Are R&D Tax Credits Available in Maryland?

Are R&D Tax Credits Available in Maryland?

Yes. The state of Maryland provides the Research and Development (R&D) Tax Credit for businesses with qualified research expenses (QREs). Here is a summary of the credits:

• The Growth R&D Tax Credit equals ten percent (10%) of QREs in excess of the Maryland Base Amount.
• The Base Amount is determined by dividing the aggregate QREs by the aggregate Maryland gross receipts for the four years prior to the credit year.
• The total amount of credits approved for all businesses in the state may not exceed $12 million. Of this amount, $3.5 million is specifically set aside for small businesses.
• The Department may not approve a tax credit for any single applicant in an amount exceeding $250,000.
• Maryland follows the federal definition of qualified R&D and QREs, as defined by § 41(b) of the Internal Revenue Code in Maryland.
• The business must submit an application by November 15th for expenses incurred in the previous calendar year.
• R&D tax credits certified after December 15, 2012, are refundable for "small businesses" to the extent that the tax credits exceed the income tax liability for that taxable year. A small business is defined as a for-profit entity with net book value assets totaling less than $5 million at the beginning or end of the taxable year in which the R&D expenses are incurred.
• Credits that exceed the income tax for a taxable year, may be carried forward for the next seven years or until used.
• All members of a controlled group of corporations are treated as single taxpayers for the purposes of the credit.
• The tax credit remains in effect until June 30, 2027, unless extended by future legislation.