Electric and Gas Utility Tax Credit

Electric and gas companies that are public utilities have two tax credits available to them. The first is a credit against the income tax for a portion of total property taxes paid by the public utility on its operating real property in Maryland, other than operating land, that is used to generate electricity or steam for sale. For steam heating companies, the credit is only available for property tax paid on or after July 1, 2001. The second credit is for wages paid to qualified employees at a multi-jurisdictional electric company's qualified corporate headquarters, and is available for tax years beginning before January 1, 2005.

The credit may be taken against corporate income tax or personal income tax. The same credit may not, however, be applied to more than one tax type.

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 company must have paid property taxes on its operating real property in Maryland, other than operating land, used to generate electricity or steam for sale. Alternatively, the company must be a multi-jurisdictional electric company that is headquartered in Maryland.

How the credit is calculated:

The first credit is equal to 60 percent of the total property taxes paid by the public utility on its operating real property in Maryland, other than operating land, used to generate electricity or steam for sale.

The second credit is equal to 25 percent of the wages paid during the taxable year to employees who work at the company's Maryland headquarters. The credit cannot exceed $2 million ($500,000 if the headquarters in Maryland is not the principal place of business).

Neither credit may exceed the Maryland tax due after application of most other tax credits.

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

Documentation required:

Corporate income tax:

Form 500CR must be submitted with the income tax return (Form 500).

Personal income tax:

Form 500CR must be submitted with the income tax return (Form 502 or 505). 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 each individual partner, shareholder or member must separately state their share of the credit. The individual must attach this statement to the Form 500CR submitted with their personal income tax return (Form 502 or 505).

For more information, contact:

Revenue Administration Division
Comptroller of Maryland
Annapolis, MD 21411-0001
Phone: 410-260-7980 from Central Maryland,
1-800-MD TAXES from elsewhere
E-mail: taxhelp@comp.state.md.us

or:

State Department of Assessments and Taxation
301 W. Preston Street
Baltimore, MD 21201-2395
Phone: 410-767-1191
E-mail: taxcredits@dat.state.md.us