Forest ProductsTax Credit Sourcebook

Maryland · research and development · MD-RD-001

Research and Development Tax Credit

Publication revised September 24, 2026. Sourcebook page 141.

Credit amount / calculation

10% of eligible excess Maryland research and development expenses; $12 million statewide cap, $3.5 million small-business set-aside and $250,000 applicant cap.

Business fit and eligible activity

Maryland manufacturers can apply annually for a capped state credit, production, routine quality control and an equipment purchase alone do not qualify.

Illustrative business benefit

A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 10%, the state credit would be about $20,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'

Timing / first action

Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Apply by November 15 of the year following the expense year. Check the research base, state certification and small-business asset test; the small-business refund is not available to every taxpayer. including a small-business set-aside. Qualified research activity. Ordinary

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