Legislature Evaluates
Maryland Job Creation Tax Credit

Since 2012, Maryland has established 14 tax credits with eight of those primarily for businesses. Since then, each enacted tax credit is required to be formally evaluated by the Department of Legislative Services (DLS) and that evaluation is to be reviewed by a special legislative committee. This year, the Job Creation Tax Credit is the subject of this process. In 2018, the process is required to evaluate and review the Research and Development Tax Credit and the Biotechnology Tax Credit. The Cyber Security Investment Incentive will be the subject of the process in 2019.

Since its inception in 2002, the Job Creation Tax Credit has been claimed by 101 businesses who reported creating 17,692 jobs. The tax credits to those businesses totaled an estimated 21.8 million dollars.

To be eligible, a business must be involved in certain industries. Biotechnology, research, development and testing, and information technology are among those business sectors eligible for the credit.

The DLS evaluation found that the Job Creation Tax Credit provides a modest incentive to large businesses but it overlaps with other State employment tax credits. Small businesses are at a disadvantage in trying to use the credit because of its requirement to create at least 30 jobs within two years. Also, the requirement to have a certification from a CPA can be too costly.

The significant recommendation from the DLS evaluation is that the Maryland General Assembly consider consolidating the credit with other employment based credits and lower the job creation requirement to make the credit more broad based.

TCM anticipates legislation to change the eligibility of this tax credit and others during the upcoming 2017 legislative session. Any proposals in this area will be discussed by the Legislative Committee during their regular conference calls starting in January.