Tech investors can get a sizable tax break from the state of Maryland next year, but they have to act fast.
Investors in Maryland tech startups could be eligible for a tax credit worth hundreds of thousands of dollars if they submit an application to the state by Monday, Nov. 15.
Applications for the Innovation Investment Tax Credit are being reviewed on a first-come, first-served basis, according to the Maryland Department of Commerce, and lawmakers have set aside $2 million for the program.
The program is outlined in a 2021 law, Senate Bill 160. Successful applicants will receive an income tax credit worth 33% of their investment in a Maryland tech startup. The tax credit is generally capped at $250,000, except for investments made in one of four rural counties: Allegany, Dorchester, Garrett and Somerset. Those investments could net an investor a tax credit worth up to $500,000. Certain investors could also realize tax credits of up to $500,000 if an eligible startup is located in an opportunity zone.
Eligible startups must meet several criteria, including that they are based in Maryland, have fewer than 50 full-time employees, must not be publicly traded and have a capitalization of at least $100,000.
Interested investors can read the full rules and apply for the tax credit by visiting the Maryland Department of Commerce website.
This tax credit is born out of the state’s Cybersecurity Investment Incentive Tax Credit Program. Maryland lawmakers had taken aim at some tax incentive programs following a 2019 audit that found a lack of oversight in the Department of Commerce’s administration of those programs. In the 2021 session, the Department of Commerce responded by proposing legislation that included widening the scope of the cybersecurity incentive to apply to tech startups more generally.
According to the Department of Commerce, this tax incentive applies to companies in the following fields: advanced manufacturing, aerospace, agriculture, artificial intelligence, blue technology, cybersecurity, education, energy and sustainability, financial, life sciences, quantum, and sensor and robotics.
