To qualify for the state income-tax benefit, an artist must:

• own or rent residential property in Maryland,
• create artistic work in any of the State’s 24 A&E Districts,
• and have generated income from the sale or performance of that artwork within this or another Maryland A&E District.

The tax deduction is actually an income tax “subtraction modification.” That means that artists who create and sell work within the districts are not taxed by the State on the income derived from those sales. Also exempt from the State tax is work created in the District and sold through the Internet, or by mail order or catalogs, so long as the work is shipped from within an A&E District.

Included in the state’s definition of artistic works are

• a book or other literary product,
• a play or performance of a play,
• a musical composition or performance,
• a painting or other picture,
• a sculpture,
• traditional or fine crafts,
• the creation of a film or acting in a film,
• the creation or performance of a dance,
• the creation of original jewelry or clothing design.

This tax benefit applies only at the state level; artists continue to pay the full amount of federal income tax. To take advantage of the program, artists submit Maryland State Tax Form 502AE when they file their state income-tax returns.