EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0488*
SENATE BILL 488
Q1 5lr2892
CF HB 168
By: Senator Jennings
Introduced and read first time: January 22, 2025
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
Manufacturing Business Personal Property Tax – Exemption 2
FOR the purpose of exempting all personal property in the possession of a person engaged 3
in a manufacturing business that is a small or medium–sized enterprise from the 4
personal property tax; and generally relating to the personal property tax. 5
BY repealing and reenacting, without amendments, 6
Article – Tax – Property 7
Section 1–101(a), (r), and (dd) 8
Annotated Code of Maryland 9
(2019 Replacement Volume and 2024 Supplement) 10
BY repealing and reenacting, with amendments, 11
Article – Tax – Property 12
Section 6–104, 7–109(a), 7–222, 7–225, and 7–508 13
Annotated Code of Maryland 14
(2019 Replacement Volume and 2024 Supplement) 15
BY adding to 16
Article – Tax – Property 17
Section 7–225.1 18
Annotated Code of Maryland 19
(2019 Replacement Volume and 2024 Supplement) 20
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 21
That the Laws of Maryland read as follows: 22
Article – Tax – Property 23
1–101. 24
2 SENATE BILL 488
(a) In this article the following words have the meanings indicated. 1
(r) (1) “Manufacturing” means the process of substantially transforming, or a 2
substantial step in the process of substantially transforming, tangible personal property 3
into a new and different article of tangible personal property by use of labor or machinery. 4
(2) “Manufacturing” includes: 5
(i) the operation of sawmills, grain mills, or feed mills; 6
(ii) the operation of machinery and equipment used to extract and 7
process minerals, metals, or earthen materials or by–products that result from the 8
extracting or processing; 9
(iii) research and development activities, whether or not the company 10
has a product for sale; 11
(iv) the identification, design, or genetic engineering of biological 12
materials for research or manufacture; and 13
(v) the design, development, or creation of computer software for 14
sale, lease, or license. 15
(3) “Manufacturing” does not include: 16
(i) activities that are primarily a service; 17
(ii) activities that are intellectual, artistic, or clerical in nature; 18
(iii) public utility services, including telephone, gas, electric, water, 19
and steam production services; or 20
(iv) any other activity that would not commonly be considered as 21
manufacturing. 22
(dd) “Property tax” means the property tax imposed by: 23
(1) the State; 24
(2) a county; or 25
(3) a municipal corporation. 26
6–104. 27
SENATE BILL 488 3
Except as otherwise provided in §§ 7–222, 7–225.1, and 7–226 of this article, any 1
stock in business of a person who engages in a manufacturing or commercial business in 2
the State is subject to property tax. 3
7–109. 4
(a) [The] EXCEPT AS PROVIDED IN § 7–225.1 OF THIS TITLE, personal 5
property described in §§ 7–222, 7–225, and 7–226 of this title is subject to the municipal 6
corporation property tax unless exempted in full or in part by the governing body of the 7
municipal corporation by law. 8
7–222. 9
(a) Except as provided in § 7–109 of this title and in subsection (b) of this section, 10
the stock in business of a person engaged in a manufacturing or commercial business is not 11
subject to property tax. 12
(b) Except as provided by § 7–108 of this title AND § 7–225.1 OF THIS SUBTITLE , 13
the personal property described in subsection (a) of this section is subject to a county 14
property tax on 35% of its assessment in Wicomico County. 15
7–225. 16
(a) Except as provided in § 7–109 of this title and in subsection (b) of this section, 17
if used in manufacturing, the following personal property, however operated and whether 18
or not in use, is not subject to property tax: 19
(1) tools; 20
(2) implements; 21
(3) machinery; or 22
(4) manufacturing apparatus or engines. 23
(b) Except as provided by § 7–108 of this title AND § 7–225.1 OF THIS SUBTITLE , 24
the personal property listed in subsection (a) of this section is subject to a county property 25
tax on: 26
(1) 100% of its assessment in Garrett County, Somerset County, Wicomico 27
County, and Worcester County; and 28
(2) 75% of its assessment in Allegany County. 29
(c) Property does not qualify for the exemption under this section if the property 30
is used primarily in administration, management, sales, storage, shipping, receiving, or 31
any other nonmanufacturing activity. 32 4 SENATE BILL 488
(d) In order to qualify for the exemption under this section, a person claiming the 1
exemption must apply for and be granted the exemption by the Department. 2
7–225.1. 3
ALL PERSONAL PROPERTY , INCLUDING MANUFACTUR ING INVENTORY , IN THE 4
POSSESSION OF A PERS ON ENGAGED IN A MANUFACTURING BUSI NESS THAT IS A 5
SMALL OR MEDIUM –SIZED ENTERPRISE IS EXEMPT FROM PROPERTY TAX, 6
INCLUDING ANY SPECIA L TAXING DISTRICT PR OPERTY TAX. 7
7–508. 8
(a) In this section, “manufacturer” means a person who engages in at least 2 of 9
the following processes: 10
(1) applies labor, skill, art, or science to materials; 11
(2) makes changes or modifications in existing material by processes 12
usually considered as manufacturing; 13
(3) develops new forms, qualities, properties, or combinations of materials, 14
or adapts materials to certain uses; or 15
(4) produces from materials a different kind of material with a new use. 16
(b) [The] SUBJECT TO § 7–225.1 OF THIS TITLE, THE governing body of 17
Washington County may exempt the raw materials used in a manufacturing process and 18
manufactured products in the possession of a manufacturer from the Washington County 19
property tax. 20
SECTION 2. AND BE IT FURTHER ENACTED, That this Act s hall take effect June 21
1, 2025, and shall be applicable to all taxable years beginning after June 30, 2025. 22