State Tax Credits, Modifications, and Exemptions - Alterations and Repeal

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0983*

HOUSE BILL 983
C8, Q1, Q3 6lr2776

By: Delegate Palakovich Carr
Introduced and read first time: February 6, 2026
Assigned to: Ways and Means and Economic Matters

A BILL ENTITLED

AN ACT concerning 1

State Tax Credits, Modifications, and Exemptions – Alterations and Repeal 2

FOR the purpose of altering the circumstances under which the Secretary of Commerce 3
may designate an area as an enterprise zone or a focus area under the Enterprise 4
Zone Program; prohibiting the Secretary from designating a new enterprise zone or 5
granting an expansion or extraordinary expansion of an existing enterprise zone 6
under certain circumstances; providing for the termination of the Enterprise Zone 7
Program on a certain date and, except under certain circumstances, eligibility for 8
certain tax credits provided under the Enterprise Zone Program; providing for the 9
termination of the One Maryland Economic Development Tax Credit Prog ram on a 10
certain date; providing an addition modification under the Maryland income tax for 11
the entire amount of certain deductions under the Internal Revenue Code for 12
dividends paid for real estate investment trusts; limiting the amount of a credit and 13
the total amount of credits against the State income tax under the Enterprise Zone 14
Program that may be claimed by a business entity each taxable year; altering the 15
termination dates of the biotechnology investment incentive tax credit, the security 16
clearance administrative expense tax credit, and the cybersecurity technology and 17
service tax credit; establishing the purpose of the film production activity tax credit; 18
limiting the excess amount of tax credit certificates that the Secretary of Commerce 19
may carry forward and issue in subsequent fiscal years under the film production 20
activity tax credit; altering eligibility for a certain tax credit for certain qualified 21
vehicles; repealing a certain discount that a licensed de aler or licensed special fuel 22
seller is allowed to deduct under the motor fuel tax; repealing certain sales and use 23
tax exemptions for sales relating to the production of concrete, certain 24
telecommunications machinery and equipment , and certain construction materials 25
and warehousing equipment used in a target redevelopment area; altering a certain 26
exemption from the tobacco tax for tobacco brought into the State by certain 27
consumers; providing for the termination of a certain enhanced credit against the 28
property tax imposed on certain qualified property under the Enterprise Zone 29
Program; providing that, for any taxable year, the amount of a certain credit against 30
the property tax imposed on certain qualified property under the Enterprise Zone 31
2 HOUSE BILL 983

Program may not exceed a certain amount; providing for the termination of the 1
eligibility for certain tax credits provided for certain businesses that create new jobs; 2
requiring the Department of Commerce to evaluate the film production activity tax 3
credit and submit a certain report on or before a certain date; and generally relating 4
to credits, modifications, and exemptions under the State income, motor fuel, sales 5
and use, tobacco, and property taxes. 6

BY repealing and reenacting, without amendments, 7
Article – Economic Development 8
Section 5–704(a)(1) and 5–707(a) 9
Annotated Code of Maryland 10
(2024 Replacement Volume and 2025 Supplement) 11

BY repealing and reenacting, with amendments, 12
Article – Economic Development 13
Section 5–704(a)(2) and (b), 5–705, 5–706, and 5–707(d) 14
Annotated Code of Maryland 15
(2024 Replacement Volume and 2025 Supplement) 16

BY adding to 17
Article – Economic Development 18
Section 5–710 and 6–407 19
Annotated Code of Maryland 20
(2024 Replacement Volume and 2025 Supplement) 21

BY repealing and reenacting, without amendments, 22
Article – Tax – General 23
Section 10–204(a) and 10–734.1(a) 24
Annotated Code of Maryland 25
(2022 Replacement Volume and 2025 Supplement) 26

BY adding to 27
Article – Tax – General 28
Section 10–204(m) and 10–702(f) 29
Annotated Code of Maryland 30
(2022 Replacement Volume and 2025 Supplement) 31

BY repealing and reenacting, with amendments, 32
Article – Tax – General 33
Section 10–305, 10–702(b), (f), and (g), 10–725(c)(3)(ii), 10–730, 10–732(b)(1), 34
10–733.1(d)(3), 10–734.1(b), 11–210, and 12–104(b)(3)(i) 35
Annotated Code of Maryland 36
(2022 Replacement Volume and 2025 Supplement) 37

BY repealing 38
Article – Tax – General 39
Section 9–315, 10–306.2, and 11–232 40
HOUSE BILL 983 3

Annotated Code of Maryland 1
(2022 Replacement Volume and 2025 Supplement) 2

BY repealing and reenacting, without amendments, 3
Article – Tax – Property 4
Section 9–103(b)(1) and 9–230(b)(1) 5
Annotated Code of Maryland 6
(2019 Replacement Volume and 2025 Supplement) 7

BY repealing and reenacting, with amendments, 8
Article – Tax – Property 9
Section 9–103(d) and 9–230(b)(2), (c)(3), (d)(5), and (m) 10
Annotated Code of Maryland 11
(2019 Replacement Volume and 2025 Supplement) 12

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14

Article – Economic Development 15

5–704. 16

(a) (1) The Secretary may designate an area as an enterprise zone only if the 17
area: 18

(i) is in a priority funding area or in a qualified opportunity zone 19
under § 1400Z –1 of the Internal Revenue Code in Allegany County, Garrett County, 20
Somerset County, or Wicomico County or meets an exception under Title 5, Subtitle 7B of 21
the State Finance and Procurement Article; and 22

(ii) satisfies at least one of the requirements specified in paragraph 23
(2) of this subsection. 24

(2) An area may be designated as an enterprise zone if: 25

(i) the average rate of unemployment in EACH CENSUS TRACT 26
WITHIN the area, or within a reasonable proximity to the area but in the same county IF 27
FEWER THAN 1,500 INDIVIDUALS RESIDE IN A CENSUS TRACT WITHIN THE AREA, for 28
the most recent 18–month period for which data are available is at least 150% of the greater 29
of the average rate of unemployment in either the State or the United States during that 30
period; 31

(ii) the population in EACH CENSUS TRACT WI THIN the area , or 32
within a reasonable proximity to the area but in the same county IF FEWER THAN 1,500 33
INDIVIDUALS RESIDE IN A CENSUS TRACT WITHIN THE AREA, qualifies the area as a 34
low–income poverty area; 35
4 HOUSE BILL 983

