may certify a new business entity as a qualified business entity after the new business entity provides the required notice under paragraph (1)(i) of this subsection, applies to the Department under paragraph (3) of this subsection, and establishes and operates an eligible project.

A new business entity shall submit to the Department an application containing at least the following information:

An existing business entity may apply to be certified as a qualified business entity if the existing business entity increases the number of qualified positions as required under subsection (a) of this section for an eligible project in a Tier I area or a Tier II area.

An existing business entity may not be certified as a qualified business entity unless the business entity:

An existing business entity shall submit an application to the Department containing at least the following information:

Except as provided in paragraph (2) of this subsection, the Program benefits authorized under this section may be claimed by a qualified business entity for up to 10 consecutive benefit years.

In the case of a qualified business entity that is located in a Tier II area and is provided a certificate under § 6–805 of this subtitle on or after June 1, 2022, the Program benefits authorized under this section may be claimed by the qualified business entity for up to 5 consecutive benefit years.

a new business entity in a Tier I area that is provided a certificate under § 6–805 of this subtitle before June 1, 2022, is eligible for:

except as provided in subsection (c) of this section, a new business entity not described under item (1) of this subsection or an existing business entity that operates an eligible project is eligible for a credit against the State income tax, established under § 10–741(b) of the Tax – General Article.

certifies the eligible project that is enrolled in the Program;

provides the duration of the certification; and

provides any additional information necessary for the Comptroller and Department to administer the Program.

For a qualified business entity that has submitted the notice required under § 6–803(b)(1)(i) or (c)(2)(i) of this subtitle before June 1, 2022, the Department may not provide the qualified business entity a certificate on or after June 1, 2022.

For a qualified business entity that has submitted the notice required under § 6–803(b)(1)(i) or (c)(2)(i) of this subtitle on or after June 1, 2022, the Department may not provide the qualified business entity a certificate on or after June 1, 2024.

Acceptance by a qualified business entity of the Program benefits under this subtitle shall be deemed to authorize the Comptroller to share with the Department any information received from a qualified business entity about eligibility for a benefit allowed under this subtitle.

Information that is received by the Department or Comptroller under paragraph (1) of this subsection is subject to confidentiality requirements established by law.

the following information is provided to the Department:

for a qualified opportunity zone business located in an opportunity zone in a county with a minimum wage that exceeds the State minimum wage, the qualified opportunity zone business pays to each employee wages that exceed the greater of:

the requirements for a Level 1 opportunity zone enhancement are met;

§ 6–304 of this title (Job Creation);

§ 6–403 of this title (One Maryland economic development);

§ 10–702 of the Tax – General Article (wages paid in an enterprise zone);

§ 10–725 of the Tax – General Article (biotechnology investment incentive);

§ 10–733 of the Tax – General Article (cybersecurity investment incentive); and

§ 10–741 of the Tax – General Article (More Jobs for Marylanders).

The Department shall administer the tax credit enhancements offered under the Program.

The enhancements offered under the Program shall be applicable to all taxable years beginning after December 31, 2018, but before January 1, 2027.

The Department shall publish on its website information about the Program and information reported by a qualified opportunity fund receiving enhanced tax credits under the Program.

The information published on the website:

the Level 1 opportunity zone enhancement is equal to:

the Level 2 opportunity zone enhancement is equal to:

the Level 1 opportunity zone enhancement increases the maximum credit allowed under § 6–403(b)(1)(ii)1 of this title to the lesser of $5,125,000 or the total eligible project cost for the eligible economic development project, less the amount of the credit previously taken for the project in prior taxable years; and

the Level 2 opportunity zone enhancement increases the maximum credit allowed under § 6–403(b)(1)(ii)1 of this title to the lesser of $5,500,000 or the total eligible project cost for the eligible economic development project, less the amount of the credit previously taken for the project in prior taxable years.

In this section the following words have the meanings indicated.

“Economically disadvantaged individual”, “focus area employee”, and “qualified employee” have the meanings stated in § 10–702 of the Tax – General Article.

“Enterprise zone” and “focus area” have the meanings stated in § 5–701 of this article.

the Level 1 opportunity zone enhancement is:

the Level 2 opportunity zone enhancement is:

the Level 1 opportunity zone enhancement is:

the Level 2 opportunity zone enhancement is:

the Level 1 opportunity zone enhancement is 65% of the investment in a qualified Maryland biotechnology company in any county, not to exceed $575,000; and

the Level 2 opportunity zone enhancement is 75% of the investment in the qualified Maryland biotechnology company in any county, not to exceed $750,000.

the Level 1 opportunity zone enhancement is 33% of the investment in a qualified Maryland technology company, not to exceed $300,000; and

the Level 2 opportunity zone enhancement is 50% of the investment in the qualified Maryland technology company, not to exceed $500,000.

the Level 1 opportunity zone enhancement is equal to 6% of the total amount of wages paid for each qualified position at an eligible project; and

the Level 2 opportunity zone enhancement is equal to 6.25% of the total amount of wages paid for each qualified position at an eligible project.