Income Tax - Angel Investor Tax Credit

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1256*

HOUSE BILL 1256
Q3, C8 6lr1317

By: Delegates Nkongolo, Buckel, Hornberger, Hutchinson, Jacobs, Miller,
T. Morgan, Reilly, and Schmidt
Introduced and read first time: February 12, 2026
Assigned to: Ways and Means

A BILL ENTITLED

AN ACT concerning 1

Income Tax – Angel Investor Tax Credit 2

FOR the purpose of allowing a credit against the State income tax for a certain percentage 3
of an investment made in qualified Maryland companies; providing that investments 4
in companies engaging in certain economic sectors may qualify for the tax credit; 5
requiring the Maryland Economic Development Commission to evaluate economic 6
sectors and recommend additional qualifying sectors to the Department of 7
Commerce; requiring the Department to designate additional qualifying economic 8
sectors for the credit ; requiring the Department to maintain an online portal 9
providing information about the credit and managing applications for the credit; 10
providing that a qualified investor shall make an investment in a qualified Maryland 11
company within a certain amount of time after the Department issues an initial tax 12
credit certificate; establishing the Angel Investor Tax Cre dit Reserve Fund; 13
requiring interest earnings of the Fund to be credited to the Fund; providing for the 14
recapture of a credit under certain circumstances; authorizing the Department to 15
revoke a certification if a representation made in connection with the application for 16
the certification is false; and generally relating to the Angel Investor Tax Credit. 17

BY repealing and reenacting, with amendments, 18
Article – Economic Development 19
Section 2.5–109(a)(4)(vii), 6–1001(e)(5), and 6–1007 20
Annotated Code of Maryland 21
(2024 Replacement Volume and 2025 Supplement) 22

BY repealing and reenacting, without amendments, 23
Article – Economic Development 24
Section 6–1001(a) 25
Annotated Code of Maryland 26
(2024 Replacement Volume and 2025 Supplement) 27

2 HOUSE BILL 1256

BY repealing and reenacting, without amendments, 1
Article – State Finance and Procurement 2
Section 6–226(a)(2)(ii) 3
Annotated Code of Maryland 4
(2021 Replacement Volume and 2025 Supplement) 5

BY repealing and reenacting, with amendments, 6
Article – State Finance and Procurement 7
Section 6–226(a)(2)(iii)79. 8
Annotated Code of Maryland 9
(2021 Replacement Volume and 2025 Supplement) 10

BY adding to 11
Article – Tax – General 12
Section 10–733 13
Annotated Code of Maryland 14
(2022 Replacement Volume and 2025 Supplement) 15

BY repealing and reenacting, with amendments, 16
Chapter 717 of the Acts of the General Assembly of 2024 17
Section 8 Item (54) 18

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20

Article – Economic Development 21

2.5–109. 22

(a) In this section, “economic development program” means: 23

(4) each of the tax credit programs administered by the Department, 24
including: 25

(vii) the [Innovation Investment Incentive ] ANGEL INVESTOR Tax 26
Credit; 27

6–1001. 28

(a) In this subtitle the following words have the meanings indicated. 29

(e) “Program” means the Opportunity Zone Enhancement Program in the 30
Department established under § 6 –1002 of this subtitle that allows enhanced tax credits 31
under: 32

(5) § 10 –733 of the Tax – General Article [(cybersecurity investment 33
incentive)] (ANGEL INVESTOR TAX CREDIT); and 34
HOUSE BILL 1256 3

6–1007. 1

(a) In this section, “investment”, “qualified investor”, and “qualified Maryland 2
[technology] company” have the meanings stated in § 10–733 of the Tax – General Article. 3

(b) For a qualified opportunity fund that is a qualified investor in a qualified 4
Maryland [technology] company under § 10 –733 of the Tax – General Article, if the 5
qualified Maryland [technology] company[, on or after March 1, 2018,] is newly established 6
in or expands into an opportunity zone in a county other than Allegany County, Dorchester 7
County, Garrett County, or Somerset County: 8

(1) the Level 1 opportunity zone enhancement is 33% of the investment in 9
a qualified Maryland [technology] company, not to exceed $300,000; and 10

(2) the Level 2 opportunity zone enhancement is 50% of the investment in 11
the qualified Maryland [technology] company, not to exceed $500,000. 12

(c) The enhanced tax credit percentages and maximums authorize d under 13
subsection (b) of this section are in substitution for and not in addition to the percentages 14
and maximums under [§ 10–733(d)] § 10–733(F) of the Tax – General Article. 15

