EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0721*
SENATE BILL 721
Q3 3lr0010
By: Chair, Budget and Taxation Committee (By Request – Departmental –
Commerce)
Introduced and read first time: February 6, 2023
Assigned to: Budget and Taxation
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 11, 2023
CHAPTER ______
AN ACT concerning 1
Income Tax – Credit for Federal Security Clearance Costs – Extension 2
Alterations 3
FOR the purpose of extending the termination date for reestablishing for a certain period 4
of taxable years a credit against the Maryland income tax for certain costs incurred 5
by employers to obtain federal security clearances for employees, rent certain spaces, 6
and construct or renovate certain sensitive compartmented information facilities in 7
the State; limiting eligibility for the income tax credit to individuals or corporations 8
who employ not more than a certain number of employees; and generally relating to 9
an income tax credit for costs related to federal security clearances. 10
BY repealing and reenacting, without amendments, 11
Article – Tax – General 12
Section 10–732(a) 13
Annotated Code of Maryland 14
(2022 Replacement Volume) 15
BY repealing and reenacting, with amendments, 16
Article – Tax – General 17
Section 10–732(b) 18
Annotated Code of Maryland 19
(2022 Replacement Volume) 20
2 SENATE BILL 721
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Tax – General 3
10–732. 4
(a) (1) In this section the following words have the meanings indicated. 5
(2) “Costs” means the costs to an individual or corporation for: 6
(i) security clearance administrative expenses incurred with regard 7
to an employee in the State including, but not limited to: 8
1. processing application requests for clearances for 9
employees in the State; 10
2. maintaining, upgrading, or installing computer systems in 11
the State required to obtain federal security clearances; and 12
3. training employees in the State to administer the 13
application process; and 14
(ii) construction and equipment costs incurred to construct or 15
renovate a sensitive compartmented information facility (“SCIF”) located in the State as 16
required by the federal government. 17
(3) “Department” means the Department of Commerce. 18
(4) “Secretary” means the Secretary of Commerce. 19
(5) “Small business” has the meaning stated in § 7–218 of this article. 20
(b) (1) Subject to the limitations of this section, for a taxable year beginning 21
after December 31, 2012 2022, but before January 1, [2022] 2028, an individual or a 22
corporation THAT EMPLOYS NOT MORE THA N 500 EMPLOYEES may claim credits 23
against the State income tax for: 24
(i) security clearance administrative expenses, not to exceed 25
$200,000; 26
(ii) expenses incurred for rental payments owed during the first year 27
of a rental agreement for spaces leased in the State if the individual or corporation is a 28
small business that performs security–based contracting, not to exceed $200,000; and 29
SENATE BILL 721 3
(iii) subject to paragraph (2) of this subsection, construction and 1
equipment costs incurred to construct or renovate a single SCIF in an amount equal to the 2
lesser of 50% of the costs or $200,000. 3
(2) The total amount of construction and equipment costs incurred to 4
construct or renovate multiple SCIFs for which an individual or a corporation is eligible to 5
claim as a credit against the State income tax is $500,000. 6
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 7
1, 2023, and shall be applicable to all taxable years beginning after December 31, 2021 8
2022. 9
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.