Maryland Now Has A Startup Technology Investment Tax Credit

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Here’s one we missed in this year’s legislative session: A new Maryland tax credit taking effect this year is designed to help attract investment in state-based tech companies.

The Maryland Department of Commercee opened applications at the end of October for the Maryland Innovation Investment Tax Credit. Starting November 1, the rolling application cycle is open to investors from Maryland tech companies. It has $ 2 million in funding for fiscal 2022, with funds available until depleted.

Investors can receive 33% credit on an investment, up to $ 250,000. There is an additional incentive for businesses in rural areas: if a business is based in Allegany, Dorchester, Garrett or Somerset County, investors can receive a credit of 50% of the investment, up to $ 500,000.

Passed through the Maryland General Assembly and promulgated by law Governor Larry Hogan this year, the tax credit aims to expand a previous program specifically designed for cybersecurity. It came as the Commerce Department sought to rework a number of existing tax credit programs for businesses during the annual legislative session in Annapolis.

“We felt that there were a lot of different technological innovations in Maryland and saw an opportunity to broaden the scope of this program to include the diverse innovation sector,” said Heather Gramm, Senior Director of Strategic Industries and Entrepreneurship at the Ministry of Commerce.

It also shows a large-scale early-stage investment incentive adopted after lawmakers and state entrepreneurs in recent years attempted to institute a separate angel investor tax credit for the Maryland. Neighboring states like Delaware have similar programs.

Companies from a dozen different sectors are now eligible: advanced manufacturing, aerospace, agriculture, artificial intelligence, blue technology, cybersecurity, education, energy and sustainability, finance, life sciences, quantum, sensors and robotics.

It is designed for investors supporting start-up businesses. Companies must have fewer than 50 employees and a capitalization of at least $ 100,000.

Within communities and within universities and state federal laboratories, technology under development requires early funding as it comes to market. Often during the product development phase, initial funding is provided by investors to help startups reach a point where they generate income.

The state government sees a role to play in this. The program can also serve as an incentive to research Maryland companies for investors casting a net across the country.

“The idea is to help companies attract these investors and give them that extra incentive when they have a lot of investment choices across the country,” Gramm said. “I think it’s particularly beneficial for start-ups that haven’t attracted capital in the past and this is their first exit. It can help make a difference for investors who take that risk in these businesses. “

He comes as the commerce department seeks to shed light on startups. Last year it released a list of Future 20 companies.

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