The State of Maryland offers a wide range of tax and financing incentives to enhance business development opportunities, and to encourage development across the State. Businesses locating to Dorchester County benefit from a menu of statutory and discretionary economic development incentive programs offered locally and through the State of Maryland’s Department of Commerce. One such incentive is the “One Maryland” program, where companies locating to the County could receive up to $5.5 million in tax credits. Other incentives are detailed below.
This Empowerment Contracting Program is designed to stimulate economic development and create jobs in urban and rural communities by providing federal contracting preferences to small businesses. A business obtains HUBZone certification in part by employing workers residing in the zone. A small business must meet all of the following criteria to qualify for the HUBZone program:
- Be located in a “historically underutilized business zone” or HUBZone.
- Be owned and controlled by one or more US Citizens, and
- Have at least 35% of its employees must reside in a HUBZone.
Small Business Reserve Program requires State agencies to reserve 10% of their contracting dollars for bid solely by small and minority-owned businesses.
State Tax Incentives
The major tax incentive programs available to Maryland businesses are:
Job Creation Tax Credit for new or expanding businesses that create at least 10 to 25 full time permanent new positions and which have been granted a property tax credit by a local Maryland government.
One Maryland Economic Development Tax Credit for businesses that establish or expand a business facility in a priority funding area.
Enterprise Zone Tax Credit, including enhanced Focus Area credits for businesses locating within the Enterprise zone a property tax credit for 10 years against local property taxes on a portion of real property improvements; and a tax credit based on wages paid to qualified employees.
Research and Development Tax Credit for businesses that incur qualified research and development expenses.
Clean Energy Incentive Tax Credit for businesses that purchase and install solar water heating and photovoltaic property or use waste materials to produce electricity.
Brownfields Tax incentives for a site located in a jurisdiction that has elected to participate in the Brownfields Revitalization Incentive Program (BRIP).
Other credits include:
- Maryland Disability Employment Tax Credit
- Employment Opportunity Tax Credit
- Neighborhood Partnership Program Tax Credit
- Employer Commuter Tax Credit
More information and a downloadable tax credit program guide are available from the Comptroller of Maryland.
Local Tax Incentives
These incentives are significant to businesses looking to locate within the County.
- Tax exemption for manufacturing and warehousing inventory
- Enterprise Zone Incentives
- A five-year phase out of the personal property taxes on manufacturing equipment
Business Personal Property Tax Incentives
- Manufacturing machinery, equipment, materials and supplies are totally exempt by Dorchester County
- Machinery, equipment, materials and supplies used primarily in research and development are treated as manufacturing equipment for tax purposes, and are exempt
- Manufacturing inventory is exempt
- Commercial inventory for warehouse/distribution is exempt
- Customized computer software is exempt
Through their discretionary authority, Dorchester County may grant tax exemptions and credits such as tax abatements on personal property tax (machinery and equipment), in return for job creation or business expansion by addition of new machinery.
Investment Financing Group – The Investment Financing Group runs several programs with the purpose of providing emerging, high technology businesses access to early-stage capital. Investment decisions are based on the project’s potential return, the promotion of economic development and the creation of jobs.
Challenge Investment Program – This program provides financing for small start-up companies to cover a portion of the initial costs associated with bringing new products to market.
Qualifications are the following:
- Have no more than 25 employees and annual sales of less than $1 million
- A minimum 1:1 co-investor match is required
- Applicants are limited to high tech companies whose principal places of business are located in Maryland
- The amount of equity is up to $150,000 with an initial investment of up to $50,000
- Additional investments are made based on performance and the achievement of specific milestones
Enterprise Investment Program – This program makes direct equity investments in emerging high technology companies with patented or proprietary products or manufacturing processes and a marketing strategy in place. Whereas the Challenge Investment Program works with emerging companies, the Enterprise Investment Program works with established companies to move them into their next stage of development as a viable business. The amount of investment ranges from $150,000 to $500,000.
- Applicants must be in a high-tech industry targeted for assistance.
- The applicant must agree to maintain its principal place of business in Maryland for five years.
- A minimum of 3:1 co-investor match is required.
Maryland Enterprise Venture Capital Limited Partnership – This program administered through the Maryland Department of Commerce provides investment in private venture capital limited partnerships with the understanding that each partnership will make its best efforts to invest in Maryland start-ups.