Businesses that contribute cash or goods to approved projects operated by tax exempt organizations (under Internal Revenue Code section 501(c)(3)) are eligible for tax credit of up to $125,000 per year. This credit is in addition to any charitable contribution deduction that is allowed for these contributions on both the state and federal income tax returns.

The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. The same credit may not, however, be applied to more than one tax type.

Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.

To Qualify For The Credit

The business must donate at least $500 in money or goods to an approved project and document the value of the contribution. The documentation may be either a receipt or certification of a value of used goods from an independent and unrelated third party. The business must also attach a copy of the fully executed certification to the tax return.

How The Credit Is Calculated

The credit is 50 percent of the value of the donation. Each business may claim a credit of up to $125,000 per year. The total contributions eligible for the tax credits for all approved projects may not be more than $2 million per fiscal year.

If the credit is more than the state tax liability, the unused credit may be carried forward for the next five years.

For More Information, Contact:

Maryland Department of Housing and Community Development

(410)514-7280

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