Information on the Maryland R&D Tax Credit:
The Maryland R&D credit is generated from qualified research activities (QRAs) performed within the state. Qualifying activities are defined in Section 41 of the Internal Revenue Code as “a new or improved function, performance, or reliability or quality.”
Process improvement activities include:
- Identifying uncertainty concerning the development or improvement of a business component;
- Identifying one or more alternatives intended to eliminate that uncertainty; and
- Identifying and conducting a process of evaluating the alternatives (e.g., through modeling, simulation, or a systematic trial-and-error methodology).
The R&D Tax Credit is a credit that is available across various industries, such as:
- Food and Beverage
- Oil and Gas
State Credit Name: The Basic R&D Tax Credit; and The Growth R&D Tax Credit
Expiration Date: Both credits expire January 1, 2020, but are subject to extension by the General Assembly.
Who Can Apply? Corporations and flow-through entities
Credit Carry Forward: Credits can be carried forward for 7 years, but no carry back.
About the Credit: Maryland adopts the federal definition of QRE’s and qualified R&D.
- The Basic R&D Tax Credit: Credit equals 3% of QRE’s that do not exceed the Maryland Base Amount.
- The Growth R&D Tax Credit: Credit equals 10% of QRE’s in excess of the Maryland Base Amount.
The Maryland Base Amount is determined by dividing the accumulated QRE’s by the accumulated Maryland gross receipts for the four years prior to the credit year.
If either credit exceeds $4.5 million, the tax credit is allocated.
Notes: The business must file an application by September 15th for expenses acquired in the previous calendar year. R&D credits received after December 15, 2012 are refundable for “small businesses” to the extent that the tax credits exceed the income tax due for that year.
Click here to find out if you qualify for the federal research tax credit.
Contact your local Swanson Reed office to speak with a representative in your area today.