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Bio-Heating Oil Tax Credit

Businesses may claim a credit for each gallon of heating oil blended with biodiesel purchased for space or water heating. For any tax year, the credit allowed under this section may not exceed $500, or the state income tax for that tax year.

The credit is available for the tax years beginning on or after January 1, 2008, but before January 1, 2018, and remains effective for 10 years, through June 30, 2018.

The credit may be taken against corporate income tax or 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:

The purchase of bio-heating oil must be for the purpose of space and water heating. Bio-heating oil means heating oil that contains at least 5% biodiesel and is:

  • Derived from the U.S. Environmental Protection Agency (EPA) approved feedstocks; or
  • Accepted under 42 U.S.C. 7545 (O) as per the U.S. EPA Renewable Fuel Standard 2 (RFS2) accompanying regulations under 40 C.F.R. Part 80 for diesel fuel replacement.
How the credit is calculated:

A business that receives an initial credit certificate from the Maryland Energy Administration (MEA) may claim a credit against the state income tax for a tax year in an amount equal to three cents ($0.03) for each gallon of bio–heating oil purchased for space or water heating.

If the credit is more than the tax liability, the unused credit may not be carried forward to any future tax years.

Documentation required:

For taxable years beginning after December 31, 2012, this credit is available only with an electronically filed return. A copy of the certification by the MEA must be included with the electronic return, and the Form 500CR section of the return must be completed.

Contact:

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



 
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