EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1204*
HOUSE BILL 1204
C8, Q3, Q1 4lr3092
HB 398/23 – W&M
By: Delegate Feldmark
Introduced and read first time: February 8, 2024
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Economic Development Tax Credit Programs – Qualified Position and Qualified 2
Employee – Definitions 3
FOR the purpose of altering the definition of “qualified position” for purposes of eligibility 4
for and the calculation of benefits under the One Maryland and More Jobs for 5
Marylanders economic development tax credit programs; altering the definition of 6
“qualified employee” for purposes of eligibility for and calculation of the credit 7
against the income tax for certain business entities located in an enterprise zone; 8
and generally relating to eligibility for benefits under the Enterprise Zone, One 9
Maryland, and More Jobs for Marylanders economic development tax credit 10
programs. 11
BY repealing and reenacting, without amendments, 12
Article – Economic Development 13
Section 6–401(a), 6–403(a) and (b)(1), 6–801(a) and (i), and 6–804(a) and (b) 14
Annotated Code of Maryland 15
(2018 Replacement Volume and 2023 Supplement) 16
BY repealing and reenacting, with amendments, 17
Article – Economic Development 18
Section 6–401(g) and 6–801(k) 19
Annotated Code of Maryland 20
(2018 Replacement Volume and 2023 Supplement) 21
BY repealing and reenacting, with amendments, 22
Article – Tax – General 23
Section 10–702 24
Annotated Code of Maryland 25
(2022 Replacement Volume and 2023 Supplement) 26
BY repealing and reenacting, without amendments, 27 2 HOUSE BILL 1204
Article – Tax – General 1
Section 10–741(a) and (b) 2
Annotated Code of Maryland 3
(2022 Replacement Volume and 2023 Supplement) 4
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMB LY OF MARYLAND, 5
That the Laws of Maryland read as follows: 6
Article – Economic Development 7
6–401. 8
(a) In this subtitle the following words have the meanings indicated. 9
(g) (1) “Qualified position” means: 10
(I) IF THE POSITION IS F ILLED BEFORE OCTOBER 1, 2024, a 11
position that: 12
[(i)] 1. is a full–time position and is of indefinite duration; 13
[(ii)] 2. pays at least 120% of the State minimum wage; 14
[(iii)] 3. is in a Tier I county; 15
[(iv)] 4. is newly created because a business facility begins or 16
expands in one location in a Tier I county; and 17
[(v)] 5. is filled; OR 18
(II) IF THE POSITION IS FILLED ON OR AFTER OCTOBER 1, 2024, 19
A POSITION THAT: 20
1. IS FULL–TIME AND OF INDEFINI TE DURATION; 21
2. PAYS AT LEAST: 22
A. FOR AN EMPLOYEE CLAS SIFICATION FOR WHICH 23
THERE IS A PREVAILIN G WAGE RATE, AS DEFINED UNDER § 17–201 OF THE STATE 24
FINANCE AND PROCUREMENT ARTICLE, THE PREVAILING WAGE ; OR 25
B. FOR ANY OTHER EMPLOY EE CLASSIFICATION , 150% 26
OF THE STATE MINIMUM WAGE ; 27
3. PROVIDES CAREER ADVA NCEMENT TRAINING ; 28 HOUSE BILL 1204 3
4. AFFORDS THE EMPLOYEE THE RIGHT TO 1
COLLECTIVELY BARGAIN FOR WAGES AND BENEFI TS; 2
5. PROVIDES PAID LEAVE ; 3
6. IS CONSIDERED COVERE D EMPLOYMENT FOR 4
PURPOSES OF UNEMPLOY MENT INSURANCE BENEFITS IN AC CORDANCE WITH TITLE 5
8 OF THE LABOR AND EMPLOYMENT ARTICLE; 6
7. ENTITLES THE EMPLOYE E TO WORKERS ’ 7
COMPENSATION BENEFIT S IN ACCORDANCE WITH TITLE 9 OF THE LABOR AND 8
EMPLOYMENT ARTICLE; 9
8. OFFERS EMPLOYER –PROVIDED HEALTH INSU RANCE 10
BENEFITS WITH MONTHL Y PREMIUMS THAT DO N OT EXCEED 8.5% OF THE 11
EMPLOYEE’S NET MONTHLY EARNIN GS; 12
9. OFFERS RETIREMENT BE NEFITS; 13
10. IS IN A TIER I COUNTY; 14
11. IS NEWLY CREATED BEC AUSE A BUSINESS FACI LITY 15
BEGINS OR EXPANDS IN ONE LOCATION IN A TIER I COUNTY; AND 16
12. IS FILLED. 17
(2) “Qualified position” does not include a position that is: 18
(i) created when an employment function is shifted from an existing 19
business facility of a business entity in the State to another business facility of the same 20
business entity if the position is not a net new job in the State; 21
(ii) created through a change in ownership of a trade or business; 22
