Electronic Transfer Tax
Reviews and Bulletins
Business Tax Credits
Individual Tax Credits
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Another reason why Montgomery County is a great place to do business.
Montgomery County offers two strong tax incentive programs for
companies seeking to locate, maintain, or expand their business
in our community:
New Jobs Tax Credit — Promotes job and construction growth
throughout the County.
Enterprise Zone Tax Credit — Encourages growth in downtown
Silver Spring, Long Branch & Takoma Park, and Wheaton.
Our County Department of Finance is here to assist you in the
tax credit application process and to ensure that you get the biggest
dividend for your business. Take a look at the program descriptions
below to determine which of these programs is right for you. This
brochure should answer many of your questions and help you initiate
a request. If you have further questions, please direct them to:
Mike Coveyou, Financial Programs Manager
Montgomery County Department of Finance
101 Monroe Street, 15th Floor
Rockville, Maryland 20850
(240) 777-8878 telephone
(240) 777-8857 fax
This program — consisting of the New Jobs Credit and the
Enhanced New Jobs Credit —benefits businesses that are planning
to increase both their space and their staff.
This six-year credit is available to businesses that increase their
space by at least 5,000 square feet and their employee count
by at least 25 new jobs. Businesses that are already resident
in theCounty or that are moving from outside of Maryland are
eligible to apply. The credit is not available to businesses
that move to Montgomery County from another Maryland county or
from Baltimore City, and it is not available to retailers.
The company must hire the 25 new permanent full-time employees
during a 24 month period during which the company takes possession
of the new or expanded premises.
A business seeking either the New Jobs Tax Credit or the Enhanced
New Jobs Tax Credit must notify the County of its intent to seek
the credit before expanding its space and staff.
Calculation of the County Tax Credits
The credit is based on the increase in both real and personal property
tax assessments resulting from the business’s expansion.
The credit decreases over six years, as follows:
Years 1 and 2: Credit = 52% of tax attributable to the assessment
Years 3 and 4: Credit = 39% of tax attributable to the assessment
Years 5 and 6: Credit = 26% of tax attributable to the assessment
New Jobs Tax Credit recipients also are eligible to receive an
additional State tax credit, which uses the same calculation
method. However, the State credit is given against one of the
The amounts for the State tax credit are as follows:
Years 1 and 2: Credit = 28% of tax attributable to the assessment
Years 3 and 4: Credit = 21% of tax attributable to the assessment
Years 5 and 6: Credit = 14% of tax attributable to the assessment
This 12- year credit is designed to benefit very large expansion
projects and is available to businesses that meet at least one
of the following three sets of requirements:
To qualify for the Enhanced New Jobs Tax Credit, a business must be engaged in one of the following qualified industries:
A business has six years from the notification date to create and fill the
required number of new jobs and acquire and inhabit the new space. When this
is accomplished, and the company has notified the County Department of
Finance, the business will begin receiving the credit. The Enhanced Tax
Credit, like the regular New Jobs Tax Credit, is given against the local
real and personal property tax and is based on the amount of additional taxes
due as a result of the business’s expansion.
Unlike the regular New Jobs Tax Credit, however, the Enhanced Tax Credit is
calculated at the same rate for all 12 years. The County tax credit rate is
58.5% of the additional local tax liability.
The State also will give a credit based on this additional local tax
liability. The State credit is 31.5% for each of the 12 years and is given
against the same State taxes as the regular New Jobs Tax Credit (corporate
or personal income taxes, the financial institutions franchise tax, or
the insurance premiums tax).
Both the regular and enhanced State tax credits allow a business to “roll”
the credit for up to five years. This means that if the State tax credit is
higher than the amount of taxes due in any given year, your business can
claim the difference for up to five years.
Both tax credits also contain a “recapture” provision that requires a
business to repay the credits if they fail to maintain the job and space
requirements for three years. This provision is applicable to each
individual year, so that if a business maintains the minimum requirements
for14 years, it will have to repay only the last (twelfth) year of the credit.
The Enterprise Zone Tax Credit is available to businesses that locate in
designated areas of downtown Silver Spring, Wheaton and part of
Takoma Park/Long Branch. It is designed to spur economic growth, both jobs
and construction, in these two Enterprise Zones. It is administered through
the County’s Silver Spring Regional Center.
This real property tax credit is available only for nonresidential properties located within the Enterprise Zones.
Like the New Jobs Tax Credit, the Enterprise Zone Tax Credit is based on
growth in property assessments. However, under the Enterprise Zone law,
personal property is not included. The “base year assessment” is the real
property assessment for the year before any new construction or refurbishing
is done. The credit is based on the increase in the assessment for each of
the next 10 years compared to the base- year assessment. The credit itself
will be given on the actual taxes that result from the increase in assessment.
The rate schedule for the Enterprise Zone Tax Credit is as follows:
Years 1 through 5: Credit = tax on 80% of the increase in the
assessment compared to the base year.
Year 6: Credit declines to 70%
Year 7 Credit declines to 60%
Year 8: Credit declines to 50%
Year 9: Credit declines to 40%
Year 10: Credit declines to 30% and expires
The State of Maryland also grants a tax credit for businesses that locate
in Enterprise Zones. However the State’s credit is for State income taxes
and is related to the number of new employees (in the Enterprise Zone) that
a business hires.
A business is entitled to receive the State tax credit for each of its
employees who work at least 25 hours per week and spend at least 50% of work
time in the Enterprise Zone. For “economically disadvantaged” employees, the
credit is $3,000 in the first year, $2,000 in the second year, and $1,000 in
the third year. For each employee who is not economically disadvantaged,
there is a one-time credit of $1,000.