Article – State Finance and Procurement 16

6–226. 17

(a) (2) (ii) Notwithstanding any other provision of law, and unless 18
inconsistent with a federal law, grant agreement, or other federal requirement or with the 19
terms of a gift or settlement agreement, net interest on all State money allocated by the 20
State Treasurer under this section to special funds or accounts, and otherwise entitled to 21
receive interest earnings, as accounted for by the Comptroller, shall accrue to the General 22
Fund of the State. 23

(iii) The provisions of subparagraph (ii) of this paragraph do not 24
apply to the following funds: 25

79. the [Innovation Investment ] ANGEL INVESTOR TAX 26
CREDIT RESERVE Fund; 27

Article – Tax – General 28

10–733. 29

(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 30
INDICATED. 31

4 HOUSE BILL 1256

(2) (I) “COMPANY” MEANS ANY ENTITY OF ANY FORM DULY 1
ORGANIZED AND EXISTI NG UNDER THE LAWS OF ANY JURISDICTION FOR THE 2
PURPOSE OF CONDUCTING BUSINESS FOR PROFIT. 3

(II) “COMPANY” INCLUDES AN ENTITY T HAT BECOMES DULY 4
ORGANIZED AND EXISTI NG UNDER THE LAWS OF ANY JURISDICTION FOR THE 5
PURPOSE OF CONDUCTING BUSINESS FOR PROFIT WITHIN 4 MONTHS OF RECEIVING 6
A QUALIFIED INVESTMENT. 7

(III) “COMPANY” DOES NOT INCLUDE A SOLE PROPRIETORSHIP. 8

(3) “DEPARTMENT” MEANS THE DEPARTMENT OF COMMERCE. 9

(4) (I) “INVESTMENT” MEANS THE CONTRIBUTI ON OF MONEY IN 10
CASH OR CASH EQUIVALENTS EXPRESSED IN UNITED STATES DOLLARS, AT A RISK 11
OF LOSS , TO A QUALIFIED MARYLAND COMPANY IN E XCHANGE FOR STOCK , A 12
PARTNERSHIP OR MEMBE RSHIP INTEREST, OR ANY OTHER OWNERSH IP INTEREST 13
IN THE EQUITY OF THE QUALIFIED MARYLAND COMPANY , TITLE TO WHICH 14
OWNERSHIP INTEREST SHALL VEST IN THE QUALIFIED INVESTOR. 15

(II) “INVESTMENT” DOES NOT INCLUDE DEB T UNLESS IT IS 16
CONVERTIBLE DEBT. 17

(III) FOR PURPOSES OF THIS SECTION, AN INVESTMENT IS AT 18
RISK OF LOSS WHEN RE PAYMENT ENTIRELY DEP ENDS ON THE SUCCESS OF T HE 19
BUSINESS OPERATIONS OF THE COMPANY. 20

(5) (I) “QUALIFIED INVESTOR” MEANS ANY INDIVIDUAL OR ENTITY 21
THAT INVESTS AT LEAST $25,000 IN A QUALIFIED MARYLAND COMPANY AND THAT 22
IS REQUIRED TO FILE AN INCOME TAX RETURN IN ANY JURISDICTION. 23

(II) “QUALIFIED INVESTOR” DOES NOT INCLUDE: 24

1. A QUALIFIED PENSION PLAN, AN INDIVIDUAL 25
RETIREMENT ACCOUNT, OR ANY OTHER QUALIFIED RETIREMENT PLAN UNDER THE 26
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 OR FIDUCIARIES OR 27
CUSTODIANS UNDER SUCH PLANS, OR SIMILAR TAX–FAVORED PLANS OR ENTIT IES 28
UNDER THE LAWS OF OTHER COUNTRIES; OR 29

2. A FOUN DER OR CURRENT EMPLO YEE OF THE 30
QUALIFIED MARYLAND COMPANY, IF THE COMPANY HAS BEEN IN ACTIVE BUSINESS 31
FOR MORE THAN 5 YEARS. 32

HOUSE BILL 1256 5

(6) (I) “QUALIFIED MARYLAND COMPANY ” MEANS A COMPANY 1
THAT HAS MET THE CRITERIA IN SUBSECTION (C) OF THIS SECTION. 2

(II) “QUALIFIED MARYLAND COMPANY” DOES NOT INCLUDE A 3
COMPANY THAT IS OR H AS BEEN CERTIFIED AS A QUALIFIED MARYLAND 4
BIOTECHNOLOGY COMPANY UNDER § 10–725 OF THIS SUBTITLE. 5