(iii) created through a consolidation, merger, or restructuring of a 23
business entity if the position is not a net new job in the State; 24
(iv) created when an employment function is contractually shifted 25
from an existing business entity in the State to another business entity if the position is 26
not a net new job in the State; or 27
(v) filled for a period of less than 12 months. 28
6–403. 29 4 HOUSE BILL 1204
(a) (1) A qualified business entity may claim a project tax credit for the cost of 1
an eligible economic development project in a Tier I county if the total eligible project cost 2
for the eligible economic development project is at least $500,000. 3
(2) A qualified business entity is not entitled to a project tax credit for a 4
cost incurred before notifying the Department of its intent to seek certification as qualifying 5
for the project tax credit. 6
(b) (1) (i) Subject to the limitation in paragraph (2) of this subsection, the 7
project tax credit allowed under this section is the lesser of the maximum amount specified 8
in subparagraph (ii) of this paragraph and the total eligible project cost for the eligible 9
economic development project, less the amount of the credit previously taken for the project 10
in prior taxable years. 11
(ii) For purposes of calculation of the credit under subparagraph (i) 12
of this paragraph, the maximum amount is: 13
1. $5,000,000, if the qualified business entity creates at least 14
50 qualified positions; 15
2. $2,500,000, if the qualified business entity creates at least 16
25 qualified positions but fewer than 50 qualified positions; or 17
3. $1,000,000, if the qualified business entity creates at least 18
10 qualified positions but fewer than 25 qualified positions. 19
6–801. 20
(a) In this subtitle the following words have the meanings indicated. 21
(i) “Program” means the More Jobs for Marylanders Program established under 22
this subtitle. 23
(k) (1) “Qualified position” means a position that: 24
(i) is full–time and of indefinite duration; 25
(ii) 1. except as provided in item 2 of this item, for a position in 26
a facility that is located in an opportunity zone, pays an average annual salary that exceeds 27
$50,000; or 28
2. A. for a position in a facility of a business entity 29
described under subsection (c)(1)(i) of this section that is provided a certificate under § 30
6–805 of this subtitle before June 1, 2022, pays at least 120% of the State minimum wage 31
IF THE POSITION IS F ILLED BEFORE OCTOBER 1, 2024, OR PAYS AT LEAST 150% OF 32
THE STATE MINIMUM WAGE IF THE POSITION IS FILL ED ON OR AFTER OCTOBER 1, 33 HOUSE BILL 1204 5
2024; or 1
B. for a position in a facility of a business entity described 2
under subsection (c)(1)(i) of this section that is provided a certificate under § 6–805 of this 3
subtitle on or after June 1, 2022, pays at least 150% of the State minimum wage; 4
(iii) is located in a facility; 5
(iv) is newly created at a single facility in the State; [and] 6
(v) is filled; AND 7
(VI) IF THE POSITION IS FILLED ON OR AFTER OCTOBER 1, 2024: 8
1. PROVIDES CAREER ADVA NCEMENT TRAINING ; 9
2. AFFORDS THE EMPLOYEE THE RIGHT TO 10
COLLECTIVELY BARGAIN FOR WAGES AND BENEFI TS; 11
3. PROVIDES PAID LEAVE ; 12
4. IS CONSIDERED COVERE D EMPLOYMENT FOR 13
PURPOSES OF UNEMPLOY MENT INSURANCE BENEF ITS IN ACCORDANCE WI TH TITLE 14
8 OF THE LABOR AND EMPLOYMENT ARTICLE; 15
5. ENTITLES THE EMPLOYE E TO WORKERS ’ 16
COMPENSATION BENEFIT S IN ACCORDANCE WITH TITLE 9 OF THE LABOR AND 17
EMPLOYMENT ARTICLE; 18
6. OFFERS EMPLOYER –PROVIDED HEALTH INSU RANCE 19
BENEFITS WITH MONTHL Y PREMIUMS THAT DO N OT EXCEED 8.5% OF THE 20
EMPLOYEE’S NET MONTHLY EARNIN GS; AND 21
7. OFFERS RETIREMENT BE NEFITS. 22
(2) “Qualified position” does not include a position that is: 23
(i) created when an employment function is shifted from an existing 24
facility of a business entity in the State to another facility of the same business entity if the 25
position is not a net new job in the State; 26
(ii) created through a change in ownership of a trade or business; 27
