Short answer. Maryland's research credit is 10 percent of eligible research spending above a Maryland base, capped at $250,000 per applicant per year. It is refundable for a small business with under $5 million in assets, the program is application-based with a November 15 deadline, and it is authorized through tax year 2030.
Key facts
| Rate | 10% of eligible R&D expenses over the Maryland base |
|---|---|
| Per-applicant cap | $250,000 per year |
| Refundable | Yes, for a small business (assets under $5M) |
| Carryforward | 7 years (non-small businesses) |
| Apply by | November 15; authorized through tax year 2030 |
10 percent, then the caps
The rate is simple; the caps decide the real number.
The credit is 10 percent of eligible research and development expenses incurred in Maryland above the Maryland Base Amount, which parallels the federal Section 41 base but is limited to Maryland expenses. Above that 10 percent, three caps apply. The program pays out at most $12 million a year across all applicants, with $3.5 million reserved for small businesses, and no single applicant can receive more than $250,000 in a year.
If applications exceed the pool, every award is pro-rated. That makes your computed credit a ceiling, not a guarantee.
The small-business refund
Maryland's best feature for an early-stage company is the cash refund.
A small business, meaning a for-profit entity with net book value of assets under $5 million, can have the credit refunded to the extent it exceeds Maryland income tax. The full certified amount is refundable, subject to the $250,000 per-applicant cap, rather than a percentage of it, which is more favorable than most state refund programs. For a non-small business the credit is not refundable, and excess carries forward seven years.
An application, not a self-claim
Maryland's credit is earned by applying, on a fixed calendar.
This is an application-based program. By November 15, the business files an application with the Maryland Department of Commerce that includes the eligible expense computation, the base amount, and supporting documentation. The certified credit is then claimed on the Maryland return for the year it relates to.
The DECADE Act (2026 Laws of Maryland Chapter 352) extended the credit, which had applied only to tax years beginning before January 1, 2026. The Department of Commerce may not approve a credit for a taxable year beginning after December 31, 2030, so the workpaper plans to tax year 2030 as the last year.
More on Maryland's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- Maryland Department of Commerce, Research and Development Tax Credit program - Maryland Department of Commerce
- Comptroller of Maryland, Tax Credits, Deductions and Subtractions - Comptroller of Maryland
- 2026 Laws of Maryland Chapter 352 (HB 898, the DECADE Act), adding Tax-General 10-721(i) - Maryland General Assembly
- Maryland Department of Legislative Services, fiscal and policy note, HB 898 (2026) - Maryland General Assembly
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder and the Maryland state workpaper from one engagement, both built to survive an exam.