(7) “RESERVE FUND” MEANS THE ANGEL INVESTOR TAX CREDIT 6
RESERVE FUND ESTABLISHED UNDER THIS SECTION. 7

(8) “SECRETARY” MEANS THE SECRETARY OF COMMERCE. 8

(B) (1) THE ANGEL INVESTOR TAX CREDIT IS INTENDED TO FOSTER THE 9
GROWTH OF THE STATE’S INNOVATIVE SECTORS BY INCENTIVIZING INVESTMENT IN 10
EARLY–STAGE COMPANIES WITH THE GOAL OF INCREASING: 11

(I) THE NUMBER OF INNOVA TIVE COMPANIES DEVELOPING IN 12
MARYLAND; 13

(II) THE OVERALL INVESTMENTS IN CURRENT AND EMERG ING 14
ECONOMIC SECTORS; AND 15

(III) THE NUMBER OF INDIVI DUAL INVESTORS ACTIV ELY 16
INVESTING IN MARYLAND COMPANIES. 17

(2) SUBJECT TO SUBSECTIONS (C), (E), AND (F) OF THIS SECTION, FOR 18
THE TAXABLE YEAR IN WHICH AN INVESTMENT IN A QUALIFIED MARYLAND 19
COMPANY IS MADE , A QUALIFIED IN VESTOR MAY CLAIM A C REDIT AGAINST THE 20
STATE INCOME TAX IN A N AMOUNT EQUAL TO TH E AMOUNT STATED IN T HE FINAL 21
CREDIT CERTIFICATE A PPROVED BY THE SECRETARY FOR THE INV ESTMENT AS 22
PROVIDED UNDER THIS SECTION. 23

(C) (1) TO BE ELIGIBLE FOR THE TAX CREDIT DESCRIBED IN PARAGRAPH 24
(2) OF THIS SUBSECTION, THE QUALIFIED INVESTOR: 25

(I) MAY NOT , AFTER MAKING THE PRO POSED INVESTMENT , 26
OWN OR CONTROL MORE THAN 25% OF THE EQUITY INTERESTS IN THE QUALIFIED 27
MARYLAND COMPANY IN WHICH THE INVESTMENT IS MADE; AND 28

(II) AT LEAST 30 DAYS PRIOR TO MAKING AN INVESTMENT IN A 29
QUALIFIED MARYLAND COMPANY , SHALL SUBMIT AN APPL ICATION TO THE 30
DEPARTMENT CONTAINING THE FOLLOWING: 31

6 HOUSE BILL 1256

1. EVIDENCE THAT THE INVESTOR IS: 1

A. IF A COMPANY , DULY ORGANIZED AND I N GOOD 2
STANDING IN THE JURISDICTION UNDER THE LAWS UNDER WHICH IT IS ORGANIZED; 3

B. CURRENT IN THE PAYMENT OF ALL TAX OBLIGATIONS 4
TO A STATE OR ANY UNIT OR SUBDIVISION OF A STATE; AND 5

C. NOT IN DEFAULT UNDER THE TERMS OF ANY 6
CONTRACT WITH, INDEBTEDNESS TO, OR GRANT FROM A STATE OR ANY UNIT OR 7
SUBDIVISION OF A STATE; 8

2. EVIDENCE THAT THE CO MPANY HAS SATISFIED THE 9
FOLLOWING MINIMUM RE QUIREMENTS TO BE CONSIDERED A QUALIFIED 10
MARYLAND COMPANY: 11

A. HAS ITS HEADQUARTERS AND BASE OF OPERATIO NS 12
IN THE STATE; 13

B. HAS NOT PARTICIPATED IN THE TAX CREDIT 14
PROGRAM UNDER THIS SECTION FOR MORE THAN 3 PRIOR FISCAL YEARS; 15

C. HAS AN AGGREGATE CAP ITALIZATION OF AT LE AST 16
$100,000; 17

D. OWNS OR HAS PROPERLY LICENSED ANY 18
PROPRIETARY TECHNOLOGY; 19

E. HAS FEWER THAN 50 FULL–TIME EMPLOYEES; 20

F. DOES NOT HAVE ITS SE CURITIES PUBLICLY TR ADED 21
ON ANY EXCHANGE; 22

G. IS IN GOOD STANDING; 23

H. IS CURRENT IN THE PA YMENT OF ALL TAX 24
OBLIGATIONS TO THE STATE OR ANY UNIT OR SUBDIVISION OF THE STATE; 25

I. IS NOT IN DEFAULT UNDER THE TERMS OF A NY 26
CONTRACT WITH, INDEBTEDNESS TO, OR GRANT FROM THE STATE OR ANY UNIT OR 27
SUBDIVISION OF THE STATE; AND 28

