Maryland Extends R&D and Job Creation Tax Credits

On May 12, 2026, Maryland Governor Wes Moore signed the Delivering Economic Competitiveness and Advancing Development Efforts (DECADE) Act of 2026, Senate Bill 388 (Chapter 351) and cross-file House Bill 898 (Chapter 352). The Act extends Maryland's three flagship business tax credits and restructures most of the state's major deal-closing and financing tools. The Research and Development Tax Credit now runs through 2031, and the Job Creation Tax Credit and Employer Security Clearance Costs Tax Credit run through 2032.

The DECADE Act was part of the Moore-Miller administration's 2026 legislative agenda. At the signing, Moore described it as central to diversifying Maryland's economy away from Washington, D.C. and building on more than $14 billion in private investment over three years.

The Department of Legislative Services (DLS) estimates that the three credit extensions reduce state revenues by $16.0 million (including $13.0 million in general funds) in fiscal 2028, rising to $18.0 million by fiscal 2030. A related-party sales tax exemption for information technology (IT) and data services in the same bill costs more. DLS puts that provision at $241.4 million in general fund revenue from fiscal 2027 through 2031.

Governor Moore announced the DECADE Act on January 9, 2026, citing the state's $1 billion Capital of Quantum Initiative and more than $10 billion in private investment attracted in 2025. It was introduced at the administration's request on January 27. The Senate passed its version 43-0 on March 23. On April 13, the session's final day, the House amended it and passed it 125-10, and the Senate concurred and passed it 45-0. Governor Moore signed both cross-files on May 12. Commerce Secretary Harry Coker, Jr. said, "If we are truly going to make Maryland's economy stronger and more competitive, our policies and programs must adapt and evolve."

Tax Credit Extensions

The three credits now run four to five years past their prior sunsets. The Research and Development Tax Credit, which under prior law would have terminated June 30, 2027, is extended for tax years 2026 through 2030 (terminating in 2031). Commerce may approve up to $12 million in credits annually, of which $3.5 million is set aside for small businesses, whose credits are refundable. The Job Creation Tax Credit lets Commerce approve up to $4 million in credits annually, capped at $1 million per qualified business entity per credit year, for businesses that expand and add jobs within a defined window. It now runs to January 1, 2032 instead of January 1, 2027. The Employer Security Clearance Costs Tax Credit, which offsets clearance-related and sensitive compartmented information facility costs for cleared contractors at up to $2 million in credits annually, runs through tax year 2032. Exhibit 1 summarizes these extensions and the changes to six other programs.

Two Commerce programs move to MEDCO. The Build Our Future Grant Program, which provides matching grants of up to $2 million for constructing innovative infrastructure in high-growth industries, and the RISE Zone program, which layers incentives around universities and federal facilities, both move from the Department of Commerce to the Maryland Economic Development Corporation (MEDCO). Build Our Future loses the word "pilot" and gains three years, with a new termination date of June 30, 2030. DLS assumes $7 million a year in general funds for it in fiscal 2028 through 2030, the fiscal 2027 level. MEDCO may also approve one "extraordinary" RISE zone in a single county or municipality built around quantum computing.

The Sunny Day Fund becomes the Strategic Closing Fund. The Economic Development Opportunities Program Fund moves under Commerce administration, is rebranded, and is realigned toward closing business-attraction deals. The Legislative Policy Committee keeps its oversight role, with 60 days to review and approve a proposed use, and the fund is budgeted at $16 million in general funds for fiscal 2027.

Higher MEDAAF and MSBDFA Financing Limits

MEDAAF limits rise and its local match ends. The Maryland Economic Development Assistance Authority and Fund's per-project cap rises from $5 million to $7.5 million for loans and investments and from $2 million to $5 million for grants. The Commerce Secretary's approval authority doubles from $2.5 million to $5 million, and the Secretary gains flexibility to set loan terms and interest rates. The 10% local-government match requirement is eliminated, which MEDA says widens the range of eligible projects.

