Title 10. Income Tax — Subtitle 4. Special Treatment of Income
Statutes in effect as of October 1, 2026.
Md. Code Ann., Tax-Gen. § 10-401 (2026)
Title 10. Income Tax
Subtitle 4. Special Treatment of Income
§ 10–401LinkCopy Citation
In computing the adjustments under §§ 10-206 and 10-210 of this title, a nonresident shall allocate to the State income, losses, or adjustments derived in connection with a business that is carried on both in and out of the State and of which the nonresident is a partner, shareholder of an S corporation, or proprietor, or in connection with an occupation, profession, or trade carried on both in and out of the State by:
(1)
separate accounting, if the Comptroller allows; or
(2)
the method that the Comptroller requires to determine fairly the part of the income derived from or reasonably attributable to the trade, business, profession, or occupation carried on in the State.
Md. Code Ann., Tax-Gen. § 10-402 (2026)
Title 10. Income Tax
Subtitle 4. Special Treatment of Income
§ 10–402LinkCopy Citation
(a)
In this section, “worldwide headquartered company” means a corporation included in a group of corporations including a parent corporation that:
(1)
filed a Form 10–Q with the Securities and Exchange Commission for the quarterly period ending June 30, 2017;
(2)
has its principal executive office in the State; and
(3)
(i)
employs at all times between July 1, 2017, and June 30, 2020, at least 500 full–time employees at the parent corporation’s principal executive office that is located within the State; or
(ii)
if the parent corporation is a franchisor, is part of a group of corporations that employs at all times between July 1, 2017, and June 30, 2020, at least 400 full–time employees at the parent corporation’s principal executive office that is located within the State.
(b)
In computing Maryland taxable income, a corporation shall allocate Maryland modified income derived from or reasonably attributable to its trade or business in this State in the following manner:
(1)
if a corporation carries on its trade or business wholly within the State, the corporation shall allocate to the State all of the Maryland modified income of the corporation; and
(2)
if a corporation carries on its trade or business within and outside the State, the corporation shall allocate to the State the part of the corporation’s Maryland modified income that is derived from or reasonably attributable to the part of its trade or business carried on in the State, in the manner required in subsection (c), (d), or (e) of this section.
(c)
(1)
Except as provided in subsection (d) or (e) of this section, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State may be determined by separate accounting if practicable.
(2)
If in any taxable year a corporation is permitted or required to use the separate accounting method in determining all or a portion of its Maryland taxable income, the portion that is separately accounted for to Maryland shall be taxable whether or not the Maryland modified income of the corporation for the taxable year is zero or less.
(d)
(1)
(i)
In this paragraph:
(1)
“manufacturing corporation” means a domestic or foreign corporation which is primarily engaged in activities that, in accordance with the North American Industrial Classification System (NAICS), United States Manual, United States Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 33; and
(2)
“manufacturing corporation” does not include a refiner, as defined in § 10–101 of the Business Regulation Article.
(ii)
If a manufacturing corporation carries on its trade or business within and outside the State and the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100% of the sales factor.
(iii)
In filing its tax return for each year, a manufacturing corporation shall certify that the NAICS Code reported on its Maryland return is consistent with that reported to other government agencies.
(iv)
If the Comptroller determines that a corporation has submitted information that incorrectly classifies the corporation as a manufacturing corporation under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation in an appropriate manner.
(2)
Except as provided in paragraphs (1) and (3) of this subsection:
(i)
for a taxable year beginning after December 31, 2017, but before January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:
(1)
the numerator of which is the sum of the property factor, the payroll factor, and 3 times the sales factor; and
(2)
the denominator of which is 5;
(ii)
for a taxable year beginning after December 31, 2018, but before January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:
(1)
the numerator of which is the sum of the property factor, the payroll factor, and 4 times the sales factor; and
(2)
the denominator of which is 6;
(iii)
for a taxable year beginning after December 31, 2019, but before January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:
(1)
the numerator of which is the sum of the property factor, the payroll factor, and 5 times the sales factor; and
(2)
the denominator of which is 7;
(iv)
for a taxable year beginning after December 31, 2020, but before January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:
(1)
the numerator of which is the sum of the property factor, the payroll factor, and 6 times the sales factor; and
(2)
the denominator of which is 8; and
(v)
for a taxable year beginning after December 31, 2021, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100% of the sales factor.
(3)
(i)
Each year a worldwide headquartered company that filed a federal corporate income tax return for the taxable year may elect to calculate its Maryland modified income derived from or reasonably attributable to trade or business carried on in the State using a 3–factor apportionment fraction:
(1)
the numerator of which is the sum of the property factor, the payroll factor, and twice the sales factor; and
(2)
the denominator of which is 4.
(ii)
To determine under subparagraph (i) of this paragraph the Maryland modified income of a corporation or group of corporations that is a worldwide headquartered company that filed a federal corporate income tax return for the taxable year, gross income from intangible investments, including dividends, interest, royalties, and capital gains from the sale of intangible property, shall be included in the calculation of the numerator based on the average of the property and payroll factors.
(4)
The property factor under paragraphs (2) and (3) of this subsection shall include:
(i)
rented and owned real property; and
(ii)
tangible personal property located in the State and used in the trade or business.
(e)
To reflect clearly the income allocable to Maryland, the Comptroller may alter, if circumstances warrant, the methods under subsections (c) and (d) of this section, including:
(1)
the use of the separate accounting method;
(2)
the use of the 3–factor double weighted sales factor formula method or the single sales factor formula method;
(3)
the weight of any factor in the 3–factor formula;
(4)
the valuation of rented property included in the property factor; and
(5)
the determination of the extent to which tangible personal property is located in the State.
Md. Code Ann., Tax-Gen. § 10-403 (2026)
Title 10. Income Tax
Subtitle 4. Special Treatment of Income
§ 10–403LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
(i)
“Financial institution” means:
(1)
a credit company;
(2)
except as provided in subparagraph (ii)1 of this paragraph, a finance company;
(3)
an international banking facility;
(4)
a loan company;
(5)
a mortgage company;
(6)
a safe-deposit company; and
(7)
a savings and loan association.
(ii)
“Financial institution” does not include:
(1)
a finance company that makes loans only to farmers for agricultural purposes;
(2)
a company licensed under the federal Small Business Investment Act of 1958;
(3)
a corporation that elects to be taxed as a small business corporation under Subchapter S of the Internal Revenue Code;
(4)
an entity that is a real estate mortgage investment conduit as defined in the Internal Revenue Code;
(5)
a limited liability company; or
(6)
a commercial bank, savings bank, trust company, or company that substantially competes with national banks in the State.
(3)
“Financial institution holding company” means a financial institution whose only activities are:
(i)
the maintenance and management of intangible investments; and
(ii)
the collection and distribution of income from intangible investments.
(b)
Notwithstanding § 10-402 of this subtitle, interest received by a financial institution holding company from one of its subsidiary corporations that is a financial institution shall be allocated to this State only to the extent that the interest is derived from the trade or business of the subsidiary corporation within this State.