Maryland counties and municipalities may apply for Arts and Entertainment (A&E) District designation for specific areas where there is a threshold of arts and entertainment activity and a desire to encourage investment and additional arts activity through the A&E Districts program's tax-related benefits.
Upon successful A&E District designation from the Maryland State Arts Council, the following benefits and incentives will be available.
Tax Deduction for Artists
The tax deduction, or income tax subtraction modification, is not a tax credit. Instead, artists who create and sell work within the District are not taxed on the income derived from art and art enterprises. This tax benefit only applies at the state level. Artists continue to pay the full amount of federal income tax.
Artists who would like to take advantage of the program must submit Maryland State Tax Form 502AE when filing their state income tax returns. The instructions for this form include the state’s definition of art-derived income. Questions regarding how the artist income tax benefit works should be addressed to the Comptroller of Maryland by emailing firstname.lastname@example.org.
To qualify for the artist income tax benefit, you must meet three minimum criteria. If you meet the following criteria, you may be eligible for a tax deduction on your state income tax.
- Own or rent residential property within Maryland
- Create artistic work in any A&E District
- Have generated income from the sale or performance of art within any A&E District
Admissions and Amusement Tax Exemption Program
Enterprises dedicated to visual or performing arts located within the A&E District are exempt from the collection of the State of Maryland's Admissions and Amusement Tax. Businesses must qualify for the exemption and notification must be provided to the State of Maryland's Comptroller's Office in order to be eligible. Enterprises interested in participating in the Admissions and Amusement Tax Exemption Program should register with the Maryland State Comptroller’s Office using the Combined Registration Application (CRA).
A&E District Projects
Interest-free or low-interest loans up to $30,000 are available for exterior improvements to commercial buildings located in the Catonsville A&E District.
Real Property Tax Credit
A five-year, 100 percent real property tax credit is available if improvements to a property located in the Catonsville A&E District increase the assessed property value by $100,000 or more.
A 10-year, 100 percent real property tax credit is available if improvement costs for a property located in the Catonsville A&E District exceed $10 million.