Tax incentive evaluation ratings

Rating: Leading

Key points:

  • Maryland is leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience in producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices.
  • Lawmakers have used the evaluations to make improvement to incentives, including a tax credit for rehabilitating historic buildings.
  • Since new incentives are not automatically added to Maryland’s review schedule, lawmakers will need to update the schedule periodically to ensure that it remains comprehensive.

Maryland evaluation law

Year enacted: 2012.a

Who evaluates: Department of Legislative Services.

Length of review cycle: Seven years.

For more information on state ratings, please visit our interactive map.  

Under a 2012 law, the nonpartisan professional staff of Maryland’s Department of Legislative Services (DLS) produces detailed studies of tax credits each year.b These evaluations are helping lawmakers improve the effectiveness of the state’s incentives.

For example, on the basis of an evaluation, Maryland lawmakers decided in 2016 to continue and improve a tax credit for rehabilitating historic buildings. The evaluation described the incentive as a model program, noting that lawmakers had put in place key protections to ensure that the cost would be predictable from year to year. But the report also pointed out ways the tax credit could work better. For example, the evaluation noted flaws in the scoring system state officials used to determine which commercial projects would qualify for the incentives.c In response, lawmakers extended the program for five years—it had been scheduled to expire in 2017—while also adjusting the scoring system.d

The historic rehabilitation report is one of several high-quality evaluations DLS has released under the law. One strength of the studies is that they draw clear policy-relevant conclusions. For example, an evaluation of the state’s Enterprise Zone Program—designed to assist distressed areas—showed that many zone residents lacked the skills required for the jobs, making it unlikely that the incentive alone could help them find employment. The report recommended using workforce training programs as one option to address this issue.e

DLS has also provided valuable economic impact analysis of incentives. When using economic modeling to study the state’s film tax credit, for instance, DLS compared the benefits of the credit to the economic costs of paying for it—based on the idea that money used on incentives is not available for other government purposes.f

By law, the studies are considered by legislators. The evaluation law established a legislative committee that is responsible for holding hearings to review evaluation drafts published by DLS. The committee also receives testimony from the public and discusses the recommendations in each evaluation to determine whether a credit should be continued with or without changes, or terminated.g

While the state has proved it can produce strong evaluations that can drive policy change, the scope of Maryland’s evaluation process could still be improved. Many states automatically add new tax incentives to their evaluation schedule, but Maryland does not. Instead, the law requires evaluation of a specific set of credits. Lawmakers added several credits to the review schedule under a separate law passed in 2016, but the state will still need to adjust the scope of the process over time to ensure that it includes all major tax incentives.h That way, lawmakers will consistently receive the high-quality information on the results of tax incentives that DLS has shown it can provide.


  1. Maryland Code Ann., Tax–Gen. § 1-301 to 311,
  2. Ibid.
  3. Maryland Department of Legislative Services, “Evaluation of the Sustainable Communities Tax Credit” (July 2016), 82–83,
  4. Maryland S.B. 759 (2016),
  5. Maryland Department of Legislative Services, “Evaluation of the Enterprise Zone Tax Credit” (August 2014), 77,
  6. Maryland Department of Legislative Services, “Evaluation of the Maryland Film Production Activity Tax Credit” (September 2015), 34–35,
  7. Maryland Code Ann., Tax–Gen. § 1-308 to 309,
  8. Maryland S.B. 843 (2016),

Spotlight on Mental Health

State tax incentives
State tax incentives

Improving Tax Incentives for Jobs and Growth

A national assessment of evaluation practices

Quick View

Tax incentives—including credits, exemptions, and deductions—are one of the primary tools that states use to try to create jobs, attract new businesses, and strengthen their economies. Incentives are also major budget commitments, collectively costing states billions of dollars a year. Given this importance, policymakers across the country increasingly are demanding high-quality information on the results of tax incentives.

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

Pills illustration
Pills illustration

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.

Quick View

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.

Explore Pew’s new and improved
Fiscal 50 interactive

Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:

  • Maps, trends, and customizable charts
  • 50-state rankings
  • Analysis of what it all means
  • Shareable graphics and downloadable data
  • Proven fiscal policy strategies


Welcome to the new Fiscal 50

Key changes include:

  • State pages that help you keep track of trends in your home state and provide national and regional context.
  • Interactive indicator pages with highly customizable and shareable data visualizations.
  • A Budget Threads feature that offers Pew’s read on the latest state fiscal news.

Learn more about the new and improved Fiscal 50.