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Maryland's Newly-Enacted Job Creation & Recovery Tax Credit Can Allow Maryland Employers a $5,000 Tax Credit Per Employee

April 14, 2010

By: A. Lee Lundy, Jr.

In an effort to create new Maryland jobs for unemployed Maryland residents, Governor Martin O'Malley has recently signed emergency legislation enacting the Job Creation and Recovery Tax Credit.  The Tax Credit makes available a $5,000 tax credit (that's $5,000 in real money - not just a tax deduction) for each "Qualified Employee" hired by a "Qualified Employer" to fill a "Qualified Position." Here are the definitions:

  • "Qualified Employee" is a Maryland resident who, at the time he or she is hired by the Qualified Employer, is receiving, or has received in the past 12 months, unemployment benefits and is not currently employed full time.
  • "Qualified Employer"  is a person or entity that conducts or operates a trade or business in Maryland and files a Maryland Income Tax Return, or is exempt from taxation under Section 501(c) of the Internal Revenue Code.
  • "Qualified Position" is a full-time position in Maryland which is expected to require the services of an employee for an indefinite duration and without interruption for a period of 12 months or more.  The position must be either newly created or have been vacant for a period of at least six months on the date of hiring of the Qualified Employee.   

Some other pertinent facts are:

  • The Qualified Employee must be hired between March 25, 2010 and December 31, 2010.
  • The tax credit is taken at the rate of $416.67 for each month during the 2010 and 2011 employer's tax years that the Qualified Employee works, up the maximum of 12 months.
  • A non-profit organization can take advantage of this program by applying the tax credit against unrelated business income and receive a refund of any excess amount.
  • The State has authorized a total of $20 Million in tax credits for this program.
  • Employers must receive certification by the Department of Labor, Licensing and Regulation.
  • Each employer may receive a maximum credit of $5,000 per Qualified Employee up to a total of $250,000.
  • The Qualified Position must be a "net new position" in the state of Maryland, and not simply one that is "created" by the shifting of employment functions from one facility to another facility of the same Maryland business entity, through a merger or acquisition, or by the displacing (i.e., terminating) of an existing employee.   

If you have questions about the Maryland Job Creation & Recovery Tax Credit and whether you and your business can benefit from it, contact A. Lee Lundy at 410.752.9705 or email. The business attorneys at Tydings are here to help.

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