State Tax Credits, Modifications, and Exemptions - Alterations and Repeal
HB0983 makes broad changes to Maryland’s tax incentive structure across economic development, income tax, property tax, motor fuel tax, tobacco tax, and sales and use tax provisions. A major component of the bill is a restructuring and eventual sunset of several business incentive programs, including the Enterprise Zone Program and the One Maryland Economic Development Tax Credit Program. It tightens eligibility for new enterprise zones and expansions, caps certain credits, and sets termination dates for multiple credits, including biotechnology, security clearance, cybersecurity, and film production incentives. The bill also adds a Maryland income tax modification for dividends paid deductions related to real estate investment trusts.
The bill further revises the film production activity tax credit by defining its purpose, limiting carryforward of unused credit authority, and requiring a Department of Commerce evaluation and report. It also changes eligibility and sunset dates for a qualified vehicle credit and a cybersecurity services credit, repeals a motor fuel tax dealer discount, repeals several sales and use tax exemptions tied to concrete production, telecommunications equipment, and target redevelopment area construction/warehousing equipment, and narrows the tobacco tax exemption for cigarettes and other tobacco products brought into the State by consumers. In addition, it places a cap on certain property tax credits and modifies reporting requirements for local governments that grant those credits.
HB0983 would amend multiple sections of the Economic Development Article, Tax-General Article, and Tax-Property Article, primarily by limiting, capping, or ending a range of tax credits and exemptions. It would constrain the Secretary of Commerce’s authority to designate or expand enterprise zones when statewide property tax credit claims are projected to exceed $60 million, terminate enterprise zone-related eligibility on January 1, 2031, and end the One Maryland credit on January 1, 2027. It would also repeal specific tax exemptions and discounts, reduce the tobacco brought-in exemption to one carton of cigarettes, and impose a $500,000 annual cap on certain property tax credits. The bill would affect businesses, film producers, local governments, taxpayers claiming credits, and consumers of tobacco and motor fuel, while also requiring new reporting and evaluation by the Department of Commerce.
The available context suggests the bill did not advance to enactment and was withdrawn by the sponsor, with no recorded committee transcript or vote history provided. Based on the text, the bill appears oriented toward fiscal restraint, program sunsets, and tighter oversight of tax expenditures, which may appeal to lawmakers concerned about revenue loss and program effectiveness. At the same time, the breadth of repeals and limitations suggests it could have drawn opposition from affected industries and local economic development interests.
Likely points of contention include the termination or reduction of long-standing tax incentives for enterprise zones, One Maryland, film production, cybersecurity, and biotechnology, as well as the repeal of sales and use tax exemptions and the motor fuel dealer discount. Businesses benefiting from these credits and exemptions would likely oppose the bill’s caps and sunsets, while supporters would likely argue for limiting state tax expenditures and requiring stronger accountability. The film credit changes also appear potentially contentious because they both preserve the program and impose new limits, reporting requirements, and a formal evaluation, indicating a possible compromise between industry support and budget oversight.