The Employer Security Clearance Costs (ESCC) Tax Credit provides income tax credits for expenses related to federal security clearance costs, construction of Sensitive Compartmented Information Facilities (SCIFs) and first-year leasing costs for small businesses doing security-based contract work.
Security Clearance Administrative Expenses Tax Credit
A business may qualify for an income tax credit up to $200,000 per taxable year for qualified security clearance administrative expenses.
Qualified expenses include:
o Processing application requests for federal security clearance,
o Maintaining, upgrading or installing computer systems in Maryland that are required to obtain federal security clearance, and
o Training employees in the State to administer the clearance application process.
Sensitive Compartmented Information Facility Costs Tax Credit
A business may also claim a credit against its Maryland income tax for costs related to the construction or renovation of a SCIF located in Maryland. The SCIF must be accredited by the appropriate federal agency. For costs related to a single SCIF, the credit is equal to the lesser of 50 percent of the costs or $200,000. For costs related to multiple SCIFs, the credit is the amount of costs up to $500,000 per calendar year.
The First Year Leasing Costs Tax Credit for Qualified Small Business
A qualified small business may also claim a credit against its Maryland income tax up to $200,000 for costs for rental payments during the first year of a rental agreement for leasing spaces to perform security-based contracting work.
The credits are capped at $2 million for each calendar year. If the amount of credits all businesses apply for exceeds the cap, each business receives its pro rata share. Businesses must submit an application to the Maryland Department of Commerce by September 15 for expenses incurred in the previous tax year.
For more information or to apply, please visit commerce.maryland.gov