(iii) created through a consolidation, merger, or restructuring of a 28
business entity if the position is not a net new job in the State; 29 6 HOUSE BILL 1204
(iv) created when an employment function is contractually shifted 1
from an existing business entity to another business entity in the State if the position is 2
not a net new job in the State; or 3
(v) filled for a period of less than 12 months. 4
6–804. 5
(a) (1) Except as provided in paragraph (2) of this subsection, the Program 6
benefits authorized under this section may be claimed by a qualified business entity for up 7
to 10 consecutive benefit years. 8
(2) In the case of a qualified business entity that is located in a Tier II area 9
and is provided a certificate under § 6–805 of this subtitle on or after June 1, 2022, the 10
Program benefits authorized under this section may be claimed by the qualified business 11
entity for up to 5 consecutive benefit years. 12
(b) On enrollment in the Program: 13
(1) a new business entity in a Tier I area that is provided a certificate under 14
§ 6–805 of this subtitle before June 1, 2022, is eligible for: 15
(i) a credit against the State income tax, established under § 16
10–741(b) of the Tax – General Article; 17
(ii) a credit against the State property tax, established under § 18
9–110 of the Tax – Property Article; 19
(iii) a refund of sales and use tax paid during the immediately 20
preceding taxable year, as provided under § 11–411 of the Tax – General Article; and 21
(iv) a waiver of fees charged by the State Department of Assessments 22
and Taxation, established under § 1–203.1 of the Corporations and Associations Article; 23
and 24
(2) except as provided in subsection (c) of this section, a new business entity 25
not described under item (1) of this subsection or an existing business entity that operates 26
an eligible project is eligible for a credit against the State income tax, established under § 27
10–741(b) of the Tax – General Article. 28
Article – Tax – General 29
10–702. 30
(a) (1) In this section the following words have the meanings indicated. 31
HOUSE BILL 1204 7
(2) (i) “Business entity” means: 1
1. a person conducting or operating a trade or business; or 2
2. an organization that is exempt from taxation under § 3
501(c)(3) or (4) of the Internal Revenue Code. 4
(ii) “Business entity” does not include a person owning, operating, 5
developing, constructing, or rehabilitating property intended for use primarily as single or 6
multifamily residential property located within the enterprise zone. 7
(3) “Economically disadvantaged individual” means an individual who is 8
certified by provisions that the Maryland Department of Labor adopts as an individual who, 9
before becoming employed by a business entity in an enterprise zone: 10
(i) was both unemployed for at least 30 consecutive days and 11
qualified to participate in training activities for the economically disadvantaged under the 12
federal Workforce Innovation and Opportunity Act or its successor; or 13
(ii) in the absence of an applicable federal act, met the criteria for an 14
economically disadvantaged individual that the Secretary of Labor sets. 15
(4) (i) “Enterprise zone” has the meaning stated in § 5–701 of the 16
Economic Development Article. 17
(ii) “Enterprise zone” includes a Regional Institution Strategic 18
Enterprise zone established under Title 5, Subtitle 14 of the Economic Development Article. 19
(5) “Focus area” has the meaning stated in § 5–701 of the Economic 20
Development Article. 21
(6) “Focus area employee” means an individual who: 22
(i) is a new employee or an employee rehired after being laid off for 23
more than 1 year by a business entity; 24
(ii) is employed by a business entity at least 35 hours each week for 25
at least 12 months before or during the taxable year for which the entity claims a credit; 26
(iii) spends at least 50% of the hours under item (ii) of this paragraph 27
either in the focus area or on activities of the business entity resulting directly from its 28
