HB0035 establishes a new Income Tax Benefit Transfer Program within the Maryland Department of Commerce, administered in consultation with the Comptroller. The program would allow certain eligible Maryland technology companies to transfer unused net operating loss subtraction modifications and certain research and development income tax credits to unrelated Maryland taxpayers in exchange for consideration of at least 80% of the tax benefit’s value. The bill is aimed at helping technology firms convert unused tax benefits into operating capital that can be used for expenses tied to maintaining and growing their Maryland operations.
To qualify, a company must be a for-profit technology company headquartered or based in Maryland, engaged in research, development, or commercialization of proprietary technology, and meet employee and compliance thresholds. The bill defines “qualified employee,” excludes independent contractors, and limits eligibility to companies with fewer than 225 U.S. employees. The Department of Commerce, after consulting with the Maryland Economic Development Commission and the Maryland Department of Labor, would annually designate eligible technology sectors, with a stated priority for clean energy innovation. The program is capped at $35 million in approved transfers per calendar year and $15 million in lifetime transferable benefits per company.
The bill also requires that proceeds from a transfer be used for operating expenses in Maryland, including fixed assets, startup costs, tenant fit-out, working capital, salaries, and research and development. Unaffiliated taxpayers purchasing the credits must enter into a written agreement with the company, which may include terms requiring the company to maintain a Maryland headquarters or base of operations. The Department may recapture the benefit if the company misuses the proceeds or leaves the state within five years, subject to an exception for liquidation.
HB0035 amends Maryland tax law to expressly allow the transfer of the research and development tax credit under § 10-721 and ties that transfer authority to the new economic development subtitle. It also applies to taxable years beginning after December 31, 2024, with an effective date of July 1, 2025. In practical terms, the bill creates a new state-backed mechanism to monetize certain tax incentives and channel private capital toward Maryland technology businesses.
The available context shows no recorded committee testimony or vote breakdown, so there is no documented floor or committee debate to gauge sentiment. Based on the bill’s structure, the measure appears designed to support innovation, startup growth, and clean energy technology, suggesting a generally pro-business and pro-economic-development intent. Likely points of contention would include the use of tax expenditures, the $35 million annual cap, the administrative complexity of the transfer program, and whether the benefits are sufficiently targeted to Maryland-based firms and jobs.
The bill adds a new Subtitle 11 to the Economic Development Article creating the Income Tax Benefit Transfer Program and amends Tax-General § 10-721 to permit transfer of the Maryland research and development tax credit through that program. It gives the Department of Commerce, in consultation with the Comptroller, authority to approve transfers, set eligible technology sectors, issue certificates, and recapture benefits if program conditions are violated. The bill affects technology companies, investors or other taxpayers purchasing the benefits, and state agencies responsible for tax administration and economic development.
No committee transcripts or vote details were provided, so there is no direct evidence of support or opposition from legislators or stakeholders in the record supplied. The bill’s design suggests a generally favorable posture toward technology-sector development, startup financing, and clean energy innovation, with safeguards intended to limit misuse and keep benefits tied to Maryland operations. Any sentiment-based concerns would likely center on fiscal cost, fairness, and whether the program effectively targets companies that need the incentive most.
The main likely points of contention are the use of state tax benefits as a financing tool, the size of the annual and lifetime caps, and the requirement that companies maintain a Maryland headquarters or base of operations for five years after receiving proceeds. Another possible issue is the administrative discretion given to the Department of Commerce and the Maryland Economic Development Commission in selecting eligible sectors and prioritizing clean energy companies. Because no hearing record or votes were provided, specific supporters or opponents cannot be identified from the supplied materials.