A business is eligible for the Enterprise Zone (EZ) tax credit program if it makes a capital investment in its property (i.e., constructs or renovates a building, or expands an existing facility) or hires at least one new employee in the Enterprise Zone. Commercial, Retail as well as industrial projects are eligible. Residential properties are not eligible for any of the Enterprise Zone tax credits.

Is your business located in Baltimore City’s Enterprise Zone?

Directions: Go to Baltimore City’s iMap web site: Once you enter the iMap web site, on the left hand side, please check the “Economic Zones” box and then enter the address in question on the upper right hand side of the page. Press the enter button once the address has been entered. Under parcel information on the right hand side, iMap will tell you whether or not the property is located within the Enterprise Zone. If your address is not recognized (no information appears in the box below), most likely the mailing address does not correspond to an address recognized by SDAT (State Department of Assessments and Taxation). Check SDAT’s website to identify a recognizable address.

Property Tax Credit
A ten-year credit against local real property taxes is offered for business improvements or new construction. The credit is based on new property taxes generated as a result of the expansion or new construction. In years 1-5, Baltimore City will waive 80% of the new property taxes generated. In years 6-10 the credit decreases 10% annually (70%, 60%, 50%, 40%, 30%).

Employment Tax Credit
The Employment Tax Credit is a one-to-three year tax credit for wages paid to new hires in the Enterprise Zone. The standard credit is a one-time $1,000 credit per new hire. Each new hire must work at least 35 hours a week and paid at least 150% above the minimum wage. The Federal Minimum Wage increased to $5.85/h on July 25, 2007 and to $6.55 in 2008 and will increase to $7.25 in 2009; therefore, businesses will have to pay at least $8.78/h after July 25, 2007; $9.83 in 2008 and $10.88 in 2009. For economically disadvantaged employees, the credit increases to a total of $6,000 per eligible new hire amortized over three years. Businesses located in a focus area may be eligible for enhanced employment tax credits. Please see the chart below:

*Are you in Baltimore City’s Focus Area?

General Employment Tax Credit:

The following requirements apply to both the general Enterprise Zone employment tax credit and the Enterprise Zone employment tax credit for economically disadvantaged employees:

• The employee must have been hired after the business was located in the zone or after the zone was designated.
• The employee must have been employed for at least 35 hours each week for six months (or 12 months in a focus area) before or during the taxable year in which the credit is taken.
• The employee must spend half of all work time in the zone or in activity related to the zone.
• The employee must have been hired to fill a new position. That is, the firm’s number of full-time positions must increase by the number of credits taken.
• The employee must earn at least 150 percent of the federal minimum wage

Economically Disadvantaged Employee Tax Credit:

In order to claim the larger tax credit for hiring an economically disadvantaged employee (in a newly created position), the firm must obtain a certification of eligibility for each employee it wants to claim. This certification is authorized by the Department of Labor, Licensing and Regulation (DLLR). Once a business is certified in the Baltimore Enterprise Zone, they will be directed to the appropriate contacts in DLLR and instructed on the certification process.

In order to receive the full tax credit, an economically disadvantaged employee must remain in the position for three years. However, if the disadvantaged employee leaves the firm and is replaced by another employee who is also certified as disadvantaged, the firm may take the remainder of the credit as if the original employee had remained.

Focus Area Only: Personal Property Tax Credit:
The credit is a 10-year, 80% credit against local personal property taxes on new investment within a focus area. The credit may be taken against the applicable City or municipal personal property tax liability.

Relocating a Business to Baltimore’s Enterprise Zone:

A firm moving from outside Maryland into Baltimore’s Enterprise Zone is considered to be a new Maryland business. All of its employees could be eligible for an Enterprise Zone one-time employee tax credit. If a firm relocates from one site in Maryland into Baltimore’s Enterprise Zone and its base employment remains the same as it was at the previous site, the firm will not be able to claim the Enterprise Zone employee tax credits. However, if the firm’s total employment increases as a result of the move or during the ten-years it is subsequently certified as an Enterprise Zone business, the new positions may be eligible for a one-time Enterprise Zone employment tax credit.

Federal Empowerment Zone Loan Program
You may also be located within an Empowerment Zone. If your business falls within an Empowerment Zone, you will be eligible to receive all Enterprise Zone benefits. Please contact the Enterprise Zone Administrator or Empower Baltimore to find out what additional benefits may be available to your business.

Benefits through 2012

In 2002, the Department of Business and Economic Development (DBED) approved the City of Baltimore’s application to consolidate and expand five (5) existing State Enterprise Zones (EZ). This approval allows property owners and businesses to benefit from Employment, Property and Personal Property Tax Credits until 2012.

Testimonials:
Tell us how the Enterprise Zone employee or property tax credit has helped your business! Send an email to: Elizabeth Weiblen and your business may be featured on our website!

For more information about the Baltimore City Enterprise Zone Program, please contact Elizabeth Weiblen