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.
*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
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: February 25, 2025
CHAPTER ______
AN ACT concerning 1
Manufacturing Business Personal Property Tax – Optional Exemption 2
FOR the purpose of exempting authorizing the Mayor and City Council of Baltimore City 3
or the governing body of a county or municipal corporation to exempt all personal 4
property in the possession of a person engaged in a manufacturing business that is 5
a small or medium–sized enterprise that employs not more than a certain number of 6
employees from the personal property tax; and generally relating to the personal 7
property tax. 8
BY repealing and reenacting, without amendments, 9
Article – Tax – Property 10
Section 1–101(a), (r), and (dd) 1–101(a) and (r) 11
Annotated Code of Maryland 12
(2019 Replacement Volume and 2024 Supplement) 13
BY repealing and reenacting, with amendments, 14
Article – Tax – Property 15
Section 6–104, 7–109(a), 7–222, 7–225, and 7–508 16
Annotated Code of Maryland 17
(2019 Replacement Volume and 2024 Supplement) 18
BY adding to 19
Article – Tax – Property 20
Section 7–225.1 7–522 21
Annotated Code of Maryland 22 2 SENATE BILL 488
(2019 Replacement Volume and 2024 Supplement) 1
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 2
That the Laws of Maryland read as follows: 3
Article – Tax – Property 4
1–101. 5
(a) In this article the following words have the meanings indicated. 6
(r) (1) “Manufacturing” means the process of substantially transforming, or a 7
substantial step in the process of substantially transforming, tangible personal property 8
into a new and different article of tangible personal property by use of labor or machinery. 9
(2) “Manufacturing” includes: 10
(i) the operation of sawmills, grain mills, or feed mills; 11
(ii) the operation of machinery and equipment used to extract and 12
process minerals, metals, or earthen materials or by–products that result from the 13
extracting or processing; 14
(iii) research and development activities, whether or not the company 15
has a product for sale; 16
(iv) the identification, design, or genetic engineering of biological 17
materials for research or manufacture; and 18
(v) the design, development, or creation of computer software for 19
sale, lease, or license. 20
(3) “Manufacturing” does not include: 21
(i) activities that are primarily a service; 22
(ii) activities that are intellectual, artistic, or clerical in nature; 23
(iii) public utility services, including telephone, gas, electric, water, 24
and steam production services; or 25
(iv) any other activity that would not commonly be considered as 26
manufacturing. 27
(dd) “Property tax” means the property tax imposed by: 28
(1) the State; 29 SENATE BILL 488 3
(2) a county; or 1
(3) a municipal corporation. 2
6–104. 3
Except as otherwise provided in §§ 7–222, 7–225.1, and 7–226 of this article, any 4
stock in business of a person who engages in a manufacturing or commercial business in 5
the State is subject to property tax. 6
7–109. 7
(a) [The] EXCEPT AS PROVIDED IN § 7–225.1 OF THIS TITLE, personal 8
property described in §§ 7–222, 7–225, and 7–226 of this title is subject to the municipal 9
corporation property tax unless exempted in full or in part by the governing body of the 10
municipal corporation by law. 11
7–222. 12
(a) Except as provided in § 7–109 of this title and in subsection (b) of this section, 13
the stock in business of a person engaged in a manufacturing or commercial business is not 14
subject to property tax. 15
(b) Except as provided by § 7–108 of this title AND § 7–225.1 OF THIS SUBTITL E, 16
the personal property described in subsection (a) of this section is subject to a county 17
property tax on 35% of its assessment in Wicomico County. 18
7–225. 19
(a) Except as provided in § 7–109 of this title and in subsection (b) of this section, 20
if used in manufacturing, the following personal property, however operated and whether 21
or not in use, is not subject to property tax: 22
(1) tools; 23
(2) implements; 24
(3) machinery; or 25
(4) manufacturing apparatus or engines. 26
(b) Except as provided by § 7–108 of this title AND § 7–225.1 OF THIS SUBTITLE , 27
the personal property listed in subsection (a) of this section is subject to a county property 28
tax on: 29
4 SENATE BILL 488
(1) 100% of its assessment in Garrett County, Somerset County, Wicomico 1
County, and Worcester County; and 2
(2) 75% of its assessment in Allegany County. 3
(c) Property does not qualify for the exemption under this section if the property 4
is used primarily in administration, management, sales, storage, shipping, receiving, or 5
any other nonmanufacturing activity. 6
(d) In order to qualify for the exemption under this section, a person claiming the 7
exemption must apply for and be granted the exemption by the Department. 8
7–225.1. 9
ALL PERSONAL PROPERTY , INCLUDING MANUFACTUR ING INVENTORY , IN THE 10
POSSESSION OF A PERSON ENGAGED IN A MANUFACTURING B USINESS THAT IS A 11
SMALL OR MEDIUM –SIZED ENTERPRISE IS EXEMPT FROM PROPERTY TAX, 12
INCLUDING ANY SPECIA L TAXING DISTRICT PR OPERTY TAX. 13
7–508. 14
(a) In this section, “manufacturer” means a person who engages in at least 2 of 15
the following processes: 16
(1) applies labor, skill, art, or science to materials; 17
(2) makes changes or modifications in existing material by processes 18
usually considered as manufacturing; 19
(3) develops new forms, qualities, properties, or combinations of materials, 20
or adapts materials to certain uses; or 21
(4) produces from materials a different kind of material with a new use. 22
(b) [The] SUBJECT TO § 7–225.1 OF THIS TITLE, THE governing body of 23
Washington County may exempt the raw materials used in a manufacturing process and 24
manufactured products in the possession of a manufacturer from the Washington County 25
property tax. 26
7–522. 27
(A) THE MAYOR AND CITY COUNCIL OF BALTIMORE CITY OR THE 28
GOVERNING BODY OF A COUNTY OR MUNICIPAL CORPORATION MAY EXEM PT FROM 29
THE COUNTY OR MUNICI PAL CORPORATION PROP ERTY TAX ALL PERSONA L 30
PROPERTY, INCLUDING MANUFACTUR ING INVENTORY , IN THE POSSESSION OF A 31 SENATE BILL 488 5
PERSON ENGAGED IN A MANUFACTURING BUSINE SS THAT EMPLOYS 50 OR FEWER 1
EMPLOYEES. 2
(B) THE MAYOR AND CITY COUNCIL OF BALTIMORE CITY OR THE 3
GOVERNING BODY OF A COUNTY OR MUNICIPAL CORPORATION MAY PROV IDE, BY 4
LAW, FOR REGULATIONS , PROCEDURES , AND ANY OTHER PROVIS ION NECESSARY TO 5
CARRY OUT THE EXEMPT ION UNDER THIS SECTION . 6
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June 7
1, 2025, and shall be applicable to all taxable years beginning after June 30, 2025. 8
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.