Key figures
Maryland advisory
2026, with sources
Credits worth applying for
Maryland’s R&D credit is administered by the Department of Commerce, not the Comptroller. It is 10% of eligible Maryland R&D expenses above the company’s Maryland Base Amount, capped at $250,000 per applicant and $12 million statewide, with $3.5 million reserved for small businesses. A small business, one with net book assets under $5 million, can have the excess refunded, which is what makes it useful before profit. Applications for tax year 2025 run through mid-November 2026.
For biotechnology companies, the Biotechnology Investment Incentive Tax Credit gives investors a refundable credit of 33% of a qualified investment, up to $250,000, and more in certain counties. Funding is first come, first served, so timing an investment around the program’s queue matters.
The 2027 payroll change
The largest change on the horizon for a Maryland employer is FAMLI. Contributions start on January 1, 2027 at 0.9% of wages up to the Social Security wage base, split equally between employer and employee; a company with fewer than 15 employees, counting out-of-state staff, owes only the employee half, which it may withhold. Benefits begin in January 2028.
An example: a 12-person company with a $150,000 Maryland payroll per person withholds 0.45% from each paycheck, $675 a year per employee, and owes no employer share. At 15 employees it adds a matching 0.45% employer cost, about $675 per employee per year at that salary.
Where founders go wrong
Maryland changed several rules in 2025 that affect software companies directly, and its local layers (county income tax, county minimum wages) are easy to miss.
- Assuming B2B SaaS is exempt; since July 1, 2025 it is taxable at 3%.
- Withholding only state tax and missing the county income tax.
- Forgetting the $300 annual report, which is due even with no Maryland activity.
- Paying the statewide minimum wage in Montgomery or Howard County.
- Not budgeting for FAMLI contributions starting January 1, 2027.
The federal baseline
This page covers what Maryland adds. The federal rules underneath it apply here too.
Common questions
Can a pre-revenue startup use the Maryland R&D credit?
Possibly, if the research is in Maryland. The Department of Commerce certifies a credit of 10% of Maryland R&D expenses above a base amount, up to $250,000 per applicant, and the credit is refundable for a small business with less than $5 million of net book assets. Applications are due by November 15 of the year after the expenses were incurred, and awards are prorated when the $12 million annual cap is oversubscribed.
Is there a Maryland credit for our investors?
For biotech, yes. The Biotechnology Investment Incentive Tax Credit gives an investor in a qualified Maryland biotechnology company a refundable credit of 33% of the investment, up to $250,000, or 50% up to $500,000 in certain counties and RISE Zones. Funding is first come, first served.
Advisory next door
- DCDistrict of Columbia advisoryDC taxes only its residents’ wages, funds paid family leave entirely from employers, and taxes most SaaS. Those three facts shape most DC planning.
- DEDelaware advisoryFor most startups Delaware is a corporate-law choice with three running costs: the franchise tax, the annual report and a registered agent. The planning questions are the franchise tax method, unclaimed property, and the R&D credit for any work done in Delaware.
- PAPennsylvania advisoryPennsylvania’s R&D credit can be sold, which makes it worth applying for before profit. Pennsylvania doesn’t follow federal QSBS, and its corporate rate keeps falling to 4.99% in 2031.
- VAVirginia advisoryVirginia’s R&D credit is refundable but small and capped. The bigger planning items are scheduled minimum wage increases through 2028 and a new paid family leave program collecting from April 2028.
- WVWest Virginia advisoryWest Virginia’s income tax keeps falling, its R&D credit requires certification before the work, and its 14-day new-hire rule, covering contractors too, catches out-of-state employers.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- SAFEsHow to account for SAFEs on your balance sheetA SAFE is cash today and shares later. Why it usually sits with liabilities, how the cap and discount set conversion, and what to book at the priced round.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Maryland guide
- AccountingAccounting and state tax in MarylandCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MarylandSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MarylandPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in MarylandWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in MarylandRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.