Press Room: Tax Release

September 06, 2012

Maryland Tax Credit for Government Contractors

Maryland Governor Martin O’Malley recently signed into law an income tax credit to assist government contractors with costs related to federal security clearances and secure worksites. Effective for tax years beginning on or after January 1, 2013, a credit is available for costs incurred to obtain federal security clearances for Maryland employees and to construct or renovate sensitive compartmented information facilities (SCIFs) located in Maryland.

The credit for security clearance administrative expenses is a maximum of $100,000. The credit for renovation of SCIFs is the lesser of 50% of the costs or $100,000 to construct or renovate a SCIF. The total amount to construct or renovate multiple SCIFs is $250,000.

Qualifying costs include:

  1. Costs associated with processing application requests for security clearances for employees in Maryland;
  2. Maintaining, upgrading, or installing computer systems in Maryland required to obtain federal security clearances;
  3. Training employees in Maryland to administer the security clearance application process; and
  4. Construction and equipment costs incurred to construct or renovate SCIFs located in Maryland as required by the federal government.

This credit expires for tax years beginning on or after January 1, 2017. If the amount of the credit exceeds the tax due, it may be carried forward until the full amount of the credit is used.