the arts mean business in downtown frederick

the arts mean business in downtown frederick

Maryland Ensemble Theatre's production of "A Clockwork Orange"

do art – get a tax break

do art – get a tax break

John Connors paints Downtown Frederick on an early spring day

nearly $10 million in arts related economic impact annually

nearly $10 million in arts related economic impact annually

All-County Student Art Exhibit at the Delaplaine Visual Arts Education Center

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Arts and Entertainment District

In 2003, Downtown Frederick became a state designated Arts & Entertainment District, a program administered by the Maryland Department of Business and Economic Development (DBED) and overseen by the Maryland Comptroller’s Office. The designation provides a great opportunity to highlight the many attractions that make Downtown Frederick an arts destination. In addition to the marketing benefits, the designation also offers a tax deduction for eligible artists, an exemption from state admission and amusement tax for certified arts activities and a property tax credit for buildings renovated or constructed for an arts related use. 

 

Artist Income Tax Benefit

To qualify for the artist income tax benefit, you must at least meet three minimum criteria:

If you can meet all three of the above criteria, then you may be eligible for a tax deduction on your state income tax.

 

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 you file your 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 at taxhelp@comp.state.md.us

 

Admission & Amusement Tax Exemption

The City of Frederick has adopted a ten-year exemption from the Admissions and Amusement Tax for those certified arts and entertainment activities occurring within the Downtown Frederick Arts & Entertainment District boundaries.

 

Property Tax Credits

Both the City of Frederick and Frederick County have enacted property tax credits for the renovation or construction of arts related spaces with the Downtown Frederick Arts & Entertainment District boundaries.

 

Only the increase in assessed valuation of the portion of the property renovated or constructed for a certified arts use is eligible for the property tax credit. The property tax credit is available for seven years and follows the schedule outlined in the following table. 

 

Year 

% Exempt 

1

100%

2

100%

3

100%

4

100%

5

75%

6

50%

7

25%

8+

0%

 

Arts & Entertainment District Administration

The Downtown Frederick A&E District is co-managed by Downtown Frederick Partnership and the Frederick Arts Council. Both organizations are involved in marketing the district and publicizing the available tax credits. However, neither organization plays a formal role in reviewing or administering the tax credits that are a part of this program. Both organizations want to ensure that as many businesses as possible benefit from the Downtown Frederick A&E District. If you need additional information, please contact either organization as listed below.  

 

Kara Norman

Downtown Frederick Partnership

301.698.8118

kara@downtownfrederick.org