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, 2013.

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 business must purchase “Bio–heating oil” with a blend of at least 5 percent biodiesel.

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 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:

The business must file an amended income tax return (Form 500X or Form 510) and submit a copy of the certification received from the Maryland Energy Administration with the amended return.

Corporate income tax:

Form 500CR must be completed and submitted with the amended income tax return (Form 500X) along with the final certificate issued by the Maryland Department of Business and Economic Development.

Personal income tax:

Form 500CR must be completed and submitted with the income tax return (Form 502). If the business is a pass-through entity, Form 500CR must be prepared for the pass-through entity and submitted with the entity’s income tax return (Form 510). A modified federal Schedule K-1 provided by the pass-through entity to its members must separately state their shares of the credit. Individuals or entities must attach this statement to the Form 500CR submitted with their personal (Form 502), corporate (Form 500) or pass-through entity (Form 510) income tax returns.

Contact:

Maryland Department of Business and Economic Development
Division of Business Development, Tax Incentives Group
217 E. Redwood St.
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4980
E-mail: taxincentives@choosemaryland.org

Maria Ulrich
Maryland Energy Administration
1623 Forest Dr., Suite 300
Annapolis, MD 21403
Phone: 410-260-7655
E-mail: mulrich@energy.state.md.us