(iii) at least 70% of the families in EACH CENSUS TRACT WI THIN 1
the area, or within a reasonable proximity to the area but in the same county IF FEWER 2
THAN 1,500 INDIVIDUALS RESIDE I N A CENSUS TRACT WITHIN THE AREA , have 3
incomes that are less than 80% of the median family income in the political subdivision 4
that contains the area; or 5

(iv) the population in EACH CENSUS TRACT WI THIN the area, or 6
within a reasonable proximity to the area but in the same county IF FEWER THAN 1,500 7
INDIVIDUALS RESIDE I N A CENSUS TRACT WITHIN THE AREA , decreased by 10% 8
between the most recent two censuses, and the political subdivision can demonstrate to the 9
Secretary’s satisfaction that: 10

1. chronic abandonment or demolition of property is 11
occurring in the area; or 12

2. substantial property tax arrearages exist in the area. 13

(b) (1) Within 60 days after a submission date, the Secretary may designate 14
one or more enterprise zones from among the areas described in the applications timely 15
submitted. 16

(2) The designation of an area as an enterprise zone is effective for 10 17
years. 18

(3) The Secretary may not designate more than six enterprise zones in a 19
calendar year. 20

(4) IF THE SECRETARY REASONABLY ANTICIPATES THAT THE 21
AGGREGATE AMOUNT OF PROPERTY TAX CREDITS CLAIMED UNDER § 9–103 OF THE 22
TAX – PROPERTY ARTICLE FOR THE IMMED IATELY PRECEDING FISCAL YEAR MAY 23
EXCEED $60,000,000, THE SECRETARY MAY NOT DES IGNATE A NEW ENTERPR ISE 24
ZONE DURING THE CURRENT FISCAL YEAR. 25

[(4)] (5) A county may not receive more than two enterprise zones in a 26
calendar year. 27

5–705. 28

(a) (1) A political subdivision may apply to the Secretary to expand an existing 29
enterprise zone in the same manner as the political subdivision would apply to designate a 30
new enterprise zone. 31

(2) [The] EXCEPT AS PROVIDED IN SUBSECTION (C) OF THIS SECTION, 32
THE Secretary may grant an expansion of an enterprise zone into an area that meets the 33
requirements of § 5–704 of this subtitle. 34
HOUSE BILL 983 5

(3) For purposes of § 5–704(b) of this subtitle, an expansion of an enterprise 1
zone that does not exceed 25% of the existing geographic area of the enterprise zone does 2
not count towards the limit on the number of enterprise zones that: 3

(i) the Secretary may designate in a calendar year; or 4

(ii) a county may receive in a calendar year. 5

(b) (1) The Secretary may grant one extraordinary expansion of an enterprise 6
zone in the State each calendar year for an area that: 7

(i) meets the requirements of § 5–704 of this subtitle; and 8

(ii) in the determination of the Secretary, has suffered a significant 9
loss of economic base or merits inclusion in an enterprise zone for a compelling economic 10
reason. 11

(2) For purposes of § 5–704(b) of this subtitle, an extraordinary expansion 12
of an enterprise zone IS NOT SUBJECT TO THE LIMITATION UNDER SUBSECTION (C) OF 13
THIS SECTION AND does not count towards the limit on the number of enterprise zones 14
that: 15

(i) the Secretary may designate in a calendar year; or 16

(ii) a county may receive in a calendar year. 17

(C) IF THE SECRETARY REASONABLY ANTICIPATES THAT THE AGGREGATE 18
AMOUNT OF PRO PERTY TAX CREDITS CL AIMED UNDER § 9–103 OF THE 19
TAX – PROPERTY ARTICLE FOR THE IMMED IATELY PRECEDING FISCAL YEAR MAY 20
EXCEED $60,000,000, THE SECRETARY MAY NOT GRA NT AN EXPANSION OF A N 21
EXISTING ENTERPRISE ZONE DURING THE CURRENT FISCAL YEAR. 22

5–706. 23

(a) A political subdivision may request the Secretary to designate all or part of an 24
enterprise zone as a focus area for the lesser of: 25

(1) 5 years; or 26

(2) the remainder of the 10–year term of the applicable enterprise zone. 27

(b) The request may be made on or before a submission date when the political 28
subdivision applies for the designation of a new enterprise zone or after the Secretary has 29
designated an enterprise zone. 30

6 HOUSE BILL 983

(c) The Secretary may grant the request if the area is located in an enterprise 1
zone and meets at least three of the following criteria: 2

(1) the average unemployment rate in EACH CENSUS TRACT WITHIN the 3
area, or within a reasonable proximity to the area but in the same county IF FEWER THAN 4
1,500 INDIVIDUALS RESIDE IN A CENSUS TRACT WITHIN THE AREA, for the most recent 5
18–month period for which data are available is at least 150% of the greater of the average 6
rate of unemployment in either the State or the United States during that same period; 7

(2) the population in EACH CENSUS TRACT WITHIN the area, or within a 8
reasonable proximity to the area but in the same county IF FEWER THAN 1,500 9
INDIVIDUALS RESIDE I N A CENSUS TRACT WITHIN THE AREA , has an incidence of 10
poverty that is at least 150% of the national average; 11

(3) the crime rate in EACH CENSUS TRACT WITHIN the area, or within a 12
reasonable proximity to the area but in the same county IF FEWER THAN 1,500 13
INDIVIDUALS RESIDE IN A CENSUS TRACT WITHIN THE AREA, is at least 150% of the 14
crime rate in the political subdivision where the area is located; 15

(4) the percentage of substandard housing in EACH CENSUS TRACT 16
WITHIN the area, or within a reasonable proximity to the area but in the same county IF 17
FEWER THAN 1,500 INDIVIDUALS RESIDE IN A CENSUS TRACT WITHIN THE AREA, is 18
at leas t 200% of the percentage of housing units in the State that are substandard, 19
according to data from the United States Bureau of the Census or other State or federal 20
government data the Secretary considers appropriate; or 21

(5) at least 20% of the square f ootage of commercial property in EACH 22
CENSUS TRACT WITHIN the area, or within a reasonable proximity to the area but within 23
the same county IF FEWER THAN 1,500 INDIVIDUALS RESIDE I N A CENSUS TRACT 24
WITHIN THE AREA , is vacant, according to data from the United States Bureau of the 25
Census or other State or federal government data the Secretary considers appropriate. 26

5–707. 27

(a) To the extent provided for in this section, a business entity is entitled to: 28

