Businesses in general should benefit significantly from tax incentives in President Barack Obama's stimulus package, but Maryland's businesses may lose out because of laws that do not require the state to follow federal income tax laws.

"It used to be that Maryland taxes were easy to do because Maryland followed federal taxes," said Michael Agetstein, chair of the tax department at KatzAbosch, a Baltimore accounting and consulting firm.

"In recent years, states have found it difficult to raise revenue, so a lot of states have decoupled from federal tax rules," he said. "Under the state's decoupling regulations, a lot of these benefits won't be put in place."

According to the state comptroller's Web site, Maryland will break from federal tax laws if the legislature enacts new tax legislation that does not fall in line with federal tax changes. The state will also decouple from the federal tax laws for one year if the impact of a change would cause Maryland to lose more than $5 million in income tax revenue.

"The problem that we see is we have to wait to see if it meets the $5 million criteria, so we have to assume that it probably does," Agetstein said.

Lawyers for the comptroller's office reviewed some of the tax incentives businesses might be afforded under the stimulus package for The Daily Record and determined that Maryland will decouple from some areas of federal tax law. Where the state does not follow federal law, the amendments will apply only to federal tax returns.

Maryland is decoupled permanently from Section 179 of the Internal Revenue Code, which allows business owners to deduct a large portion of capital expenses on their taxes in the first year, instead of writing off the amount over several years, if the deduction allowed is more than $25,000.

Under the American Reinvestment and Recovery Act, business owners that spend less than $800,000 on buying equipment will be able to deduct $250,000 as an expense immediately and deduct the rest over several years.

"This was stimulating businesses to go out and buy assets," Agetstein said. "It would help businesses because they could deduct those assets and it helped manufacturers because there would be a demand for their products."

Christopher Summers, president of the Maryland Public Policy Institute, a conservative, free-market oriented think tank, said while a tax deduction on business expenses would have helped Maryland businesses, the effect would have been greater in boom times.

"The deduction would have occurred now, instead of later, which would have helped businesses," he said. "But if companies are reducing staff, they're not purchasing equipment. No one's buying product; no one's expanding. The retraction in the business sector is because sales orders are down and businesses are protecting their capital cushion."

Many of the tax benefits for businesses were removed from the package when members of the House and Senate had to compromise on a final bill, Summers said.

"I don't really see businesses benefiting from the stimulus because a lot of the benefits were stripped out in committee, so I don't really see Maryland losing out," he said.

The stimulus package had a grand total of $787 billion, of which Maryland is slated to get about $3.8 billion. Most of the stimulus will be used for spending, and the Obama administration has said $288 billion will go toward tax incentives, with less than half of that going toward business taxes.

Maryland also does not comply with bonus depreciation, which allows businesses to deduct 50 percent of property expenses in the first year and deduct the rest over time, except when the purchases cover certain things like cellulosic biofuel plants, reuse and recycling property or disaster assistance property.