Maryland R&D Tax Credit Overview for Businesses

Maryland and the R&D Tax Credit

State Credit Name: The Basic R&D Tax Credit; and The Growth R&D Tax Credit

Expiration Date: Both credits expire June 2022, 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.

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Special Notes: 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.”

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.

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.

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Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 145 West Ostend Street, Baltimore, Maryland provides R&D tax credit consulting and advisory services to Baltimore, Frederick, Rockville, Gaithersburg, Bowie, Hagerstown, Annapolis, College Park, Salisbury and Laurel.

If you have any questions or need further assistance, please call or email our local Maryland Partner on (443) 687-8701.
Feel free to book a quick teleconference with one of our Maryland R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

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Maryland R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Maryland, businesses must first apply to the Maryland Department of Commerce. This application, which is typically an online submission, must be made by November 15th of the calendar year following the tax year in which the R&D expenses were incurred. The Department of Commerce reviews these applications and issues a tax credit certificate with the approved amount by February 15th of the subsequent calendar year.
Once the certification is received, businesses can then claim the credit on their Maryland income tax return. For individuals, this is done by completing Part D of Form 502CR, Income Tax Credits for Individuals, and attaching it to their Maryland income tax return (Form 502). Businesses will report the credit on their respective Maryland income tax forms (e.g., Form 502 for individuals, Form 505 for pass-through entities, or Form 515 for corporations). A copy of the tax credit certificate issued by the Department of Commerce must be attached to the tax return to substantiate the claim. If the credit exceeds the tax liability, unused portions may be carried forward, and for small businesses, certain credits can be refundable.

R&D Tax Credit Training for MD CPAs

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R&D Tax Credit Training for MD CFPs

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Maryland Patent of the Year – 2024/2025

Sonavex Inc. has been awarded the 2024/2025 Patent of the Year for their innovative ultrasound-detectable medical device. Their invention, detailed in U.S. Patent No. 11858181, titled ‘Microcavity-containing polymeric medical devices for enhanced ultrasonic echogenicity’, this invention introduces a novel approach to improving the visibility of medical implants during ultrasound imaging.

The patented device features a polymeric structure with microcavities dispersed within its core. These microcavities reflect ultrasonic signals, enhancing the device’s echogenicity and making it more visible on ultrasound scans. This design addresses the challenge of poor visibility of certain medical implants, such as markers or catheters, which can complicate procedures and follow-up care.

By incorporating microcavities, the device ensures strong image contrast throughout its entire cross-section, regardless of the angle of the ultrasound beam. This robust visibility is crucial for accurate placement and monitoring of medical implants, potentially reducing complications and improving patient outcomes.

Manufactured using resorbable polymers, the device is designed to safely degrade within the body over time, minimizing the need for surgical removal. This innovation marks a significant advancement in medical device technology, offering a practical solution to enhance the effectiveness of ultrasound-guided procedures.