(1) the special property tax credit in § 9–103 of the Tax – Property Article; 29

(2) the income tax credits in § 10–702 of the Tax – General Article; and 30

(3) consideration for financial assistance from programs in Subtitle 1 of 31
this title. 32

(d) (1) Except as provided in § 10 –702 of the Tax – General Article and § 33
9–103 of the Tax – Property Article, the incentives and initiatives set forth in this section 34
are available for 10 years after the date that an area is designated an enterprise zone. 35
HOUSE BILL 983 7

(2) (I) A law enacted after the enactment of this section that eliminates 1
or reduces the benefits available to a business entity under this section does not apply to a 2
business entity that was in an enterprise zone before the effective date of the law. 3

(II) A BUSINESS ENTITY THAT LOCATES IN AN ENTERP RISE 4
ZONE BEFORE THE TERM INATION DATE OF THIS SUBTITLE PROVIDED UN DER § 5
5–710 OF THIS SUBTITLE REM AINS ELIGIBLE FOR TH E BENEFITS AVAILABLE TO A 6
BUSINESS ENTITY UNDE R THIS SECTION , PROVIDED THAT THE BU SINESS ENTITY 7
MEETS THE REQUIREMENTS AND CONDITIONS OF THE CODE SECTION APPLICABLE 8
TO THE BENEFIT. 9

5–710. 10

THIS SUBTITLE AND , EXCEPT AS PROVIDED I N § 5–707(D)(2) OF THIS 11
SUBTITLE, ELIGIBILITY FOR THE TAX CREDITS PROVIDED UNDER § 5–707(A) OF THIS 12
SUBTITLE SHALL TERMINATE ON JANUARY 1, 2031. 13

6–407. 14

(A) THIS SUBTITLE AND THE TAX CREDIT AUTHORIZE D UNDER THIS 15
SUBTITLE SHALL TERMINATE ON JANUARY 1, 2027. 16

(B) AFTER THE TERMINATION OF THIS SUBTITLE , TAX CREDITS EARNED 17
MAY BE CARRIED FORWARD IN ACCORDANCE WITH § 6–403 OF THIS SUBTITLE. 18

SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 19
as follows: 20

Article – Tax – General 21

10–204. 22

(a) To the extent excluded from federal adjusted gross income, the amounts under 23
this section are added to the federal adjusted gross income of a resident to de termine 24
Maryland adjusted gross income. 25

(M) THE ADDITION UNDER SUBSECTION (A) OF THIS SECTION INCLUDES ANY 26
AMOUNT DEDUCTED UNDE R § 857 OF THE INTERNAL REVENUE CODE FOR 27
DIVIDENDS PAID FOR REAL ESTATE INVESTMENT TRUSTS. 28

10–305. 29

8 HOUSE BILL 983

(a) To the extent excluded from federal taxable income, the amounts under this 1
section are added to the federal taxable income of a corporation to determine Maryland 2
modified income. 3

(b) The addition under subsection (a) of this section includes the net capital loss 4
carryback, as defined in § 1212 of the Internal Revenue Code. 5

(c) The addition under subsection (a) of this section includes any taxes based on 6
net income that are imposed by any state or by a political subdivision of any state. 7

(d) The addition under subsection (a) of this section includes the additions 8
required for an individual under: 9

(1) § 10–204(b) of this title (Dividends and interest from another state or 10
local obligation); 11

(2) § 10–204(c)(2) of this title (Federal tax–exempt income); 12

(3) § 10–204(e) of this title (Oil percentage depletion allowance); 13

(4) § 10 –204(i) of this title (Deduction for qualified production activities 14
income); 15

(5) § 10 –204(j) of this title (Deduction for costs for security clearance 16
administrative expenses and construction and equipment costs incurred to construct or 17
renovate a sensitive compartmented information facility); [and] 18

(6) § 10–204(l) of this title (Deduction for donations to qualified permanent 19
endowment funds); AND 20

(7) § 10–204(M) OF THIS TITLE (DEDUCTION FOR DIVIDEN DS PAID 21
FOR REAL ESTATE INVESTMENT TRUSTS). 22

[10–306.2. 23

(a) (1) In this section the following words have the meanings indicated. 24

(2) (i) “Captive REIT” means a corporation, trust, or association: 25

1. that is considered a real estate investment trust for the 26
taxable year under § 856 of the Internal Revenue Code; 27

2. that is not regularly traded on an established securities 28
market; and 29

3. of which more than 50% of the voting power or value of the 30
HOUSE BILL 983 9

beneficial interests or shares, at any time during the last half of the taxable year, is owned 1
or controlled, directly or indirectly, by a single entity that is subject to the provisions of 2
Subchapter C of Chapter 1 of the Internal Revenue Code. 3

(ii) “Captive REIT” does not include: 4

1. a corporation, trust, or association of which, at any time 5
during which the corporation, trust, or association satisfies subparagraph (i)3 of this 6
paragraph, more than 50% of the voting power or value of the beneficial interests or shares 7
of the corporation, trust, or association is owned or controlled, directly or indirectly, by: 8

A. a real estate investment trust other than a real estate 9
investment trust described in subparagraph (i) of this paragraph; 10

B. a person exempt from taxation under § 501 of the Internal 11
Revenue Code; 12

C. a listed Australian property trust, or an entity organized 13
as a trust in which a listed Australian property trust owns or controls, directly or indirectly, 14
75% or more of the voting power or value of the beneficial interests or shares of the trust; 15
or 16

D. a qualified foreign entity; or 17

2. subject to regulations that the Comptroller adopts, a real 18
estate investment trust that is intended to become regularly traded on an established 19
securities market and that satisfies the requirements of § 856(a)(5) and (6) of the Internal 20
Revenue Code by reason of § 856(h)(2) of the Internal Revenue Code. 21

(3) “Qualified foreign entity” means a corporation, trust, association, or 22
partnership that is organized under the laws of a foreign government and: 23

(i) at least 75% of the total asset value of the entity at the close of 24
the entity’s taxable year is represented by real estate assets, as defined in § 856 of the 25
Internal Revenue Code, cash and cash equivalents, and United States government 26
securities; 27

(ii) 1. is not subject to tax on amounts distributed to the entity’s 28
beneficial owners; or 29

2. is exempt from entity–level taxation; 30

(iii) on an annual basis, distributes at least 85% of the taxable income 31
of the entity, as computed in the jurisdiction in which the entity is organized, to the holders 32
of the shares or certificates of the beneficial interests of the entity; 33

