Expertise Beyond the Numbers

Maryland Manufacturing: Proposed Bill Incentivizes Job Creation

The following blog post from SC&H Group’s Tax Services team discusses the newly proposed tax incentive program for Maryland manufacturers, providing executives with an overview of the program requirements, benefits, and impact on their business, as well as key considerations for application.

To help spur the growth of Maryland manufacturing jobs, especially in distressed counties, Governor Larry Hogan recently announced the More Jobs for Marylanders Act. Under the proposal, qualified businesses can apply for tax credits that offset state income and property taxes, exempt them from sales and use tax, and waive certain state fees.

Weighing the Impact for New Manufacturers Entering vs. Existing in Maryland

If a new manufacturer enters the state and meets all requirements, they would be entitled to:

  • Income tax credits that offset qualified business income,
  • Property tax credits,
  • Exemption from sales and use tax,
  • And waiver of State Department of Assessments and Taxation (SDAT) fees.

Although the program would be a benefit to manufacturers currently in the state, the program is not as rich.

An existing, qualified manufacturer would:

  • Not be eligible for property or sales tax exemptions,
  • And be eligible for an income tax credit (calculated by multiplying their Maryland withholding by the wages of the added qualifying positions).

Qualifying for the New Program Credits
If a manufacturer is already receiving credits or incentives under another Maryland program, the business would not be entitled to additional credits under this new program. Further, an independent certified public accountant must verify their application and financial information, and they must pay qualified, full-time employees at least 150 percent of the federal minimum wage.

In addition, the program is exclusive to distressed counties. A distressed county is defined as having one of the following within the most recent 24-month period:

  • An average unemployment rate that exceeds 150 percent of the average rate of unemployment for the state
  • An average per capita personal income that is equal to or less than 67 percent of the average per capita personal income for the state

Ultimately, Maryland manufacturers can benefit from the proposed legislation. However, they should first consider the various impacts it may have on their business, as well as other, potentially more beneficial credits and incentives. By working with an experienced tax professional, manufacturers can determine if they meet qualifications, decide which tax credits and incentives are most effective, and chart the best path for future success.

If you think this program would apply to your business or you are considering setting up a manufacturing business in Maryland, please contact SC&H Group’s Tax Services team here for additional information.