HOUSE BILL 1256 7

J. MEETS ANY OTHER REAS ONABLE REQUIREMENTS OF 1
THE DEPARTMENT EVIDENCING THAT THE COMPANY IS A GOING CONCERN 2
ENGAGED IN THE RESEARCH, DEVELOPMENT, OR COMMERCIALIZATION OF 3
INNOVATIVE AND PROPR IETARY IDEAS IN AN ELIGIBLE ECONOMIC SECTOR 4
IDENTIFIED UNDER PARAGRAPH (2) OF THIS SUBSECTION; AND 5

3. ANY OTHER INFORMATIO N THE DEPARTMENT MAY 6
REQUIRE. 7

(2) (I) A COMPANY QUALIFIES FOR INVESTMENTS THAT ARE 8
ELIGIBLE FOR THE TAX CREDIT UNDER THIS SECTION IF THE COMPANY ENGAGES IN 9
ONE OR MORE OF THE FOLLOWING ECONOMIC SECTORS: 10

1. ADVANCED MANUFACTURING; 11

2. BIOSCIENCES; 12

3. CYBERSECURITY; 13

4. TECHNOLOGY; OR 14

5. AN ECONOMIC SECTOR DESI GNATED BY THE 15
DEPARTMENT UNDER SUBPARAGRAPH (III) OF THIS PARAGRAPH. 16

(II) AFTER CONSULTING WITH THE DEPARTMENT AND THE 17
MARYLAND DEPARTMENT OF LABOR, EACH YEAR THE MARYLAND ECONOMIC 18
DEVELOPMENT COMMISSION SHALL: 19

1. EVALUATE THE POTENTI AL EMPLOYMENT AND 20
ECONOMIC GROWTH OF THE STATE’S ECONOMIC SECTORS; AND 21

2. RECOMMEND ADDITIONAL QUALIFYING ECONOMIC 22
SECTORS TO THE DEPARTMENT. 23

(III) EACH YEAR, THE DEPARTMENT SHALL: 24

1. CONSIDER THE RECOMME NDATION OF THE 25
MARYLAND ECONOMIC DEVELOPMENT COMMISSION; AND 26

2. DESIGNATE ADDITIONAL ECONOMIC SECTORS TO 27
INCLUDE ON THE LIST OF SECTORS IDENTIFIED UNDER SUBPARAGRAPH (I) OF THIS 28
PARAGRAPH. 29

8 HOUSE BILL 1256

(IV) IN DETERMINING WHETHER A COMPANY IS ENGAGED IN AN 1
ELIGIBLE ECONOMIC SECTOR, THE DEPARTMENT SHALL CONS IDER THE 2
DEFINITIONS SET FORT H IN THE NORTH AMERICAN INDUSTRY CLASSIFICATION 3
SYSTEM (NAICS). 4

(D) (1) THE DEPARTMENT SHALL MAINTAIN AN ONLINE PORTAL THAT: 5

(I) PUBLICLY PROVIDES INFORMATION ABOUT THE TAX 6
CREDIT, INCLUDING A CURRENT LIST OF ELIGIBLE ECONOMIC SECTORS; 7

(II) SECURELY MANAGES APP LICATIONS FOR CREDIT S UNDER 8
THIS SECTION; AND 9

(III) PROVIDES APPLICATION STATUS UPDATES TO APPLICANTS. 10

(2) NOTWITHSTANDING PROVI SIONS OF LAW REQUIRI NG 11
DISCLOSURE, INFORMATION PROVIDED AS PART OF AN APPLIC ATION UNDER THIS 12
SECTION MAY NOT BE D ISCLOSED TO THE PUBL IC BY A UNIT OF STATE 13
GOVERNMENT. 14

(E) THE DEPARTMENT SHALL: 15

(1) APPROVE ALL APPLICATIONS THAT QUALIFY FOR CREDITS UNDER 16
THIS SECTION ON A FIRST–COME, FIRST–SERVED BASIS; AND 17

(2) WITHIN 30 CALENDAR DAYS OF RECEIPT OF AN APPLICATION: 18

(I) CERTIFY THE AMOUNT OF ANY APPROVED TAX C REDITS TO 19
A QUALIFIED INVESTOR; AND 20

(II) DETERMINE WHETHER A COMPANY QUALIFIES FO R 21
INVESTMENTS THAT ARE ELIGIBLE FOR THE TAX CREDIT UNDER THIS SECTION. 22

