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Clean Energy Incentive Tax Credit

Businesses that use a qualified energy resource to produce electricity that is sold to an unrelated person may be entitled to an income tax credit. 

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:

This credit is allowed if a Maryland facility is originally placed in service or initially began co-firing, during the period of January 1, 2006 through December 31, 2018 and produces electricity during the tax year primarily using qualified energy resources derived from:

  • Wind
  • Open-Loop and Closed-Loop Biomass, including:
    • Any non-hazardous waste material that is segregated from other waste materials and is derived from any of the following forest-related resources:
      • Mill residues, forest thinnings, slash, brush, waste pallets, crates, and dunnage and landscape or right-of-way trimmings
    • Agricultural sources, including but not limited to, orchard tree crops, vineyard grain, sugar, and other crop by-products and residues.
    • Methane gas or other combustible gases resulting from the decomposition of organic materials from an agricultural operation or from a landfill or a wastewater treatment plant using one, or a combination, of the following processes:
      • Anaerobic decomposition;
      • Thermal decomposition.
    • Biomass facilities may NOT use old growth timber, or mill residues consisting of sawdust or wood shavings.
  • Geothermal Energy
  • Solar Energy
  • Small Irrigation Power
  • Municipal Solid Waste
  • Qualified Hydropower

The business must apply for and receive an initial credit certificate from the Maryland Energy Administration (MEA) before claiming this credit. The initial credit certificate must state the amount of electricity the taxpayer expects to produce in a qualified Maryland facility over a five-year period. The total amount of the credit specified in the initial credit certificate cannot exceed $2.5 million and must be a minimum of $1,000.

Note:  MEA is prohibited from issuing initial credit certificates after December 31, 2018.

How the credit is calculated:

The credit is $0.0085 (85/100 of one cent) for each kilowatt hour (or 85 cents for every 100 kilowatt hours) of electricity produced at a Maryland facility using qualified energy resources during the five-year period specified in the initial credit certification.

The annual tax credit may not exceed one-fifth (1/5) of the maximum amount of credit stated in the initial credit certificate.If the credit is more than the state tax liability, the excess credit may be refunded. 

The MEA cannot issue an initial credit certificates after December 31, 2015, and may not issue an initial credit certificate for a credit amount less than $1,000.

Documentation required:

For taxable years beginning after December 31, 2012, this credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. A copy of the initial credit certificate issued by the MEA must be included with the electronic return, and the Form 500CR section of the return must be completed.

Contacts:

Maryland Energy Administration
1800 Washington Blvd, Suite 755
Baltimore, MD 21230
Phone: 410-260-7207
E-mail: meainfo@energy.state.md.us



 
Links for Business Tax Credits
General Information
Business Tax Credits
  Bio-Heating Oil Tax Credit
  Biotechnology Investment Incentive Tax Credit
  Businesses That Create New Jobs Tax Credit
  Cellulosic Ethanol Technology Research and Development Tax Credit
  Clean Energy Incentive Tax Credit
  Community Investment Tax Credit
  Commuter Tax Credit
  Cybersecurity Investment Incentive Tax Credit
  Electric Vehicle Recharging Equipment Tax Credit
  Employer-Provided Long-Term Care Insurance Tax Credit
  Employer Security Clearance Costs Tax Credits
  Employment Opportunity Tax Credit
  Enterprise Zone Tax Credit
  Film Production Activity Tax Credit
  Green Building Tax Credit
  Health Enterprise Zone Hiring Tax Credit
  Job Creation Tax Credit
  Long-Term Employment of Ex-Felons Tax Credit
  Maryland Disability Employment Tax Credit
  Maryland-Mined Coal Tax Credit
  One Maryland Economic Development Tax Credit
  Oyster Shell Recycling Tax Credit
  Qualified Vehicle Tax Credit
  Research and Development Tax Credits
  Heritage Structure Rehabilitation Tax Credit
  Work-Based Learning Program Tax Credit
  Wineries and Vineyards Tax Credit
  Endow Maryland Tax Credit
 
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