location in the focus area; 29
(iv) is hired by the business entity after the later of: 30
1. the date on which the focus area is designated; or 31
8 HOUSE BILL 1204
2. the date on which the business entity located in the focus 1
area; and 2
(v) 1. FOR AN INDIVIDUAL HI RED OR REHIRED BEFOR E 3
OCTOBER 1, 2024, earns at least 120% of the State minimum wage; OR 4
2. FOR AN INDIVIDUAL HI RED OR REHIRED ON OR AFTER 5
OCTOBER 1, 2024, IS EMPLOYED IN A QUA LIFIED POSITION. 6
(7) “Qualified employee” means an individual who: 7
(i) is hired to fill a newly created position or, if the individual is an 8
economically disadvantaged individual, is hired to fill a position previously held by another 9
economically disadvantaged individual; 10
(ii) is employed by a business entity at least 35 hours each week for 11
at least 6 months before or during the taxable year for which the entity claims a credit; 12
(iii) spends at least 50% of the hours under item (ii) of this paragraph, 13
either in the enterprise zone or on activities of the business entity resulting directly from 14
its location in the enterprise zone; 15
(iv) 1. FOR AN INDIVIDUAL HIRED OR REHIRED BEF ORE 16
OCTOBER 1, 2024, earns at least 120% of the State minimum wage; [and] OR 17
2. FOR AN INDIVIDUAL HI RED OR REHIRED ON OR AFTER 18
OCTOBER 1, 2024, IS EMPLOYED IN A QUA LIFIED POSITION; AND 19
(v) is hired by the business entity after the later of: 20
1. the date on which the enterprise zone is designated; or 21
2. the date on which the business entity locates in the 22
enterprise zone. 23
(8) “QUALIFIED POSITION ” MEANS A POSITION THA T: 24
(I) PAYS AT LEAST: 25
1. FOR AN EMPLOYEE CLASSIFICATION FOR W HICH 26
THERE IS A PREVAILIN G WAGE RATE, AS DEFINED UNDER § 17–201 OF THE STATE 27
FINANCE AND PROCUREMENT ARTICLE, THE PREVAILING WAGE ; OR 28
2. FOR ANY OTHER EMPLOY EE CLASSIFICATION , 150% 29
OF THE STATE MINIMUM WAGE ; 30 HOUSE BILL 1204 9
(II) PROVIDES CAREE R ADVANCEMENT TRAINI NG; 1
(III) AFFORDS THE EMPLOYEE THE RIGHT TO COLLECT IVELY 2
BARGAIN FOR WAGES AN D BENEFITS; 3
(IV) PROVIDES PAID LEAVE ; 4
(V) IS CONSIDERED COVERE D EMPLOYMENT FOR PUR POSES OF 5
UNEMPLOYMENT INSURAN CE BENEFITS IN ACCOR DANCE WITH TITLE 8 OF THE 6
LABOR AND EMPLOYMENT ARTICLE; 7
(VI) ENTITLES THE EMPLOYE E TO WORKERS ’ COMPENSATION 8
BENEFITS IN ACCORDAN CE WITH TITLE 9 OF THE LABOR AND EMPLOYMENT 9
ARTICLE; 10
(VII) OFFERS EMPLOYER –PROVIDED HEALTH INSU RANCE 11
BENEFITS WITH MONTHL Y PREMIUMS THAT DO NOT EXCEED 8.5% OF THE 12
EMPLOYEE’S NET MONTHLY EARNIN GS; AND 13
(VIII) OFFERS RETIREMENT BE NEFITS. 14
(b) (1) Any business entity that is located in an enterprise zone and satisfies 15
the requirements of § 5–707 of the Economic Development Article may claim a credit only 16
against the State income tax for the wages specified in subsections (c) and (d) of this section 17
that are paid in the taxable year for which the entity claims the credit. 18
(2) A business entity that is located in a focus area and satisfies the 19
requirements of § 5–707 of the Economic Development Article may claim a credit only 20
against the State income tax for the wages specified in subsection (e) of this section that 21
are paid to a focus area employee in the taxable year for which the entity claims the credit. 22
(3) An organization that is exempt from taxation under § 501(c)(3) or (4) of 23
the Internal Revenue Code may apply the credit under this section as a credit against 24
income tax due on unrelated business taxable income as provided under §§ 10–304 and 25
10–812 of this title. 26
(c) If a business entity does not claim an enhanced tax credit under subsection (e) 27
of this section for a focus area employee, for the taxable year in which a business entity 28
satisfies the requirements of § 5–707 or § 5–1406 of the Economic Development Article, a 29
credit is allowed that equals: 30
(1) up to $3,000 of the wages paid to each qualified employee who: 31
(i) is an economically disadvantaged individual; and 32 10 HOUSE BILL 1204
