The Maryland R&D tax credit, explained
Maryland's 10% R&D credit requires Commerce certification, and is refundable only for small businesses under $5 million in assets.
Last verified July 2026 against Maryland Department of Commerce guidance.
The short answer
Maryland has a state R&D tax credit, but it runs through a certification process rather than a simple return claim. Companies apply to the Maryland Department of Commerce, and only certified expenses count.
How the Maryland credit works
The credit equals 10% of qualified Maryland research spending above a base amount. For businesses certified as small businesses, meaning net book value under $5 million, the credit is refundable if it exceeds their tax liability. Other businesses get a nonrefundable credit that carries forward 7 years.
The statewide pool is capped at $12 million a year, with $3.5 million reserved for small businesses. Each individual company's credit is capped at $250,000. If total applications exceed the cap, Commerce prorates every certified credit.
How it stacks with the federal credit
Maryland's credit stacks with the federal R&D credit, since both are based on qualified research spending. The certification process adds a step, but it does not change what counts as research for federal purposes.
Example: a Maryland biotech company with 6 scientists and an average salary of $130,000 spends $780,000 on qualified research. If the base amount is $500,000, the excess is $280,000. At Maryland's 10% rate, that is a $28,000 state credit, well under the $250,000 per company cap. If the company qualifies as a small business, that $28,000 comes back as cash even with no tax liability. The same $780,000 in spending can generate a federal credit of roughly $47,000 to $78,000, and a company under $5 million in revenue can apply that federal credit against up to $500,000 of payroll taxes a year.
Because the Maryland credit requires certification before some applicants even close out their tax year, companies should plan the state application alongside the federal research study, not after it.
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Eligibility and how to claim it
Any company doing qualified research in Maryland can apply, but the credit is not self-claimed. The Maryland Department of Commerce reviews and certifies each application before the Comptroller allows the credit on a tax return.
Small businesses, defined as having net book value assets under $5 million at the start or end of the tax year, get the refundable version and access to the $3.5 million small business set-aside within the larger $12 million pool.
Certified companies claim the credit on Maryland Form 500CR, attached to their Maryland income tax return, filed with the Comptroller of Maryland. Claimship prepares the research study and expense documentation that supports the Commerce application. The company's CPA files the application, attaches the certification letter, and files the Maryland return.
Official source: Maryland Department of Commerce.
Carryforward and deadlines
Companies must submit their Commerce application no later than November 15 of the year after the tax year in which the research spending happened. Commerce issues certification letters by February 15 of the following year.
Once certified, nonrefundable credit carries forward for 7 years. The refundable version for small businesses pays out in the certification year regardless of tax liability, so there is nothing to carry forward for those companies.