New Maryland Tax Credit May Apply to Your Medical Practice

Published by BradyRenner CPAs | November 21, 2016

The State of Maryland quietly completed some updates to its tax laws this summer and one of the adjustments is bringing a new tax credit to some medical practices. The objective of the new tax credit is to address the increasingly serious shortage of healthcare practitioners in rural areas of the state.

Maryland was recently listed as one of the least appealing states for doctors in the nation, coming in at 46 out of 50 on a recent ranking by WalletHub. In addition, the state that is home to three of America’s most prestigious medical schools (Johns Hopkins, the University of Maryland and the Uniformed Services University of Health Sciences) is also last in the nation for the number of its medical school graduates who ultimately enter primary care as their specialty.

The silver lining in this cloud for some practitioners may be the state’s decision to enact new legislation, effective as of July 1, 2016, that seeks to provide a tax credit of between $1,000 and $10,000 per year, for physicians or nurse practitioners who serve as preceptors to medical students or nurse practitioner students in areas of the state that are experiencing primary care workforce shortages. The credit will then be applied to the preceptor’s state income taxes.

Preceptors must work with one of the state’s established and approved preceptorship programs, and only certain areas of Maryland qualify for the credit. The objective of the initiative is to increase the number of preceptors statewide from 150 to 250, and participating practitioners receive a $1,000 tax credit for each medical student they precept, up to the maximum of $10,000 annually.

Preceptors must provide a minimum of 12 weeks of clinical training under the program, and they may be engaged in precepting for either medical students or nurse practitioner students, with the ultimate objective of increasing the number of primary care practitioners in the state’s under-served regions. The law designates the Maryland Department of Health and Mental Hygiene and the State Workforce Investment Board as the agencies responsible for both identifying the qualifying regions and administering the program.

According to a report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care based on data from the U.S. Department of Health & Human Services (HHS), all or portions of 15 out of the state’s 23 counties have been identified as having partial or full primary care shortages.

Note: Official designation of a qualifying area for the purposes of the tax credit may only be made by the Maryland Department of Health and Mental Hygiene and the Maryland Workforce Investment Board.

Funding for the credit is limited (the current legislative cap is $100,000 per year), so interested practitioners should contact the Maryland Department of Health and Mental Hygiene in order to apply for participation in 2017 and in subsequent years.

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Image Credit: Lisa Brewster (Flickr @ Creative Commons)