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Employment Opportunity Tax Credit - A Maryland State Tax Credit for Employers

What is it?

A two-year Maryland State tax credit available to employers for wages paid and childcare expenses incurred by employers for Maryland residents who are recipients of benefits through the Temporary Assistance to Needy Families (TANF). The credit is:

Year 1: 30% of 1st $6,000 wages = $1,800 plus up to $600 Childcare or Transportation

Year 2: 20% of 1st $6,000 wages = $1,200 plus up to $500 Childcare

Who qualifies?

  • Individuals who have been residents of Maryland for the last 6 months.
  • Maryland residents who have received Temporary Assistance to Needy Families (TANF) benefits for a minimum of 3 months of the 18 month immediately prior to employment.
  • Temporary, seasonal, part-time, and full-time employees qualify for this credit if they work for 12 months.

Long Term EOC Credit

  • If an EOC eligible applicant has been a recipient of Temporary Assistance to Needy Families (TANF) for any 18 months during the last 48 months and is employed by a business entity for a full year, the amount of the credit is 40% of up to the first $10,000 of wages paid to the employee.

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Enterprise Zone Tax Credit - A Maryland State Tax Credit for Employers

What is it?

A one-to-three year Maryland state tax credit available to employers in the designated Enterprise Zones who hire for newly created full-time jobs. A one-time credit for each new employee and a three-year credit for hiring an employee who is economically disadvantage (as determined by the Maryland Job Service). The credit is:

Economically Disadvantaged New Hires or Rehires who have been laid off a year or more:

  • 1st Year: $ 3000
  • 2nd Year: $ 2000
  • 3rd Year: $ 1000

Focus Area Employees within the Enterprise Zone:

  • 1st Year: $ 4500
  • 2nd Year: $ 3000
  • 3rd Year: $ 1500

New Hires Who Are Not Economically Disadvantaged:

  • $1000 credit per new worker - $1500 if in a focus area within a zone
  • In order to receive the full $6,000 tax credit, the individual must remain in the position for 3 years. If the individual leaves and another individual who is economically disadvantaged is hired in the position, the employer may take the remainder of the credit as if the original employee remained.

Who qualifies

An employee who is:

  • hired after the business was located in the Enterprise Zone, or after the zone was created, whichever is later
  • employed for at least 35 hours each week for 6 months, before or during the taxable year for which the tax credit is taken
  • spending half of all work time in the zone or in an activity related to the zone
  • hired to fill a new position, or replacing someone who is also economically disadvantaged; the employer’s number of full-time positions must increase by the number of credits taken
  • a new employee or an employee rehired after being laid-off by the business for more than one year

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Maryland Disability Tax Credit

What is it?

The Maryland Disability Employment Tax Credit (MDETC) is a Maryland State tax credit that allows employers to claim credit for employees with disabilities hired on or after October 1, 1997 but before June 30, 2007.

For each taxable year a credit is allowed in an amount equal to 30% of up to the first $6000 ($1800) of wages paid during the first year and 20% of up to the first $6000 ($1200) during the second year of employment.

Also, under MDETC, employers can benefit from a tax credit for work-related childcare or transportation expenses paid by the employer. A credit of up to $600 of the qualified childcare or transportation expenses incurred during the first year of employment, and up to $500 for the second year.

The MDETC may be claimed concurrently with any available federal tax credits for which the employee may be eligible.

The MDETC does not apply to:

  • Persons hired to replace laid-off employees or individuals on strike; or
  • A business simultaneously receiving federal or State employment training benefits; or
  • A business claiming a State tax credit under the "work not welfare" law for the same individual.

There are special provisions for employment lasting less than one year

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Work Opportunity Tax Credit - A Federal Tax Credit for Employers

What is it?

A one-time federal tax credit available to employers who hire new employees from a qualified population of low-income groups, including workers with disabilities. The credit is:

Up to 40% of the first $6,000 in paid wages ($2,400 per employee) if the individual works a minimum of 180 days or 400 hours.

