Maryland has two franchise taxes: a public service company franchise tax and a financial institution franchise tax. The public service company franchise tax applies to utilities engaged in telephone business or in the transmission, distribution, or delivery of electricity or natural gas in Maryland.
The financial institution franchise tax, on the other hand, applies to certain banks and similar institutions. Most ordinary businesses are not subject to either franchise tax.
The State Department of Assessments and Taxation (SDAT) administers the public service company franchise tax. Because it is measured by receipts and deliveries rather than profit, companies may owe this tax even in loss years. Maryland has detailed information about franchise taxes on SDAT's Franchise and Public Utilities page.
For telephone companies, the tax is 2% of taxable Maryland gross receipts. For electric and gas companies, the tax includes 2% of taxable Maryland gross receipts plus additional charges based on kilowatt-hours of electricity and therms of natural gas delivered for final consumption in Maryland.
Maryland's public service company franchise tax applies to companies engaged in a telephone business in Maryland or in the transmission, distribution, or delivery of electricity or natural gas in the state.
A separate financial institution franchise tax (7% of taxable net earnings) applies to certain banks and financial institutions under Tax-General Title 8, Subtitle 2.
Most other businesses do not pay a Maryland franchise tax. Regular C corporations pay Maryland's flat 8.25% corporate income tax on state-apportioned income instead. LLCs and S corporations generally operate as pass-through entities and pay tax at the owner level, though Maryland offers an elective pass-through entity tax.
Public service company franchise tax is reported on separate SDAT franchise tax forms, not on Form 1 (the Annual Report and Business Personal Property Return).
Electric and gas companies file:
Telephone companies file:
The Annual Report and Business Personal Property Return (Form 1) is a distinct filing that applies to most business entities and is not the franchise tax return.
Beyond the franchise tax, Maryland businesses face several other tax obligations that vary by entity type and business activities. This includes:
Form 1 (Annual Report) is due April 15 each year. Businesses may request a 60-day extension by submitting an online extension request through SDAT's website on or before April 15. Extension requests must be made online; paper extensions are not accepted. There is no separate "expected tax" payment with the Form 1 extension.
Public service company franchise tax returns (Form 11 and Form 11T) are due April 15 following the calendar year and cannot be extended.
For amendments to Form 1, mark the "AMENDED RETURN" checkbox, attach schedules showing corrected figures, and include payment for additional tax and interest due. No separate amendment fee applies.
Maryland's franchise tax deadlines, sales tax obligations, annual report requirements, and corporate income tax filings across multiple states create an endless compliance shuffle that spreadsheets struggle to track effectively.
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