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of Maryland qualified research expenses above your Maryland base amount.
No applicant can receive more than $250,000. Total credits are capped at $12 million a year across all applicants.
A business with net book value assets under $5 million is refunded any credit above its Maryland income tax liability.
Unused credit carries forward up to 7 taxable years after the year the expense was incurred.
Apply to the Maryland Department of Commerce by November 15 of the year after the tax year. Certificates go out by February 15.
Commerce certifies the credit. You then claim it on an amended return or a later return, with the certificate attached.
Maryland uses the federal definition of qualified research. If your team is working through technical problems and testing alternatives in Maryland, that work may qualify.
Where it shows up
New features, system architecture, algorithms, data pipelines, and performance or scalability work may qualify when the solution is not obvious up front.
Prototyping, testing, and design iteration for new or improved products may qualify, along with work to develop better production or lab processes.
Formulation, assay development, and preclinical research may qualify when the work meets the four-part test.
Maryland's credit runs through an application and certification process, with annual caps. These are the rules worth knowing before you apply.
Only qualified research conducted in Maryland counts, and the expenses have to be incurred for that Maryland work. The gross receipts and expenses in the base calculation are Maryland figures too.
You cannot just claim the credit on your return. You apply to the Maryland Department of Commerce by November 15 of the year after the tax year, and you need to be in good standing with the State Department of Assessments and Taxation. Commerce issues a certificate by February 15, and a copy goes with your return.
Total credits are capped at $12 million a year, with $3.5 million set aside for small businesses and $8.5 million for everyone else. No applicant can receive more than $250,000. If applications exceed a pool, Commerce prorates every credit in it, and unused amounts in one pool flow to the other.
The credit is 10% of Maryland qualified expenses above a base amount built from your Maryland gross receipts and R&D spending over the credit year and the four years before it. In the first year you have R&D expenses, the base amount is zero, so the credit is 10% of all qualified expenses.
A small business is a for-profit company with net book value assets under $5 million at the beginning or end of the tax year, shown on its balance sheet. Small businesses draw from their own pool, and the credit is refundable to the extent it exceeds their Maryland income tax.
Only the parent company applies, and each subsidiary gets a share of the credit based on its share of the group's Maryland qualified expenses. After a merger or acquisition, you include the acquired company's prior Maryland expenses in your base amount. The credit currently runs through tax year 2030.
The Maryland credit and the federal credit are separate claims, but they draw on the same definitions. Maryland uses the federal definitions of qualified research and qualified research expenses, limited to work done in Maryland, so the same technical documentation can support both claims.
The timelines differ. The federal credit goes on your tax return, while Maryland requires an application to Commerce by November 15 before you can claim. We work alongside your CPA to keep both on track.
We meet with your key staff to identify every qualifying project and disqualify any that don’t meet IRS criteria.
Our team reviews your payroll, general ledger, and tax returns to calculate the full credit.
A dedicated team with an impeccable IRS defense record reviews everything through our QA process.
You receive a complete, audit ready report that your CPA files alongside your taxes or amends for prior years.
Start with a no-obligation call to determine what your business could claim.