Job Creation Tax Credit

What Is the Job Creation Tax Credit?

Maryland’s Job Creation Tax Credit program provides tax credits up to $1,500 for each new, full-time job. The purpose of these tax incentives is to encourage businesses to expand or relocate in Maryland. The incentives, which are credits against taxes, are more valuable than deductions because credits are subtracted directly from income tax liability.

How much credit does a business receive?

  1. In most cases, the credit is 2-1/2% of aggregate annual wages for all newly created, full-time jobs, subject to a limit of $1,000 times the number of jobs created. The credit earned by a qualified business entity may not exceed $1 million per credit year.
  2. In a state enterprise zone, a federal empowerment zone, or a neighborhood designated by the Department of Housing and Community Development, the credit is increased to 5% of annual wages for all newly created full-time jobs, subject to a limit of $1,500 times the number of jobs created. The credit earned by a qualified business entity may not exceed $1 million per credit year.

How do I know if I can claim the Job Creation Tax Credit?

  1. Firm Certification Requirement. A firm must be certified as a qualified business entity eligible for the tax credit. Applications for certification are available from the Division of Marketing, Maryland Department of Business and Economic Development.
  2. Declaration of Intent Requirement. A business may not be certified as qualifying for the tax credit unless the business notifies the Department of Business and Economic Development of its intent to seek certification BEFORE hiring qualified employees.
  3. Job Creation Minimums.
    1. The business must create 60 new, full-time jobs at the expanding or new facility during a 24-month period.
    2. In designated “priority funding areas”, the minimum is 25. (see below for definition of priority funding areas)
    3. Outside “priority funding areas”, the requirement may be reduced to as few as 30 new jobs if the aggregate annual salary of the new workers exceeds $2.29 million (for 2002-2003).
  4. Other General Requirements.
    1. The new or expanded facility must be engaged in an eligible activity as defined by the statute.
    2. Only new jobs which pay more than 150% of the federal minimum wage are eligible for the credit.
    3. The expansion or establishment of a business must be at a single location in the state. Of course, a single firm may have more than one eligible location, provided that each is certified and meets the requirements of the statute.
    4. The job must be filled for 12 months before it is qualified for the tax credit.