(ii) is not hired to replace an individual whom the business entity 1
employed in that or any of the 3 preceding taxable years; and 2
(2) up to $1,000 of the wages paid to each qualified employee who: 3
(i) is not an economically disadvantaged individual; and 4
(ii) is not hired to replace an individual whom the business entity 5
employed in that or any of the 3 preceding taxable years. 6
(d) (1) If a business entity does not claim an enhanced tax credit under 7
subsection (e) of this section for a focus area employee, for each taxable year after the 8
taxable year described in subsection (c) of this section, while the area is designated an 9
enterprise zone, a credit is allowed that equals: 10
(i) up to $3,000 of the wages paid to each qualified employee who: 11
1. is an economically disadvantaged individual; 12
2. became a qualified employee during the taxable year to 13
which the credit applies; and 14
3. is not hired to replace an individual whom the business 15
entity employed in that or any of the 3 preceding taxable years; 16
(ii) up to $2,000 of the wages paid to each qualified employee who is 17
an economically disadvantaged individual, if the business entity received a credit under 18
subsection (c)(1) of this section for the qualified employee in the immediately preceding 19
taxable year; and 20
(iii) up to $1,000 of the wages paid to each qualified employee who is 21
not hired to replace an individual whom the business entity employed in that or any of the 22
3 preceding taxable years if the qualified employee: 23
1. is an economically disadvantaged individual for whom the 24
business entity received a credit under subsection (c)(1) of this section or item (i) of this 25
paragraph and a credit under item (ii) of this paragraph in the 2 immediately preceding 26
taxable years; or 27
2. is not an economically disadvantaged individual but 28
became a qualified employee during the taxable year to which the credit applies. 29
(2) A business entity that hires a qualified employee to replace another 30
qualified employee for whom the business entity received a credit under subsection (c)(1) of 31
this section and paragraph (1)(ii) of this subsection in the immediately preceding taxable 32
year may treat the new qualified employee as the replacement for the other qualified 33 HOUSE BILL 1204 11
employee to determine any credit that may be available to the business entity under 1
paragraph (1)(ii) or (iii) of this subsection. 2
(e) (1) For the taxable year in which a business entity satisfies the 3
requirements of §§ 5–706 and 5–707 or § 5–1406 of the Economic Development Article, a 4
credit is allowed that equals: 5
(i) up to $4,500 of the wages paid to each focus area employee who: 6
1. is an economically disadvantaged individual; and 7
2. is not hired to replace an individual whom the business 8
entity employed in that year or any of the 3 preceding taxable years; and 9
(ii) up to $1,500 of the wages paid to each focus area employee who: 10
1. is not an economically disadvantaged individual; and 11
2. is not hired to replace an individual whom the business 12
entity employed in that year or any of the 3 preceding taxable years. 13
(2) For each taxable year after the taxable year described in paragraph (1) 14
of this subsection, while the area is designated a focus area, a credit is allowed that equals: 15
(i) up to $4,500 of the wages paid to each focus area employee who: 16
1. is an economically disadvantaged individual; 17
2. became a focus area employee during the taxable year to 18
which the credit applies; and 19
3. is not hired to replace an individual whom the business 20
entity employed in that year or any of the 3 preceding taxable years; 21
(ii) up to $3,000 of the wages paid to each focus area employee who 22
is an economically disadvantaged individual, if the business entity received a credit under 23
paragraph (1)(i) of this subsection for the focus area employee in the immediately preceding 24
taxable year; and 25
