Maryland’s Angel Investor Tax Credit Expansion: What It Means for Cybersecurity and Emerging Technology Companies

Maryland continues to strengthen its reputation as one of the nation’s most important hubs for cybersecurity and advanced technology innovation. A new piece of legislation currently under consideration in the Maryland General Assembly represents an important opportunity to accelerate that growth and support the next generation of technology companies across the state.

The Cybersecurity Association is supporting legislation that would expand incentives for investment in emerging technologies, helping innovative companies attract capital and scale their operations within Maryland’s technology ecosystem.

The bill, Income Tax – Angel Investor Tax Credit for Investments in Emergent Technology, sponsored by Delegate Lily Qi and Delegate Ryan Spiegel, would provide a state income tax credit for qualifying investments made in Maryland companies developing emergent technologies. The measure is currently under review in the Maryland House Ways and Means Committee, with a hearing scheduled in the Maryland House of Delegates.

For cybersecurity companies, investors, and ecosystem partners across Maryland, this legislation represents a significant opportunity to strengthen innovation, encourage early-stage investment, and help keep high-growth technology companies headquartered in the state.

Below, we outline what the bill proposes, why it matters for the cybersecurity community, and how members can support this important initiative.

Understanding the Angel Investor Tax Credit Proposal

At its core, the legislation aims to stimulate investment in emerging technology companies by providing tax incentives to individuals who invest in qualifying Maryland businesses.

The bill proposes that qualified investors may receive a credit against Maryland state income tax equal to 25 percent of an investment made in a qualified Maryland company, with eligible investments capped at $1,000,000.

In practical terms, this means that investors who support innovative companies operating in emergent technology sectors—including cybersecurity—would receive a financial incentive for doing so.

Key elements of the proposal include:

• A 25% state income tax credit for qualified investments

• Eligibility for investments made in qualified Maryland companies

• Maximum investment eligibility up to $1,000,000

• Qualification requirements tied to emergent technology sectors

• A requirement that investments occur within a specified timeframe after the Maryland Department of Commerce issues an initial tax credit certificate

• Implementation beginning July 1, 2026, if enacted

The bill also includes a mandated appropriation in the state budget, signaling legislative intent to ensure the program is properly funded and implemented.

Why This Matters for the Cybersecurity Ecosystem

Maryland is already recognized as a national leader in cybersecurity, supported by a strong concentration of federal agencies, research institutions, defense contractors, and innovative startups.

However, early-stage companies—particularly those developing advanced security technologies—often face a critical challenge: access to growth capital.

Angel investors play an essential role in bridging the gap between startup formation and institutional investment. By providing financial incentives to these investors, Maryland can help accelerate innovation while ensuring that promising companies remain headquartered and growing within the state.

For members of the Cybersecurity Association, this legislation has several important implications.

1. Increased Capital for Cybersecurity Startups

Many cybersecurity companies begin as small, highly specialized startups focused on solving complex technical challenges. These firms frequently rely on angel investment to develop prototypes, refine products, and attract their first customers.

By reducing the financial risk for investors, this tax credit could encourage more individuals to support early-stage cybersecurity companies.

The result: more capital flowing into Maryland’s cybersecurity ecosystem.

2. Stronger Technology Commercialization

Maryland’s universities and research institutions generate cutting-edge technologies across fields such as artificial intelligence, quantum computing, and cyber defense. However, transitioning research breakthroughs into market-ready companies requires investment.

Tax incentives that encourage angel investment can help move innovations from the lab into the marketplace more quickly.

This supports not only startup formation but also technology commercialization and job creation across the state.

3. Retaining High-Growth Companies in Maryland

Technology startups often face pressure to relocate to states where capital and investor networks are more abundant.

Programs like the Angel Investor Tax Credit help create an environment where entrepreneurs can build and scale their companies locally. By strengthening Maryland’s investment ecosystem, the state improves its ability to retain high-growth cybersecurity companies.

This benefits the entire ecosystem—including workforce development, supply chains, and regional economic growth.

4. Strengthening the Cybersecurity Workforce

Investment drives hiring.

When cybersecurity companies receive funding, they are able to expand teams, invest in research and development, and create new career opportunities for engineers, analysts, and technology professionals.

For the Cybersecurity Association’s members—many of whom are focused on workforce development—this legislation supports broader efforts to grow the cybersecurity talent pipeline in Maryland.

How Members Should Interpret the Legislation

While the bill focuses primarily on tax policy, its broader significance lies in how it shapes the long-term investment environment for emerging technology companies.

Members of the Cybersecurity Association should view this legislation through three strategic lenses:

Investment Ecosystem Development

The tax credit is designed to attract more angel investors into the technology sector. For startups and founders, this means a potentially larger pool of investors interested in supporting early-stage innovation.

Technology Sector Prioritization

By explicitly recognizing emergent technologies, the legislation signals that Maryland intends to prioritize sectors such as cybersecurity, artificial intelligence, and advanced computing.

This aligns with broader national priorities around digital security and technological competitiveness.

Economic Competitiveness

States across the country are competing to attract and retain technology companies. Incentives like the Angel Investor Tax Credit help ensure Maryland remains competitive with other innovation hubs.

Current Status of the Bill

The legislation is currently under consideration in the Maryland House of Delegates.

The bill has been referred to the House Ways and Means Committee, where policymakers review proposals related to taxation and fiscal policy.

A hearing on the legislation is scheduled for March 5 at 1:00 p.m.. During this stage, lawmakers will gather testimony and evaluate the potential fiscal and policy impacts of the bill.

The bill is also cross-filed in the Maryland Senate, meaning companion legislation has been introduced in the upper chamber to move through the legislative process simultaneously.

If approved by both chambers of the General Assembly and signed into law, the program would take effect July 1, 2026.

How Members Can Support This Legislation

Advocacy from industry leaders plays an important role in shaping public policy. Members of the Cybersecurity Association are uniquely positioned to provide insight into how policies like the Angel Investor Tax Credit can support innovation and economic growth.

There are several ways members can engage.

Contact Your State Delegates

Members can share their perspectives directly with legislators in the Maryland House of Delegates and Maryland Senate.

Communicating with elected officials about how investment incentives support innovation, job creation, and economic competitiveness helps policymakers better understand the needs of the technology community.

Submit Feedback or Testimony

Industry leaders may also choose to submit written testimony supporting the legislation. This feedback can highlight real-world examples of how angel investment supports cybersecurity startups and emerging technology companies.

Engage with the Cybersecurity Association

The Cybersecurity Association serves as a collective voice for the cybersecurity ecosystem. Members who have insights, case studies, or perspectives on the importance of investment incentives are encouraged to share them with the association.

These insights help strengthen industry advocacy efforts and ensure that policymakers understand the needs of Maryland’s cybersecurity community.

Members can reach out to the association to share perspectives, provide input, or learn more about ongoing policy initiatives.

Looking Ahead

The expansion of Maryland’s Angel Investor Tax Credit represents a meaningful step toward strengthening the state’s innovation economy.

By encouraging investment in emerging technologies—including cybersecurity—the legislation supports entrepreneurs, accelerates commercialization, and helps ensure Maryland remains a global leader in cybersecurity innovation.

For members of the Cybersecurity Association, this bill reflects a broader commitment to fostering a vibrant ecosystem where companies can innovate, grow, and succeed.

As the legislative process continues, industry engagement will play an important role in shaping policies that support the cybersecurity community and the future of technology in Maryland.

Jeannette Blake
Marketing & Communications Manager
Cybersecurity Association