(iv) 1. of which not more than 10% of the voting power or val ue 34
10 HOUSE BILL 983

of the beneficial interests or shares of the entity is owned or controlled directly, indirectly, 1
or constructively by a single entity or individual; or 2

2. the beneficial interests or shares of the entity are 3
regularly traded on an established securities market; and 4

(v) the entity is organized in a foreign country that has a tax treaty 5
with the United States government. 6

(b) In addition to the modifications under §§ 10 –305 through 10 –306.1 of this 7
subtitle, an amount equal to the amount of the dividends paid deduction allowed under the 8
Internal Revenue Code for the taxable year is added to federal taxable income to determine 9
the Maryland modified income of a captive REIT. 10

(c) For purposes of this section, the constructive ownership rules prescr ibed 11
under § 318(a) of the Internal Revenue Code, as modified by § 856(d)(5) of the Internal 12
Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of 13
any person.] 14

10–702. 15

(b) (1) [Any] SUBJECT TO THE LIMITA TIONS OF THIS SECTIO N, ANY 16
business entity that is located in an enterprise zone and satisfies the requirements of § 17
5–707 of the Economic Development Article may claim a credit only against the State 18
income tax for the wages specified in subsections (c) and (d) of this section that are paid in 19
the taxable year for which the entity claims the credit. 20

(2) [A] SUBJECT TO THE LIMITA TIONS OF THIS SECTIO N, A business 21
entity that is located in a focus area and satisfies the requirements of § 5 –707 of the 22
Economic Development Article may claim a credit only against the State income tax for the 23
wages specified in subsection (e) of this section that are paid to a focus area employee in 24
the taxable year for which the entity claims the credit. 25

(3) An organization that is exempt from taxation under § 501(c)(3) or (4) of 26
the Internal Revenue Code may apply the credit under this section as a credit against 27
income tax due on unrelated business taxable income as provided under §§ 10 –304 and 28
10–812 of this title. 29

(F) (1) THE CREDIT ALLOWED UNDER THIS SECTION SHALL BE CLAIMED 30
ON A FIRST–COME, FIRST–SERVED BASIS. 31

(2) FOR ANY TAXABLE YEAR: 32

(I) THE CREDIT ALLOWED U NDER THIS SECTION MA Y NOT 33
EXCEED $250,000; AND 34

HOUSE BILL 983 11

(II) THE TOTAL AMOUNT OF CREDITS CLAIMED BY B USINESS 1
ENTITIES MAY NOT EXCEED $2,000,000. 2

[(f)] (G) If the credit allowed under this section in any taxable year exceeds the 3
State income tax for that taxable year, a business entity may apply the excess as a credit 4
against the State income tax for succeeding taxable years until the earlier of: 5

(1) the full amount of the excess is used; or 6

(2) the expiration of the 5th taxable year from the date on which the 7
business entity hired the qualified employee to whom the credit first applies. 8

[(g)] (H) If a credit is claimed under this section, the claimant must make the 9
addition required in § 10–205, § 10–206, or § 10–306 of this title. 10

10–725. 11

(c) (3) (ii) The Department may not issue any tax credit certificates under 12
this section after June 30, [2028] 2026. 13

10–730. 14

(a) (1) In this section the following words have the meanings indicated. 15

(2) “Department” means the Department of Commerce. 16

(3) “Digital animation project” means the creation, development, and 17
production of computer–generated animation content for distribution or exhibition to the 18
general public. 19

(4) (i) “Film production activity” means: 20

1. the production of a film or video project that is intended 21
for nationwide commercial distribution; and 22

2. for a television series, each season of the television series. 23

(ii) “Film production activity” includes the production of: 24

1. a feature film; 25

2. a television project; 26

3. a commercial; 27

4. a corporate film; 28

12 HOUSE BILL 983

5. a music video; 1

6. a digital animation project; 2

7. a documentary; or 3

8. a talk, reality, or game show. 4

(iii) “Film production activity” does not include production of: 5

1. a student film; 6

2. a noncommercial personal video; 7

3. a sports broadcast; 8

4. a broadcast of a live event; 9

5. a video, computer, or social networking game; 10

6. pornography; 11

7. an infomercial; 12

8. a digital project or an animation project other than a 13
digital animation project; or 14

9. a multimedia project. 15

(5) “Maryland small or independent film entity” means a qualified film 16
production entity that: 17

(i) has been incorporated in Maryland for at least 3 months; 18

(ii) is independently owned and operated; 19

(iii) is not a subsidiary of another entity; 20

(iv) is not dominant in its field of operation; 21

(v) employs 25 or fewer full–time employees; and 22

(vi) employs Maryland residents as at least 40% of its workforce in 23
the film production activity. 24

HOUSE BILL 983 13

(6) “Pornography” means any production for which records are required to 1
be maintained under § 2257 of Title 18, U.S.C., with respect to any performer in such 2
production engaging in sexually explicit conduct. 3

(7) “Qualified film production entity” means an entity that: 4

(i) is carrying out a film production activity; and 5

(ii) the Secretary determines to be eligible for the tax credit under 6
this section in accordance with subsection [(c)] (D) of this section. 7

(8) “Secretary” means the Secretary of Commerce. 8

(9) “Television series” means a group of program episodes intended for 9
television broadcast or transmission with a common series title, with or without a 10
predetermined number of episodes, and shall include a miniseries and a pilot episode 11
produced for an intended television series. 12

(10) (i) “Total direct costs”, with respect to a film production activity, 13
means the total costs incurred in the State that are necessary to carry out the film 14
production activity. 15

(ii) “Total direct costs” includes costs incurred for: 16

1. employee wages and benefits; 17

2. fees for services; 18

3. acquiring or leasing property; 19

4. salaries, wages, or other compensation for writers, 20
directors, or producers; and 21

5. any other expense necessary to carry out a film production 22
activity, including costs associated with: 23

A. set construction and operation; 24

B. wardrobe, makeup, and related services; 25

C. photography and sound synchronization, lighting, and 26
related services and materials; 27

D. editing and related services, including film processing, 28
transfers of film to tape or digital format, sound mixing, computer graphic services, special 29
effects services, and animation services; 30

14 HOUSE BILL 983

E. salary, wages, and other compensation including related 1
benefits, for work performed in the State, paid to persons employed in the production; 2

