Economic Development - Income Tax Benefit Transfer Program - Establishment
SB91 establishes a new Income Tax Benefit Transfer Program within the Maryland Department of Commerce to let certain eligible technology companies sell or transfer unused state tax benefits to other, unaffiliated Maryland taxpayers. The bill applies to companies engaged in research, development, or commercialization of innovative proprietary technology, with eligibility tied to company age, in-state employment levels, good standing, tax compliance, and a U.S. employee cap of fewer than 225 workers. The transferable benefits include unused net operating loss subtraction modifications and certain research and development tax credits.
Under the program, an eligible company may receive at least 80% of the value of the transferred tax benefit in exchange for the transfer, and the Department of Commerce, in consultation with the Comptroller, would administer applications, approve transfers, and issue tax benefit transfer certificates. The bill directs the Maryland Economic Development Commission to recommend eligible technology sectors each year, gives priority to clean energy innovation, caps annual approved transfers at $35 million, and limits the lifetime value a company may transfer to $15 million. It also requires that consideration received be used for operating expenses in Maryland and allows recapture if the funds are misused or if the company fails to maintain a Maryland headquarters or base of operations for five years.
The bill amends Maryland tax law to expressly allow the state research and development tax credit to be transferred under the new program, and it also ties in net operating loss subtraction modifications under the Tax-General Article. The measure takes effect July 1, 2025, and applies to taxable years beginning after December 31, 2024. In practical terms, it creates a new financing tool for early-stage and growth-stage technology firms by monetizing otherwise unused tax attributes.
Because there are no committee transcripts or recorded votes provided, the overall sentiment cannot be measured from debate or roll call history. Based on the bill text alone, the proposal appears supportive of economic development and technology-sector investment, especially for clean energy and other innovative industries. The main policy tradeoff is that it offers a state-backed tax incentive mechanism that could reduce tax revenue or shift tax value to participating businesses, while aiming to stimulate in-state operations and job growth.
SB91 would add a new subtitle to the Economic Development Article creating a state-administered tax benefit transfer mechanism for eligible technology companies. It also amends the Tax-General Article to make the Maryland research and development tax credit transferable under the new program. The bill would affect technology companies, purchasers of tax benefit certificates, and the Department of Commerce and Comptroller, while imposing eligibility, reporting, use-of-funds, and recapture requirements.
No committee discussion or voting record was provided, so there is no documented legislative sentiment to summarize from debate or votes. The bill’s text suggests a generally pro-business, pro-innovation policy approach, with particular emphasis on technology development, clean energy innovation, and retaining headquarters or operations in Maryland.
The likely points of contention are the fiscal and policy implications of allowing tax benefits to be sold to other taxpayers, including the potential reduction in state revenue and whether the incentive is sufficiently targeted. Another possible issue is the bill’s eligibility structure, which favors smaller technology companies with in-state employees and excludes affiliated purchasers, while also giving priority to clean energy innovation. Supporters would likely emphasize economic development, startup financing, and job retention, while critics may question whether the program is an efficient use of tax expenditures or whether the annual and lifetime caps are adequate.