(3) (I) AFTER THE DATE ON WHI CH THE DEPARTMENT ISSUES AN 23
INITIAL TAX CREDIT C ERTIFICATE UNDER THI S SECTION, A QUALIFIED INVESTOR 24
SHALL HAVE 30 CALENDAR DAYS TO MAK E AN INVESTMENT IN A QUALIFIED 25
MARYLAND COMPANY UNDER THIS SECTION. 26

(II) WITHIN 10 CALENDAR DAYS AFTER THE DATE ON WHICH A 27
QUALIFIED INVESTOR MAKES THE INVESTMENT, THE QUALIFIED INVESTOR SHALL 28
PROVIDE TO THE DEPARTMENT NOTICE AND PROOF OF THE MAKING OF THE 29
INVESTMENT, INCLUDING: 30

HOUSE BILL 1256 9

1. THE DATE OF THE INVESTMENT; 1

2. THE AMOUNT INVESTED; 2

3. PROOF OF THE RECEIPT OF THE INVESTED FUNDS BY 3
THE QUALIFIED MARYLAND COMPANY; 4

4. A COMPLETE DESCRIPTI ON OF THE NATURE OF THE 5
OWNERSHIP INTEREST I N THE EQUITY OF THE QUALIFIED MARYLAND COMPANY 6
ACQUIRED IN CONSIDERATION OF THE INVESTMENT; AND 7

5. ANY REASONABLE SUPPO RTING DOCUMENTATION 8
THE DEPARTMENT MAY REQUIRE. 9

(III) IF A QUALIFIED INVESTOR DOES NOT PROVIDE THE NOTICE 10
AND PROOF OF THE MAKING OF THE INVESTMENT REQUIRED IN SUBPARAGRAPH (II) 11
OF THIS PARAGRAPH WITHIN 40 CALENDAR DAYS AFTER THE DATE ON WHICH TH E 12
DEPARTMENT ISSUES AN INITIAL TAX CREDIT CERTIFICATE UNDER THIS SECTION: 13

1. THE DEPARTMENT SHALL RESCIND THE INITIAL TAX 14
CREDIT CERTIFICATE; AND 15

2. THE CREDIT AMOUNT ALLOCATED TO THE RESCINDED 16
CERTIFICATE SHALL REVERT TO THE RESERVE FUND AND SHALL BE AVAILABLE IN 17
THE APPLICABLE FISCAL YEAR FOR ALLOCATIO N BY THE DEPARTMENT TO OTHER 18
INITIAL TAX CREDIT CERTIFICATES IN ACCORDANCE WITH THE PROVISIONS OF THIS 19
SECTION. 20

(F) (1) THE TAX CREDIT A LLOWED IN AN INITIAL TAX CREDIT 21
CERTIFICATE ISSUED UNDER THIS SECTION IS: 22

(I) EXCEPT AS PROVIDED I N ITEM (II) OF THIS PARAGRAPH , 23
33% OF THE INVESTMENT IN A QUALIFIED MARYLAND COMPANY, NOT TO EXCEED 24
$250,000; OR 25

(II) IF A QUALIFIED MARYLAND COMPANY IS LOCATED IN 26
ALLEGANY COUNTY, DORCHESTER COUNTY, GARRETT COUNTY, OR SOMERSET 27
COUNTY, 50% OF THE INVESTMENT IN THE QUALIFIED MARYLAND COMPANY, NOT 28
TO EXCEED $500,000. 29

(2) DURING ANY FISCAL YEA R, THE SECRETARY MAY NOT CER TIFY 30
ELIGIBILITY FOR TAX CREDITS FOR INVESTMENTS IN: 31

10 HOUSE BILL 1256

(I) A SINGLE QUALIFIED MARYLAND COMPANY THAT IN THE 1
AGGREGATE EXCEED 15% OF THE TOTAL APPROPRIATIONS TO THE RESERVE FUND 2
FOR THAT FISCAL YEAR; OR 3

(II) A SINGLE ECONOMIC SECTOR THAT IN THE AGGREGATE 4
EXCEED 25% OF THE TOTAL APPROPRIATIONS TO THE RESERVE FUND FOR THAT 5
FISCAL YEAR. 6

(3) IF THE CREDIT ALLOWED UNDER THIS SECTION IN ANY TAXABLE 7
YEAR EXCEEDS THE STATE INCOME TAX FOR THAT TAXABLE YEAR, AN INDIVIDUAL 8
OR A CORPORATION MAY CLAIM A REFUND IN THE AMOUNT OF THE EXCESS. 9