F. rental of facilities in the State and equipment used in the 3
State; 4

G. leasing of vehicles; 5

H. food and lodging; 6

I. music, if performed, composed, or recorded by a Maryland 7
musician or published by a person or company domiciled in Maryland; 8

J. travel expenses incurred to bring persons employed, either 9
directly or indirectly, in the production of the project to Maryland, but not including 10
expenses of these persons departing from Maryland; and 11

K. legal and accounting services performed by attorneys or 12
accountants licensed in Maryland. 13

(iii) “Total direct costs” does not include any salary, wages, or other 14
compensation for personal services of an individual who receives more than $500,000 in 15
salary, wages, or other compensation for personal services in connection with any film 16
production activity. 17

(B) THE PURPOSE OF THE TAX CREDIT AL LOWED UNDER THIS SEC TION IS 18
TO INCENTIVIZE AND PROMOTE FILM PRODUCTION ACTI VITY IN THE STATE TO 19
STIMULATE THE LOCAL ECONOMY BY CREATING JOBS, FOSTERING INVESTMENT IN 20
INDUSTRY INFRASTRUCTURE, AND BOOSTING TOURISM. 21

[(b)] (C) (1) A qualified film production entity may claim a credit against the 22
State income tax for film production activities in the State in an amount equal to the 23
amount stated in the final tax credit certificate approved by the Secretary for film 24
production activities. 25

(2) If the tax credit allowed under this section in any taxable year exceeds 26
the total tax otherwise payable by the qualified film production entity for that taxable year, 27
the qualified film production entity may claim a refund in the amount of the excess. 28

[(c)] (D) (1) Before beginning a film production activity, a film production 29
entity shall submit to the Department an application to qualify as a film production entity. 30

(2) The application shall describe the anticipated film production activity, 31
including: 32

(i) the projected total budget; 33
HOUSE BILL 983 15

(ii) the estimated number of Maryland r esident and out –of–state 1
employees and total wages to be paid; and 2

(iii) the anticipated dates for carrying out the major elements of the 3
film production activity. 4

(3) Except as provided in subsection [(h)] (I) of this section, to qualify as a 5
film production entity, the estimated total direct costs incurred in the State must exceed 6
$250,000. 7

(4) The application shall include any other information required by the 8
Secretary. 9

(5) For a film production entity with total direct costs that exceed $250,000, 10
the Secretary may require the information provided in an application to be verified by an 11
independent auditor selected and paid for by the film production entity seeking 12
certification. 13

(6) The Secretary shall: 14

(i) determine if the film produ ction entity qualifies for the credit 15
under this section; and 16

(ii) notify the Comptroller of the estimated amount of total direct 17
costs and the taxable year the credit will be claimed. 18

[(d)] (E) (1) After completion of the film production activity, a qualified film 19
production entity shall apply to the Department for a tax credit certificate. 20

(2) The application shall be on a form required by the Secretary and shall 21
include: 22

(i) proof of the total direct costs that qualify for the tax credit; and 23

(ii) the number of employees hired and wages paid. 24

(3) Subject to subsections [(f)] (G) and [(h)] (I) of this section, the Secretary 25
shall determine the total direct costs that qualify for the tax credit and issue a tax credit 26
certificate for: 27

(i) except as provided in item (ii) of this paragraph, 28% of the total 28
direct costs that qualify for the tax credit; and 29

(ii) for a television series, 30% of the total direct costs that qualify 30
for the tax credit. 31

16 HOUSE BILL 983

[(e)] (F) In accordance with § 2.5–109 of the Economic Development Article, the 1
Department shall submit a report on film production activity in the State and the economic 2
benefits to the State resulting from film production activity during the reporting period. 3

[(f)] (G) (1) Except as provided in paragraph (2) of this subsection, the 4
Secretary may not issue tax credit certificates for credit amounts in the aggregate totaling 5
more than: 6

(i) for fiscal year 2014, $25,000,000; 7

(ii) for fiscal year 2015, $7,500,000; 8

(iii) for fiscal year 2016, $7,500,000; 9

(iv) for fiscal year 2019, $8,000,000; 10

(v) for fiscal year 2020, $11,000,000; 11

(vi) for fiscal years 2021 through 2023, $12,000,000; 12

(vii) for fiscal year 2024, $15,000,000; 13

(viii) for fiscal year 2025, $17,500,000; and 14

(ix) for fiscal year 2026 and each fiscal year thereafter, $12,000,000. 15

(2) (I) [If] SUBJECT TO SUBPARAGRAPH (II) OF THIS PARAGRAPH, 16
IF the aggregate credit amounts under the tax credit certificates issued by the Secretary 17
total less than the maximum provided under paragraph (1) of this subsection in any fiscal 18
year, any excess amount may be carried forward and issued under tax credit certificates in 19
a subsequent fiscal year. 20

(II) THE AGGREGATE AMOUNT CARRIED FORWARD FROM ALL 21
PRIOR FISCAL YEARS IN ACCORDANCE WITH S UBPARAGRAPH (I) OF THIS 22
PARAGRAPH MAY NOT EXCEED $12,000,000. 23

(3) The Secretary may not issue tax credit certificates for credit amounts 24
totaling more than $10,000,000 in the aggregate for a single film production activity. 25

(4) (i) For fiscal year 2019 and each fiscal year thereafter, the Secretary 26
shall make 10% of the credit amount authorized under paragraph (1) of this subsection 27
available for Maryland small or independent film entities. 28

(ii) If the total amount of credits applied for by Maryland small or 29
independent film entities is less than the amount made available under subparagraph (i) 30
HOUSE BILL 983 17

of this paragraph, the Secretary shall make available the unused amount of credits for use 1
by qualified film production entities. 2

[(g)] (H) (1) Except as provided in paragraph (2) of this subsection, a qualified 3
film production entity that receives a tax credit certificate under this section for a film 4
production activity shall include: 5

(i) for a feature film project, a 5–second long static or animated logo 6
that promotes the State in the end credits before the below–the–line crew crawl for the life 7
of the project and a link to the State’s website on the project’s website; 8

(ii) for a television series project, an embedded 5–second long static 9
or animated logo that promotes the State during each broadcast worldwide for the life of 10
the project and a link to the State’s website on the project’s website; or 11

(iii) for any other project, the State logo at the end of each project and 12
in online promotions. 13

(2) In lieu of including a State logo as required under paragraph (1) of this 14
subsection, the qualified film production entity may offer alternative marketing 15
opportunities to be evaluated by the Department to ens ure that those opportunities offer 16
equal or greater promotional value to the State. 17

