How much of Maryland's R&D credit comes back as cash?

Under Tax-General 10-721, the credit is refundable only for a small business, which the statute ties to net book value of assets under $5 million. A company that has raised a large round should check where it stands against that line before it applies, since the test decides whether the credit is cash or a balance.

A company that does not meet the test still earns the credit. It just cannot take it as cash. Its unused credit carries forward 7 years instead.

The credit is 10 percent of Maryland qualified research expenses above the Maryland base, with a limit of $250,000 per applicant. The statewide cap is $12 million a year. Of that, $3.5 million is reserved for small businesses and $8.5 million for everyone else, and whatever one side does not use shifts to the other. When applications exceed the cap, the Department of Commerce prorates the awards.

Illustrative example. A pre-profit SaaS company with $3 million in assets spends $1,500,000 on Maryland research against a Maryland base of $700,000. The excess is $800,000, and 10 percent of that is $80,000, well under the $250,000 limit. Suppose the small-business pool is oversubscribed that year and Commerce prorates every award to 60 percent (a made-up rate for this example). The certified credit is $80,000 x 60 percent = $48,000. With no Maryland tax to offset, the full $48,000 is refunded.

The application goes to the Maryland Department of Commerce by November 15 of the year after the tax year, and Commerce certifies credits by February 15. For a calendar-year company, research done in 2026 is applied for by November 15, 2027, with certification by February 15, 2028. The refund follows from the certified amount, so budget for a gap of more than a year between the work and the cash.

The program is authorized for tax years through 2030 under the DECADE Act, 2026 Laws of Maryland chapter 352. Missing the November 15 date means missing that year's pool.

A company above the $5 million asset line keeps its certified credit as a carryforward and can use it against Maryland tax for up to 7 years. That clock matters for a company that crosses the asset line as it raises money: the same research that would have produced a check one year produces a 7-year balance the next.

Commerce certifies an amount based on your expense computation and your base, and a refund claim is only as good as the records behind those numbers. Maryland's credit rests on federal Section 41 qualified research, so the federal four-part test analysis and the wage and contractor detail are what hold the state claim up.

R&D Binder produces that federal Section 41 documentation from your commit history and payroll. Your CPA prepares the application and files the return, and whether your facts qualify is your CPA's call.

• Maryland's R&D credit (full overview)
• Maryland R&D credit rate
• Maryland vs the federal credit
• The Section 41 four-part test
• What is a qualified research expense (QRE)?
• Form 6765 and Section G
• Connecticut R&D credit
• Delaware R&D credit
• Iowa R&D credit

• Maryland Tax-General 10-721 (research and development tax credit) - Maryland General Assembly
• 2026 Laws of Maryland Chapter 352 (HB 898, the DECADE Act), adding Tax-General 10-721(i) - Maryland General Assembly
• Maryland Department of Legislative Services, fiscal and policy note, HB 898 (2026) - Maryland General Assembly
• EisnerAmper, Maryland DECADE Act (July 2026) - EisnerAmper