(G) (1) (I) THERE IS AN ANGEL INVESTOR TAX CREDIT RESERVE 10
FUND WHICH IS A SPECIAL CONTINUING, NONLAPSING FUND THAT IS NOT SUBJECT 11
TO § 7–302 OF THE STATE FINANCE AND PROCUREMENT ARTICLE. 12

(II) THE MONEY IN THE RESERVE FUND SHALL BE INVESTE D 13
AND REINVESTED BY THE TREASURER, AND INTEREST AND EAR NINGS SHALL BE 14
CREDITED TO THE GENERAL FUND. 15

(III) THE MONEY IN THE RESERVE FUND MAY BE USED BY T HE 16
DEPARTMENT TO PAY THE COSTS OF ADMINISTERI NG THE TAX CREDIT PR OGRAM 17
UNDER THIS SECTION. 18

(2) (I) SUBJECT TO THE PROVISIONS OF THIS S UBSECTION, THE 19
SECRETARY SHALL ISSUE AN INITIAL TAX CREDI T CERTIFICATE TO A Q UALIFIED 20
INVESTOR FOR EACH AP PROVED INVESTMENT IN A QUALIFIED MARYLAND 21
COMPANY ELIGIBLE FOR A TAX CREDIT. 22

(II) AN INITIAL TAX CREDIT CERTIFICATE ISSUED UNDER THIS 23
SUBSECTION SHALL STATE THE MAXIMUM AMOUNT OF TAX CREDIT FOR WHICH THE 24
QUALIFIED INVESTOR IS ELIGIBLE. 25

(III) 1. EXCEPT AS OTHERWISE P ROVIDED IN THIS 26
SUBPARAGRAPH, FOR ANY FISCAL YEAR , THE SECRETARY MAY NOT ISS UE INITIAL 27
TAX CREDIT CERTIFICA TES FOR CREDIT AMOUNTS IN THE AGGREGATE TOTALI NG 28
MORE THAN THE AMOUNT APPROPRIATED TO THE RESERVE FUND FOR THAT FISCAL 29
YEAR IN THE STATE BUDGET AS APPRO VED BY THE GENERAL ASSEMBLY, AS 30
REDUCED BY THE AMOUNT NEEDED TO PAY THE COSTS OF ADMINISTERING THE TAX 31
CREDIT PROGRAM UNDER THIS SECTION. 32

2. IF THE AGGREGATE CREDIT AMOUNTS UNDER INITIAL 33
TAX CREDIT CERTIFICA TES ISSUED IN A FISC AL YEAR TOTAL LESS T HAN THE 34
HOUSE BILL 1256 11

AMOUNT APPROPRIATED TO THE RESERVE FUND FOR THAT FISCAL YEAR, ANY 1
EXCESS AMOUNT SHALL REMAIN IN THE RESERVE FUND AND MAY BE ISSUED UNDER 2
INITIAL TAX CREDIT CERTIFICATES FOR THE NEXT FISCAL YEAR. 3

3. FOR ANY FISCAL YEAR, IF FUNDS ARE TRANSFERRED 4
FROM THE RESERVE FUND UNDER THE AUTHOR ITY OF ANY PROVISION OF LAW 5
OTHER THAN UNDER PARAGRAPH (3) OF THIS SUBSECTION, THE MAXIMUM CREDIT 6
AMOUNTS IN THE AGGREGATE FOR WHICH THE SECRETARY MAY ISSUE INITIAL TAX 7
CREDIT CERTIFICATES SHALL BE REDUCED BY THE AMOUNT TRANSFERRED. 8

(IV) FOR EACH FISCAL YEAR , THE GOVERNOR SHALL INCLUDE 9
IN THE BUDGET BILL AN APPROPRIATION OF AT LEAST $2,000,000 TO THE RESERVE 10
FUND. 11

(V) NOTWITHSTANDING THE P ROVISIONS OF § 7–213 OF THE 12
STATE FINANCE AND PROCUREMENT ARTICLE, THE GOVERNOR MAY NOT REDUCE 13
AN APPROPRIATION TO THE RESERVE FUND IN THE STATE BUDGET AS APPROVED 14
BY THE GENERAL ASSEMBLY. 15

(VI) BASED ON THE ACTUAL AMOUNT OF AN INVESTMENT MADE 16
BY A QUALIFIED INVES TOR, THE SECRETARY SHALL ISSUE A FINAL TAX CREDIT 17
CERTIFICATE TO THE QUALIFIED INVESTOR. 18

(3) (I) EXCEPT AS OTHERWISE P ROVIDED IN THIS PARA GRAPH, 19
MONEY APPROPRIATED T O THE RESERVE FUND SHALL REMAIN IN THE RESERVE 20
FUND. 21

