Businesses may claim a credit against the State portion of the income tax for up to 25% of the qualified capital expenses made in connection with the establishment of new wineries or vineyards, or the capital improvements made to existing wineries or vineyards in Maryland.
The Wineries and Vineyards tax credit is available for tax years beginning after December 31, 2012, and no credit may be earned for any tax year beginning on or after January 1, 2021.
The credit may be taken against corporation income tax and the State portion of the personal income tax. 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:
For a winery or a vineyard to claim a tax credit, an individual or corporation on behalf of the winery or vineyard must apply to and be certified by the Maryland Department of Commerce (DOC). The winery or vineyard must submit an application to DOC by September 15th following the tax year in which the qualified capital expenses were incurred.
A qualified winery is defined as an establishment licensed by the Comptroller of Maryland as either a Class 3 or Class 4 winery.
A qualified vineyard is defined as agricultural lands located in Maryland consisting of at least one contiguous acre used solely to grow grapes and other plants that will be used in the production of wine by a winery licensed by the Comptroller of Maryland.
Qualified capital expenses must be made in connection with the establishment of new wineries or vineyards, or capital improvements made to existing wineries or vineyards in Maryland.
"Qualified capital expenses" include expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or in a winery. Qualified capital expenses do NOT include the cost of construction or installation of buildings or structures, utilities, labor costs, service costs, repair costs, maintenance costs, and general supplies.
A list of expenses that are “qualified capital expenses” is posted on the Department of Commerce's Website
By December 15th of the year in which the application has been filed, DOC will certify the approved amount of credit. The total Maryland Wineries and Vineyards Tax Credit approved by DOC may not exceed $500,000 for any calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.
How the Credit is Calculated:
To claim the credit, the business must: 1) File an electronic Maryland income tax return with the Comptroller of Maryland for any taxable year after the taxable year in which the qualified capital expenses were incurred; or 2) File an electronic amended tax return with the Comptroller of Maryland for the year in which the expenses were incurred. A copy of the certification from the Maryland Department of Commerce must be included with the return.
DOC will certify up to 25% of the qualified capital expenses; however they may not approve more than $500,000 of tax credits in more than one calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.
If the approved credit is more than the state tax liability, the unused credit may be carried forward for up to fifteen tax years, or until used, whichever comes first.
A copy of the required certification from DOC must be included with the appropriate electronic amended return: Form 500X, the Maryland Amended Corporation Income Tax Return, or Form 502X(or Form 505X), Maryland Amended Individual Income Tax Return or Pass-Through Entities Form 510. The Form 500CR section of the electronic amended return must also be completed.
Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041 or (877) 821-0099