[(h)] (I) (1) For a Maryland small or independent film entity to qualify as a 18
film production entity: 19

(i) the estimated total direct costs incurred in the State shall exceed 20
$25,000; and 21

(ii) at least 50% of the filming of the film production activity must 22
occur within the State. 23

(2) The Secretary shall determine the total direct costs that qualify for the 24
tax credit and issue a tax credit certificate to a Maryland small or independent film entity 25
for 28% of the total direct costs that qualify for the tax credit, not to exceed $125,000. 26

[(i)] (J) The Department and the Comptroller jointly shall adopt regulations to 27
carry out the provisions of this section and t o specify criteria and procedures for the 28
application for, approval of, and monitoring of continuing eligibility for the tax credit under 29
this section. 30

10–732. 31

(b) (1) Subject to the limitations of this section, for a taxable year beginning 32
after December 31, 2022, but before January 1, [2028] 2027, an individual or a corporation 33
that employs not more than 500 employees may claim credits against the State income tax 34
for: 35
18 HOUSE BILL 983

(i) security clearance administrative expenses, not to exceed 1
$200,000; 2

(ii) expenses incurred for rental payments owed during the first year 3
of a rental agreement for spaces leased in the State if the individual or corporation is a 4
small business that performs security–based contracting, not to exceed $200,000; and 5

(iii) subject to paragraph (2) of this subsection, construction and 6
equipment costs incurred to construct or renovate a single SCIF in an amount equal to the 7
lesser of 50% of the costs or $200,000. 8

10–733.1. 9

(d) (3) (i) The total amount of the credit certificates approved by the 10
Secretary of Commerce under this subsection may not exceed: 11

1. for taxable year 2018, $2,000,000; and 12

2. for taxable [year] YEARS 2019 [and each taxable year 13
thereafter] THROUGH 2026, $4,000,000. 14

(ii) For each taxable year, the Secretary of Commerce shall award 15
25% of the amount of tax credits authorized under subparagraph (i) of this paragraph to 16
qualified buyers that purchase cybersecurity services. 17

(III) THE SECRETARY OF COMMERCE MAY NOT AWAR D TAX 18
CREDITS UNDER THIS S UBSECTION FOR A TAXAB LE YEAR BEGINNING AF TER 19
DECEMBER 31, 2026. 20

10–734.1. 21

(a) (1) In this section the following words have the meanings indicated. 22

(2) “Administration” means the Motor Vehicle Administration. 23

(3) “Qualified vehicle” means a Class F (tractor) vehicle described under § 24
13–923 of the Transportation Article that is titled and registered in the State. 25

(b) Subject to the limitations of this section, an individual or a corporation 26
HEADQUARTERED IN THE STATE that obtains a tax credit certi ficate from the 27
Administration may claim a credit against the State income tax for the expense of 28
registering a qualified vehicle in the State during the taxable year. 29

SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 30
as follows: 31
HOUSE BILL 983 19

Article – Tax – General 1

[9–315. 2

(a) A licensed dealer or licensed special fuel seller shall deduct 0.5% of the 1st 10 3
cents of the motor fuel tax on each gallon of motor fuel, as a discount: 4

(1) instead of an allowance for evaporation, shrinkage, and handling; and 5

(2) to reimburse the licensed dealer or licensed special fuel seller for 6
expenses incurred for the State in: 7

(i) keeping records; 8

(ii) collecting and paying the tax; and 9

(iii) preparing reports. 10

(b) (1) This subsection does not apply to: 11

(i) any aviation gasoline; or 12

(ii) any other motor fuel on which the motor fuel tax has not been 13
paid. 14

(2) From the discount under subsection (a) of this section: 15

(i) a licensed dealer who sells gasoline to a retail service sta tion 16
dealer shall deduct on the bill 1/2 of the discount; 17

(ii) a licensed dealer who sells gasoline to a licensed distributor or 18
licensed special fuel seller shall deduct on the bill 2/3 of the discount; 19

(iii) a licensed distributor who sells motor fuel to a retail service 20
station dealer shall deduct on the bill 1/3 of the discount; 21

(iv) a licensed special fuel seller who sells special fuel to a retail 22
service station dealer shall deduct on the bill 1/2 of the discount; 23

(v) a licensed special fuel seller who sells special fuel to a licensed 24
distributor shall deduct on the bill 2/3 of the discount; and 25

(vi) a licensed special fuel seller who sells gasoline to a licensed 26
distributor shall deduct on the bill 1/3 of the discount.] 27

11–210. 28
20 HOUSE BILL 983

(a) [The sales and use tax does not apply to a sale of: 1

(1) machinery or equipment used to produce bituminous concrete; or 2

(2) electricity, fuel, and other utilities used to operate that machinery or 3
equipment. 4

(b)] The sales and use tax does not apply to a sale of: 5

(1) tangible personal property, a digital code, or a digital product used 6
directly and predominantly in a production activity at any stage of operation on the 7
production activity site from the handling of raw material or components to the movement 8
of the finished product, if the tangible personal property, digital code, or digital product is 9
not installed so that it becomes real property; 10

(2) a melting, smelting, heating, or annealing coke oven, aluminum 11
furnace, anode bake ov en, electrolytic pot, cathode, refractory, or other material used in 12
relining and rebuilding a furnace or oven; or 13

(3) a foundation to support other machinery or equipment or an item 14
required to conform to an air or water pollution law and normally cons idered part of real 15
property. 16

[(c)] (B) The sales and use tax does not apply to a sale of equipment that is used 17
by a retail food vendor to manufacture or process bread or bakery goods for resale if: 18

(1) the taxable price of each piece of equipment is at least $2,000; and 19

(2) the retail food vendor operates a substantial grocery or market 20
business, as defined in § 11 –206(a) of this subtitle, at the same location where the food is 21
sold. 22

[(d) The sales and use tax does not apply to the sale, on or a fter January 1, 2000, 23
but before January 1, 2008, of machinery or equipment: 24

(1) that enables a television or radio station to originate and broadcast or 25
to receive and broadcast digital signals; and 26

(2) that was or is purchased to comply with or to facilitate compliance with 27
the Telecommunications Act of 1996, Pub. L. 104–104, 110 Stat. 56.] 28

[(e)] (C) The sales and use tax does not apply to the sale of: 29

(1) machinery or equipment used directly and predominantly to produce 30
Energy Star windows or Energy Star entry doors for residential real property; or 31
HOUSE BILL 983 21