(II) 1. WITHIN 15 DAYS AFTER THE END OF EACH CALENDAR 22
QUARTER, THE DEPARTMENT SHALL NOTIFY THE COMPTROLLER AS TO EACH FINAL 23
CREDIT CERTIFICATE ISSUED DURING THE QUARTER: 24

A. THE MAXIMUM CREDIT A MOUNT STATED IN THE 25
INITIAL TAX CREDIT C ERTIFICATE FOR THE I NVESTMENT IN THE QUA LIFIED 26
MARYLAND COMPANY; AND 27

B. THE FINAL CERTIFIED CREDIT AMOUNT FOR TH E 28
INVESTMENT IN THE QUALIFIED MARYLAND COMPANY. 29

2. ON NOTIFICATION THAT AN INVESTMENT HAS BE EN 30
CERTIFIED, THE COMPTROLLER SHALL TRA NSFER AN AMOUNT EQUA L TO THE 31
CREDIT AMOUNT STATED IN THE INITIAL TAX C REDIT CERTIFICATE FO R THE 32
INVESTMENT FROM THE RESERVE FUND TO THE GENERAL FUND. 33

12 HOUSE BILL 1256

(III) 1. PERIODICALLY, BUT NOT MORE FREQUEN TLY THAN 1
QUARTERLY, THE DEPARTMENT MAY SUBMIT INVOICES FOR COSTS T HAT HAVE 2
BEEN INCURRED OR ARE ANTICIPATED TO BE IN CURRED IN ADMINISTER ING THE 3
TAX CREDIT PROGRAM UNDER THIS SECTION. 4

2. THE COMPTROLLER SHALL TRANSFER MONEY FROM 5
THE RESERVE FUND TO THE DEPARTMENT TO PAY FOR COSTS THAT HAVE BEEN 6
INCURRED OR ARE ANTI CIPATED TO BE INCURR ED IN ADMINISTERING THE TAX 7
CREDIT PROGRAM UNDER THIS SECTION. 8

(H) (1) THE CREDIT CLAIMED UN DER THIS SECTION SHA LL BE 9
RECAPTURED AS PROVID ED IN PARAGRAPH (3) OF THIS SUBSECTION I F WITHIN 2 10
YEARS FROM THE CLOSE OF THE TAXABLE YEAR FOR WHICH THE CREDIT IS 11
CLAIMED: 12

(I) THE QUALIFIED INVEST OR SELLS , TRANSFERS, OR 13
OTHERWISE DISPOSES OF THE OWNERSHIP INTEREST IN THE QUALIFIED MARYLAND 14
COMPANY THAT GAVE RISE TO THE CREDIT; OR 15

(II) THE QUALIFIED MARYLAND COMPANY THAT GAVE RISE TO 16
THE CREDIT: 17

1. CEASES OPERATING AS AN ACTIVE BUSINESS WITH ITS 18
HEADQUARTERS AND BASE OF OPERATIONS IN THE STATE; OR 19

2. PAYS OUT AS DIVIDEND S OR OTHERWISE 20
DISTRIBUTES THE EQUITY INVESTMENT. 21

(2) THE CREDIT CLA IMED UNDER THIS SECT ION SHALL BE 22
RECAPTURED AS PROVIDED IN PARAGRAPH (3) OF THIS SUBSECTION I F, WITHIN 4 23
MONTHS OF RECEIVING A QUALIFIED INVESTME NT, A QUALIFIED MARYLAND 24
COMPANY IS NOT DULY ORGANIZED AND EXISTI NG UNDER THE LAWS OF ANY 25
JURISDICTION FOR THE PURPOSES OF CONDUCTING BUSINESS FOR PROFIT. 26

(3) THE AMOUNT REQUIRED T O BE RECAPTURED UNDE R THIS 27
SUBSECTION IS THE PRODUCT OF MULTIPLYING: 28

(I) THE TOTAL AMOUNT OF THE CREDIT CLAIMED O R, IN THE 29
CASE OF AN EVENT DES CRIBED IN PARAGRAPH (1)(I) OF THIS SU BSECTION, THE 30
PORTION OF THE CREDIT ATTRIBUTABLE TO THE OWNERSHIP INTEREST DISPOSED 31
OF; AND 32

HOUSE BILL 1256 13

(II) 1. 100%, IF THE EVENT REQUIRING RECAPTURE OF THE 1
CREDIT OCCURS DURING THE TAXABLE YEAR FOR WHICH THE TAX CREDIT IS 2
CLAIMED; 3