MSBDFA moves its ceilings up by 33% to 100%. The Maryland Small Business Development Financing Authority's contract financing and guaranty programs move from $2 million to $3 million, equity participation financing from $2 million to $3 million, surety bond guaranties from $2.25 million to $3 million, and the bid, performance and payment bonds MSBDFA issues directly from $2.5 million to $5 million. Exhibit 2 compares the old and new limits.

Film Credit Changes and a Sales Tax Exemption

The film credit keeps its $10 million per-production cap. DLS's 2025 evaluation reported Commerce's view that the cap, enacted in 2018, "can deter large productions, which typically seek larger financial incentives from states," and found that approximately $46.5 million was available for fiscal 2026, including $34.5 million rolled over from prior years. The bill as introduced would have repealed the cap, but the House struck that provision. The enacted Act adds a purpose statement for the credit, lets a production amend its application when an independent audit shows its budget changed at least 50%, and requires Commerce to evaluate the credit and report to the General Assembly by December 1, 2026.

The bill also exempts related-party IT and data services from the 3% sales tax, and that is its largest fiscal item. Since fiscal 2026, Maryland has taxed data and information technology services, software publishing and digital products at 3% under the Budget Reconciliation and Financing Act of 2025. Effective July 1, 2026, the DECADE Act exempts those sales when the vendor and buyer are members of the same affiliated group under Internal Revenue Code Section 1504. DLS estimates the exemption reduces general fund revenue by $35.5 million in fiscal 2027 and $241.4 million from fiscal 2027 through 2031, plus roughly $1.8 million a year from the Blueprint for Maryland's Future Fund. For multi-entity companies that centralize IT in a shared-services affiliate, the exemption removes the tax on those internal charges.

New Reporting on Job-Creation Property Tax Credits

Local governments must report more detail on these property tax credits. Beginning October 1, 2026, and annually thereafter, counties and municipalities granting "businesses that create new jobs" property tax credits must report business-level detail to the State Department of Assessments and Taxation: the credit amount, business name and address, associated investment, whether the business expanded, relocated or is new to the state, job counts, total employees and compliance status. SDAT will aggregate the reports for the General Assembly. Exhibit 3 lists the Act's key dates.

What to Do Now

This is for companies in Maryland's information technology, life sciences, and aerospace and defense sectors planning R&D or expansion through 2030, and for corporate groups with a Maryland shared-services affiliate paying the 3% tax on intercompany IT charges. The Act takes effect June 1, 2026, and the affiliated-group sales tax exemption and most program changes follow on July 1. If you want a read on fit before July 1, reach out to our team.

References

1. Maryland General Assembly, SB 388, Economic Development - Delivering Economic Competitiveness and Advancing Development Efforts (DECADE) Act (2026 Regular Session), passed enrolled April 13, 2026; Chapter 351.
2. Maryland General Assembly, HB 898, Economic Development - DECADE Act (2026 Regular Session), passed enrolled April 13, 2026; Chapter 352.
3. Maryland General Assembly, Chapter 351 of 2026 (SB 388, enrolled text).
4. Office of the Governor, Letter to the Members of the General Assembly, bills signed May 12, 2026 (SB 388, Ch. 351; HB 898, Ch. 352).
5. Maryland Economic Development Association, "Governor Moore Signs Legislation Enhancing Key Maryland Economic Development Programs," May 12, 2026.
6. Department of Legislative Services, Fiscal and Policy Note, SB 388 (Enrolled, Revised), May 11, 2026.
7. Department of Legislative Services, The 90 Day Report, 2026 Session, April 2026.
8. MACo Conduit Street, "DECADE Act Advances Maryland's Economic Development Toolkit," April 23, 2026.
9. Office of Governor Wes Moore, "Governor Moore Announces Legislative Action to Strengthen Maryland's Economic Competitiveness," January 9, 2026.
10. Department of Legislative Services, Evaluation of the Film Production Activity Tax Credit Program, 2025.
11. LegiScan, Maryland SB 388 (2026), roll call votes.
12. Maryland Department of Commerce, program pages: Research and Development Tax Credit, Job Creation Tax Credit, Build Our Future Grant Program, RISE Zone Program, Sunny Day Fund.

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