§ 10-721. Research and development tax credit
West's Annotated Code of MarylandTax-GeneralEffective: July 1, 2022
Effective: July 1, 2022
MD Code, Tax - General, § 10-721
§ 10-721. Research and development tax credit
(8) “Small business” means a for-profit corporation, limited liability company, partnership, or sole proprietorship with net book value assets totaling, at the beginning or the end of the taxable year for which Maryland qualified research and development expenses are incurred, as reported on the balance sheet, less than $5,000,000.
(b)(1) The purpose of the Research and Development Tax Credit Program is to foster increased research activities and expenditures in Maryland.
(2) Subject to the limitations of this section, an individual or a corporation may claim credits against the State income tax in an amount equal to 10% of the amount by which the Maryland qualified research and development expenses paid or incurred by the individual or corporation during the taxable year exceed the Maryland base amount for the individual or corporation.
(c)(1) By November 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred, an individual or corporation shall submit an application to the Department for the credits allowed under subsection (b) of this section.
(ii) Subject to paragraph (5) of this subsection, if the total amount of credits applied for by all small businesses under this section exceeds the amount specified under subparagraph (i) of this paragraph, the Department shall approve a credit for each applicant in an amount equal to the product of multiplying the credit applied for by the applicant times a fraction:
(ii) Subject to paragraph (5) of this subsection, if the total amount of credits applied for by all applicants that are not small businesses exceeds the maximum specified under subparagraph (i) of this paragraph, the Department shall approve a credit under this section for each applicant in an amount equal to the product of multiplying the credit applied for by the applicant times a fraction:
(5)(i) For any calendar year, if the total amount of credits applied for by all small businesses is less than $3,500,000, the amount specified under paragraph (4)(i) of this subsection shall be increased for that calendar year by an amount equal to the difference between $3,500,000 and the total amount of credits applied for by small businesses.
(ii) For any calendar year, if the total amount of credits applied for by all applicants that are not small businesses is less than $8,500,000, the amount specified under paragraph (3)(i) of this subsection shall be increased for that calendar year by an amount equal to the difference between $8,500,000 and the total amount of credits applied for by applicants that are not small businesses.
(7) By February 15 of the calendar year following the end of the year in which the individual or corporation submitted an application for the credit in accordance with paragraph (1) of this subsection, the Department shall certify to the individual or corporation the amount of the research and development tax credits approved by the Department for the individual or corporation under this section.
(d)(1) Except as provided in paragraph (2) of this subsection, if the credit allowed under this section in any taxable year exceeds the State income tax for that taxable year, an individual or corporation may apply the excess as a credit against the State income tax for succeeding taxable years until the earlier of:
(e)(1) In determining the amount of the credit under this section:
(f)(1) The Department of Commerce and the Comptroller jointly shall adopt regulations to prescribe standards for determining when research or development is considered conducted in the State for purposes of determining the credit under this section.
(g) In accordance with § 2.5-109 of the Economic Development Article, the Department shall report on the credits approved under this section.
(h) If the provisions of § 41 of the Internal Revenue Code governing the federal research and development tax credit are repealed or terminate, the provisions of this section continue to operate as if the provisions of § 41 of the Internal Revenue Code remain in effect, and the Maryland research and development tax credit under this section shall continue to be available.
Credits
Added by Acts 2000, c. 515, § 1, eff. July 1, 2000; Acts 2000, c. 516, § 1, eff. July 1, 2000. Amended by Acts 2001, c. 152, § 1, eff. July 1, 2001; Acts 2005, c. 98, § 1, eff. July 1, 2005; Acts 2007, c. 90, § 1, eff. July 1, 2007; Acts 2013, c. 109, § 1, eff. June 1, 2013; Acts 2014, c. 525, § 1, eff. June 1, 2014; Acts 2015, c. 22, § 5; Acts 2015, c. 58, § 1, eff. June 1, 2015; Acts 2016, c. 8, § 5; Acts 2017, c. 743, § 1, eff. July 1, 2017; Acts 2018, c. 609, § 1, eff. July 1, 2018; Acts 2019, c. 85, § 1, eff. July 1, 2019; Acts 2021, c. 114, § 1, eff. July 1, 2021; Acts 2022, c. 116, § 1, eff. July 1, 2022.
MD Code, Tax - General, § 10-721, MD TAX GENERAL § 10-721
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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