2. 67%, IF THE EVENT REQUIRING RECAPTURE OF THE 4
CREDIT OCCURS DURING THE FIRST YEAR AFTER THE CLOSE OF THE TAXABLE YEAR 5
FOR WHICH THE TAX CREDIT IS CLAIMED; OR 6

3. 33%, IF THE EVENT REQUIRI NG RECAPTURE OF THE 7
CREDIT OCCURS MORE T HAN 1 YEAR BUT NOT MORE TH AN 2 YEARS AFTER T HE 8
CLOSE OF THE TAXABLE YEAR FOR WHICH THE TAX CREDIT IS CLAIMED. 9

(4) THE QUALIFIED INVESTO R THAT CLAIMED THE C REDIT SHALL 10
PAY THE AMOUNT TO BE RECAPTURED AS DETERMINED UNDER PARAGRAPH (3) OF 11
THIS SUBSECTION AS T AXES PAYABLE TO THE STATE FOR THE TAXABLE YEAR IN 12
WHICH THE EVENT REQUIRING RECAPTURE OF THE CREDIT OCCURS. 13

(I) (1) THE DEPARTMENT MAY REVOKE ITS INITIAL OR FINAL 14
CERTIFICATION OF AN APPROVED CREDIT UNDE R THIS SECTION IF AN Y 15
REPRESENTATION MADE IN CONNECTION WITH T HE APPLICATION FOR T HE 16
CERTIFICATION IS DETERMINED BY THE DEPARTMENT TO HAVE BEEN FALSE. 17

(2) THE REVOCATION MAY BE IN FULL OR IN PART A S THE 18
DEPARTMENT MAY DETERM INE AND , SUBJECT TO PARAGRAPH (3) OF THIS 19
SUBSECTION, SHALL BE COMMUNICATE D TO THE QUALIFIED I NVESTOR, THE 20
QUALIFIED MARYLAND COMPANY, AND THE COMPTROLLER. 21

(3) THE QUALIFIED INVESTO R SHALL HAVE AN OPPO RTUNITY TO 22
APPEAL ANY REVOCATION TO THE DEPARTMENT PRIOR TO N OTIFICATION OF THE 23
COMPTROLLER. 24

(4) THE COMPTROLLER MAY MAKE AN ASSESSMENT AGAINS T THE 25
QUALIFIED INVESTOR T O RECAPTURE ANY AMOUNT OF TAX CREDIT THAT T HE 26
QUALIFIED INVESTOR HAS ALREADY CLAIMED. 27

(J) THE DEPARTMENT SHALL COND UCT OUTREACH ABOUT THE TAX 28
CREDIT ESTABLISHED U NDER THIS SECTION TO INCUBATORS , INSTITUTIONS OF 29
HIGHER EDUCATION, AND INVESTOR NETWORKS. 30

(K) IN ACCORDANCE WITH § 2.5–109 OF THE ECONOMIC DEVELOPMENT 31
ARTICLE, THE DEPARTMENT SHALL SUBMIT A REPORT ON THE INITIAL TAX CREDIT 32
CERTIFICATES AWARDED UNDER THIS SECTION FOR THE CALENDAR YEAR. 33

14 HOUSE BILL 1256

(L) THE DEPARTMENT AND THE COMPTROLLER JOINTLY S HALL ADOPT 1
REGULATIONS TO CARRY OUT THE PROVISIONS O F THIS SECTION AND T O SPECIFY 2
CRITERIA AND PROCEDU RES FOR APPLICATION FOR, APPROVAL OF , AND 3
MONITORING CONTINUING ELIGIBILITY FOR THE TAX CREDIT UNDER THIS SECTION. 4

Chapter 717 of the Acts of 2024 5

SECTION 8. AND BE IT FURTHER ENACTED, That, notwithstanding any other 6
provision of law, and unless inconsistent with a federal law, grant agreement, or other 7
federal requirement, or with the terms of a gift or settlement agreement, for fiscal years 8
2024 through 2028, net interest on all State money allocated by the State Treasurer under 9
§ 6–226 of the State Finance and Procurement Article to special funds or accounts, and 10
otherwise entitled to receive interest earnings, as accounted for by the Comptroller, shall 11
accrue to the General Fund of the State, with the exception of the following funds: 12

(54) the [Innovation Investment Fund ] ANGEL INVESTOR TAX CREDIT 13
RESERVE FUND; 14

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 15
1, 2026, and shall be applicable to all taxable years beginning after December 31, 2025, but 16
before January 1, 2036. It shall remain effective for a period of 10 years and, at the end of 17
June 30, 2036, this Act, with no further action required by the General Assembly, shall be 18
abrogated and of no further force and effect. 19