(2) electricity, fuel, and other utilities used to operate that machinery or 1
equipment. 2

[11–232. 3

(a) (1) In this section the following words have the meanings indicated. 4

(2) (i) “Construction material” means an item of tangible personal 5
property that is used to construct or renovate a building, a structure, or an improvement 6
on land and that typically loses its separate identity as personal property once incorporated 7
into the real property. 8

(ii) “Construction material” includes building materials, building 9
systems equipment, landscaping materials, and supplies. 10

(3) “Target redevelopment area” means any real property owned or leased 11
by a person in Baltimore County that: 12

(i) was prev iously owned at any time by Bethlehem Steel 13
Corporation, or any of its subsidiaries; and 14

(ii) was, as of January 1, 2016, the subject of an approved application 15
for participation in the Voluntary Cleanup Program under Title 7, Subtitle 5 of the 16
Environment Article. 17

(4) “Warehousing equipment” means equipment used for material 18
handling and storage, including racking systems, conveying systems, and computer 19
systems and equipment. 20

(b) The sales and use tax does not apply to a sale of construction material or 21
warehousing equipment, if: 22

(1) the material or equipment is purchased by a person solely for use in a 23
target redevelopment area; and 24

(2) the buyer provides the vendor with evidence of eligibility for the 25
exemption issued by the Comptroller.] 26

12–104. 27

(b) The tobacco tax does not apply to: 28

(3) cigarettes or other tobacco products that: 29

(i) a consumer brings into the State: 30

22 HOUSE BILL 983

1. if the quantity brought from another state does not exceed 1
other tobacco products having a retail value of $100 or [5 cartons] 1 CARTON of cigarettes; 2
or 3

2. if the quantity brought from a United States armed forces 4
installation or reservation does not exceed other tobacco products having a retail value of 5
$100 or [5 cartons] 1 CARTON of cigarettes; 6

SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 7
as follows: 8

Article – Tax – Property 9

9–103. 10

(b) (1) The governing body of a county or of a municipal corporation shall grant 11
a tax credit under this section against the property tax imposed on the eligible assessment 12
of qualified property. 13

(d) (1) Except as provided in [paragraph (2)] PARAGRAPHS (2) AND (3) of 14
this subsection, AND SUBJECT TO THE L IMITATION UNDER PARAGRAPH (7) OF THIS 15
SUBSECTION, the appropriate governing body shall calculate the amount of the tax credit 16
under this section equal to a percentage of the amount of property tax imposed on the 17
eligible assessment of the qualified property, as follows: 18

(i) 80% in each of the 1st 5 taxable years following the calendar year 19
in which the property initially becomes a qualified property; 20

(ii) 70% in the 6th taxable year; 21

(iii) 60% in the 7th taxable year; 22

(iv) 50% in the 8th taxable year; 23

(v) 40% in the 9th taxable year; and 24

(vi) 30% in the 10th taxable year. 25

(2) For newly constructed qualified property that provides both office and 26
retail space and became eligible for the credit under this section on or after January 1, 27
2019, but before January 1, [2022] 2020, the appropriate governing body shall calcul ate 28
the amount of the tax credit under this section equal to a percentage of the amount of 29
property tax imposed on the eligible assessment of the qualified property as follows: 30

(i) 80% in each of the 1st [8] 7 taxable years following the calendar 31
year in which the property initially becomes a qualified property; 32
HOUSE BILL 983 23

(ii) 70% in the [9th] 8TH taxable year; 1

(iii) 60% in the [10th] 9TH taxable year; 2

(iv) 50% in the [11th] 10TH taxable year; 3

(v) 40% in the [12th] 11TH taxable year; and 4

(vi) 30% in the [13th] 12TH taxable year. 5

(3) FOR NEWLY CONSTRUCTED QUALIFIED PROPERTY T HAT 6
PROVIDES BOTH OFFICE AND RETAIL SPACE AND BECAME ELIGIBLE FOR THE 7
CREDIT UNDER THIS SE CTION ON OR AFTER JANUARY 1, 2020, BUT BEFORE 8
JANUARY 1, 2021, THE APPROPRIATE GOVERNING BODY SHALL CALCULATE THE 9
AMOUNT OF THE TAX CR EDIT UNDER THIS SECT ION EQUAL TO A PERCE NTAGE OF 10
THE AMOUNT OF PROPER TY TAX IMPOSED ON TH E ELIGIBLE ASSESSMENT OF THE 11
QUALIFIED PROPERTY AS FOLLOWS: 12

(I) 80% IN EACH OF THE 1ST 6 TAXABLE YEARS FOLLO WING 13
THE CALENDAR YEAR IN WHICH THE PROPERTY I NITIALLY BECOMES A Q UALIFIED 14
PROPERTY; 15

(II) 70% IN THE 7TH TAXABLE YEAR; 16

(III) 60% IN THE 8TH TAXABLE YEAR; 17

(IV) 50% IN THE 9TH TAXABLE YEAR; 18

(V) 40% IN THE 10TH TAXABLE YEAR; AND 19

(VI) 30% IN THE 11TH TAXABLE YEAR. 20

[(3)] (4) The Department shall allocate the eligible assessment to the 21
nonresidential part of the qualified property at the same percentage as the square footage 22
of the nonresidential part is to the total square footage of the building. 23

[(4)] (5) For purposes of calculating the amount of the credit allowed 24
under this section, the amount of property tax imposed on the eligible assessment shall be 25
calculated without reduction for any credits allowed under this title. 26

[(5)] (6) For qualified property located in a focus area, the appropriate 27
governing body shall calculate the amount of the tax credit under this section equal to 80% 28
of the amount of property tax imposed on the eligible assessment of the qualified property 29
for each of the 10 taxable years following the calendar year in which the property initially 30
24 HOUSE BILL 983

becomes a qualified property: 1

(i) for newly constructed qualified property that provides both office 2
and retail space and became eligible for the credit under this section on or after January 1, 3
2019, but before January 1, 2022, for each of the 13 taxable years following the calendar 4
year in which the property initially becomes a qualified property; or 5

(ii) for any other qualified property, for each of the 10 taxa ble years 6
following the calendar year in which the property initially becomes a qualified property. 7

(7) FOR ANY TAXABLE YEAR , THE AMOUNT OF A PROP ERTY TAX 8
CREDIT GRANTED UNDER THIS SECTION TO A QU ALIFIED PROPERTY MAY NOT 9
EXCEED $500,000. 10