Up to 25% of the first $6,000 in paid wages ($1,500 per employee) if the individual works a minimum of 120 hours but less than 400 hours.

For qualified summer youth, the credit is 25% of the first $3,000 in first-year wages paid during the 90-day summer working period, allowing a maximum credit of $750.

Who qualifies?

Temporary, seasonal, part-time, and full-time employees who fall under any of the following categories qualify (see WOTC Supplement for a description of eligible participants):

  • Recipients of Temporary Assistance for Needy Families (TANF)
  • Veterans (includes a new subcategory of Disabled Vets)
  • Ex-Felons
  • Designated Community Residents (DCR) 18-39 years of age
  • Vocational Rehabilitation Referrals
  • Summer Youth
  • Food Stamp Recipients
  • Supplemental Security Income (SSI) Recipients.

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Welfare-to-Work Tax Credit

The Welfare-to-Work Tax Credit for hiring long-term recipients can be as much as $8,500 per new hire: 35% of qualified wages for the first year, and 50% of qualified wages for the second year of employment.

Qualified wages: which include tax exempt amounts received under accident and health plans, as well as educational and dependent assistance programs - are capped at $10,000 per year. To qualify employers for this tax credit, new hires must begin work at any time after December 31, 2006, and before September 1, 2011, and must be employed at least 400 hours or 180 days.

Hiring Any of These Individuals Will Qualify You for the Welfare-to-Work Tax Credit

Long-term welfare recipients who are:

  • Members of a family receiving Temporary Cash Assistance (TCA) for at least 18 consecutive months before the date of hire
  • Members of a family whose eligibility to receive benefits has expired under federal or state law since August 5, 1997
  • Members of a family which have received benefits for any 18 months since August 5, 1997.

 

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Other Tax Credit Programs

Newly Constructed Dwelling Property Tax Credit
This Tax Credit was designed to encourage the construction and purchase of new homes in the city.

Vacant Dwelling Property Tax Credit
This Tax Credit was designed to encourage the renovation and reuse of residential vacant properties. It was the first of a series of tax credits enacted in the mid-1990s in response to concern about lagging development in the City during and after the recession of the early-1990s.

Home Improvement Property Tax Credit
This Tax Credit was designed to provide an incentive to make improvements to residential properties and lessen the financial burden on property owners.

Brownfield Property Tax Credit
This Tax Credit was designed to encourage the re-development of contaminated abandoned and/or under-utilized industrial/commercial sites. This program offers a city property tax credit (for both real and personal property taxes) on the increased property taxes after eligible improvements* are made (improved value).

Tax Credit for Conservation Property
Enacted in 1986, this state Tax Credit is designed to support preservation of conservation areas or open space properties.

Dwelling on Cemetery Property Tax Credit
This Tax Credit was designed to provide a full city property tax credit for improved properties: located on the site of cemetery property that is exempt under Sate Tax Property Article §7-201, and used as a dwelling by an employee of the owner of the exempt property.

Enterprise Zone Property Tax Credit
This Tax Credit was established in the early 1980's to encourage targeted investment in economically distressed areas as measured by unemployment, poverty status, population decline, or property abandonment. The City currently has 8 enterprise zones.

Fallen Hero Tax Credit
This Tax Credit is to provide property tax relief to the surviving spouse of a "Fallen Hero", an individual determined by the Fire and Police Employee's Retirement Systems to have died in the line of duty pursuant to applicable provisions of the City Code.

Historic Restoration and Rehabilitation Property Tax Credit
This Tax Credit was designed to encourage investment in historic properties.

Homestead Property Tax Credit
This Tax Credit was designed to limit the amount of the annual increase in taxable assessments for eligible owner occupied properties.

Arts and Entertainment Districts Property Tax Credit
This Tax Credit is designed to encourage the renovation of buildings for use by artists or arts and entertainment enterprises by lessening the financial burden on property owners.

Admission and Amusement Tax Exemption
The admission and amusement tax exemption is designed to encourage artist activity in designated Arts and Entertainment (A&E) Districts.