(iii) up to $1,500 of the wages paid to each focus area employee who 26
is not hired to replace an individual whom the business entity employed in that year or any 27
of the 3 preceding taxable years if the focus area employee: 28
1. is an economically disadvantaged individual for whom the 29
business entity received a credit under item (ii) of this paragraph in the 2 immediately 30
preceding taxable years and under: 31
12 HOUSE BILL 1204
A. paragraph (1)(i) of this subsection; or 1
B. item (i) of this paragraph; or 2
2. is not an economically disadvantaged individual but 3
became a focus area employee during the taxable year to which the credit applies. 4
(3) A business entity that hires a focus area employee to replace another 5
focus area employee for whom the business entity received a credit under paragraph (1)(i) 6
of this subsection and paragraph (2)(ii) of this subsection in the immediately preceding 7
taxable year may treat the focus area employee as the replacement for the other focus area 8
employee to determine any credit that may be available to the business entity under 9
paragraph (2)(ii) or (iii) of this subsection. 10
(f) If the credit allowed under this section in any taxable year exceeds the State 11
income tax for that taxable year, a business entity may apply the excess as a credit against 12
the State income tax for succeeding taxable years until the earlier of: 13
(1) the full amount of the excess is used; or 14
(2) the expiration of the 5th taxable year from the date on which the 15
business entity hired the qualified employee to whom the credit first applies. 16
(g) If a credit is claimed under this section, the claimant must make the addition 17
required in § 10–205, § 10–206, or § 10–306 of this title. 18
10–741. 19
(a) (1) In this section the following words have the meanings indicated. 20
(2) “Business entity” has the meaning stated in § 6–801 of the Economic 21
Development Article. 22
(3) “Department” means the Department of Commerce. 23
(4) “Eligible project” has the meaning stated in § 6–801 of the Economic 24
Development Article. 25
(5) “Existing business entity” has the meaning stated in § 6–801 of the 26
Economic Development Article. 27
(6) “New business entity” has the meaning stated in § 6–801 of the 28
Economic Development Article. 29
(7) “Qualified business entity” has the meaning stated in § 6–801 of the 30
Economic Development Article. 31
HOUSE BILL 1204 13
(8) “Qualified position” has the meaning stated in § 6–801 of the Economic 1
Development Article. 2
(9) “Tier I area” has the meaning stated in § 6–801 of the Economic 3
Development Article. 4
(10) “Tier II area” has the meaning stated in § 6–801 of the Economic 5
Development Article. 6
(b) (1) Subject to the limitations of this section, an individual or corporation 7
that is a new business entity that operates an eligible project in a Tier I area or an existing 8
business entity that operates an eligible project may claim a credit against the State income 9
tax equal to the amount stated in the final tax credit certificate approved by the 10
Department for an eligible project. 11
(2) The amount of the credit authorized under paragraph (1) of this 12
subsection is equal to the product of: 13
(i) 1. if the qualified business entity received a certificate under 14
§ 6–805 of the Economic Development Article before June 1, 2022, 5.75%; or 15
2. if the qualified business entity received a certificate under 16
§ 6–805 of the Economic Development Article on or after June 1, 2022, 4.75%; and 17
(ii) the total amount of wages paid for each qualified position at an 18
eligible project. 19
(3) If the tax credit allowed under this section in any taxable year exceeds 20
the total tax otherwise payable by the qualified business entity for that taxable year, the 21
qualified business entity may claim a refund in the amount of the excess. 22
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 23
1, 2024, and shall be applicable to all taxable years beginning after December 31, 2023. 24