9–230. 11

(b) (1) The Mayor and City Council of Baltimore City or the governing body of 12
a county or of a municipal corporation may enact legislation necessary to grant either 13
property tax credits, enhanced property tax credits, or both types of property tax credits 14
against the county or municipal corporation property tax imposed on real property owned 15
or leased by business entities that meet the requirements specified for the applicable tax 16
credit under this section and on personal property owned by business entities that meet the 17
requirements specified under this section. 18

(2) (i) [If] FOR TAXABLE YEARS END ING BEFORE JANUARY 1, 19
2027, IF a property tax credit is granted under paragraph (1) of this subsection, a business 20
entity that meets the requirements for the propert y tax credit under this section and 21
obtains certification from the county or municipal corporation may claim a State tax credit 22
against the individual or corporate income tax, insurance premiums tax, or financial 23
institution franchise tax as provided under subsection (c)(3) of this section. 24

(ii) [If] FOR TAXABLE YEARS END ING BEFORE JANUARY 1, 25
2027, IF an enhanced property tax credit is granted under this section and a business 26
entity and its affiliates meet the requirements for the enhanced property tax credit and 27
obtain certification from the county or municipal corporation, the business entity or any of 28
its affiliates may claim a State tax credit against the individual or corporate income tax, 29
insurance premiums tax, or financial institution franchise tax as provided under subsection 30
(d)(5) of this section. 31

(c) (3) [On] FOR TAXABLE YEARS ENDING BEFORE JANUARY 1, 2027, AND 32
ON receipt of notification under subsection (b)(7) of this section that a business entity has 33
been certified for a property tax credit under this subsection, the Department shall compute 34
and certify to the Comptroller or, in the case of the insurance premiums tax, the Maryland 35
Insurance Commissioner the amount of the State tax credit authorized under this 36
subsection that may be claime d against the individual or corporate income tax, insurance 37
premiums tax, or financial institution franchise tax that would otherwise be due to equal a 38
HOUSE BILL 983 25

percentage of the amount of property tax imposed on the assessment of the new or expanded 1
premises, as follows: 2

(i) 28% in the 1st and 2nd taxable years; 3

(ii) 21% in the 3rd and 4th taxable years; 4

(iii) 14% in the 5th and 6th taxable years; and 5

(iv) 0% for each taxable year thereafter. 6

(d) (5) [On] FOR TAXABLE YEARS ENDING BEFORE JANUARY 1, 2027, AND 7
ON receipt of notification under subsection (b)(7) of this section that a business entity has 8
been certified for an enhanced property tax credit under this subsection, the Department 9
shall compute and certify to the Comptroller or, in the case of the insurance premiums tax, 10
the Maryland Insurance Commissioner the amount of the State tax credit authorized under 11
this subsection that may be claimed by the business entity or any of its affiliates against 12
the individual or corporate income tax, insura nce premiums tax, or financial institution 13
franchise tax that would otherwise be due to equal 31.5% of the amount of property tax 14
imposed on the increase in assessment of the real and personal property described in 15
paragraph (4)(ii) of this subsection for each of the first 24 taxable years for which the credit 16
is allowed. 17

(m) (1) On October 1 [of each year ], 2027, AND EACH OCTOBER 1 18
THEREAFTER, each county and municipal corporation that has granted tax credits under 19
this section shall report to the Department[, the Department of Commerce, and the 20
Comptroller]: 21

[(1)] (I) [the amount of ] FOR each credit granted for that year , THE 22
FOLLOWING INFORMATION: 23

1. THE AMOUNT OF THE CREDIT; 24

2. THE NAME AND ADDRESS OF THE BUSINESS ENTITY; 25

3. THE INVESTMENT ASSOCIATED WITH THE CREDIT; 26

4. WHETHER THE CREDIT R ESULTED FROM AN 27
EXPANSION, A RELOCATION, OR A NEW BUSINESS; 28

5. THE NUMBER OF JOBS A SSOCIATED WITH THE 29
CREDIT; 30

26 HOUSE BILL 983

6. WHETHER THE BUSINESS ENTITY HAD A PRESENCE IN 1
THE STATE PRIOR TO RECEIVING THE CREDIT AND THE BUSINESS ENTITY’S YEARS 2
OF OPERATION; AND 3

7. THE TOTAL NUMBER OF INDIVIDUALS EMPLOYED BY 4
THE BUSINESS ENTITY; and 5

[(2)] (II) whether the business entity is in compliance with the 6
requirements for the tax credit. 7

(2) ON OR BEFORE DECEMBER 31, 2027, AND EACH DECEMBER 31 8
THEREAFTER, THE DEPARTMENT SHALL AGGREGATE THE REPORT S RECEIVED 9
UNDER PARAGRAPH (1) OF THIS SUBSECTION AND SUBMIT A COMBINED REPORT TO 10
THE GENERAL ASSEMBLY, IN ACCORDANCE WITH § 2–1257 OF THE STATE 11
GOVERNMENT ARTICLE, INCLUDING ANY FINDINGS OR RECOMMENDATIONS. 12

SECTION 5. AND BE IT FURTHER ENACTED, That: 13

(a) On or before December 1, 2026, the Department of Commerce shall evaluate 14
the tax credit allowed under § 10–730 of the Tax – General Article, as enacted under Section 15
1 of this Act, and report to the General Assembly, in accordance with § 2–1257 of the State 16
Government Article, on the tax credit. 17

(b) The report under subsection (a) of this section shall include recommendations 18
on how the tax credit could be improved or streamlined, including potential reforms to: 19

(1) the list of eligible production activities; 20

(2) the small or independent film entity eligibility requirements, including 21
hiring requirements, and designated funding levels; 22

(3) the minimum in –State spending requirements for large r film 23
production entities; and 24

(4) the qualifying costs, including whether qualifying costs would be better 25
defined by administrative regulation. 26

SECTION 6. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 27
applicable to all taxable years beginning after December 31, 2025. 28

SECTION 7. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall be 29
applicable to all taxable years beginning after June 30, 2026. 30

SECTION 8. AND BE IT FURTHER ENACTED, That Sections 2 and 3 of this Act 31
shall take effect July 1, 2026. 32

HOUSE BILL 983 27

SECTION 9. AND BE IT FURTHER ENACTED, That, except as provided in Section 1
8 of this Act, this Act shall take effect June 1, 2026. 2