While Maryland families struggle with the increased costs of fuel, food, healthcare, and other life essentials – the federal 2025 One Big Beautiful Bill Act (OBBBA) handed a massive windfall to corporations and the ultra-wealthy, delivering trillions in federal tax breaks.
Because Maryland’s tax code "couples" with federal tax laws, these federal handouts automatically apply to state taxes as well. This alignment threatens to drain Maryland's state and local revenues, ultimately starving public education, infrastructure, and community services.
A package of tax fairness bills was introduced in 2026 to decouple Maryland from these lopsided federal rules. However, they didn't pass, making it an absolute necessity that the General Assembly pass them in 2027.
Here is a breakdown of the five critical bills and why they are vital to protect Maryland's economic future.
HB 801: Trimming Excess Corporate Deductions
Everyday citizens cannot write off parking tickets or fines for illegal behavior on their state taxes, corporations should not be allowed to, either. Marylanders should not have to subsidize corporate misconduct by allowing companies to deduct court-ordered fines and penalties from their state taxes.
HB 880: Decoupling from Federal Depreciation Giveaways
Federal tax policy frequently changes how corporations can deduct the depreciation of property and assets. This is a way for them to make quick cash. HB 880 would decouple Maryland from these federal changes and help to ensure multi-million dollar corporations pay their fair share of taxes in Maryland.
HB 926: Recalibrating Individual Itemized Deductions
The OBBBA tax overhaul raised the cap on State and Local Tax (SALT) deductions, creating a loophole that allows wealthy homeowners to significantly reduce their Maryland state tax liability
HB 926 recalibrates this deduction. In FY 2027 alone, this adjustment is estimated to safeguard $317.3 million for the State General Fund and $192.7 million for local jurisdictions.
HB 930: Income Tax – Decoupling from Federal Changes – Education Expenses
The federal OBBBA introduced tax-free private K-12 savings accounts and federal credits for private school scholarships.
HB 930 prohibits the governor from participating in the federal private school scholarship tax credit program. It also strips Maryland College Investment Plan (MCIP) tax benefits if those funds are diverted to private elementary or secondary school expenses. This ensures wealth-hoarding loopholes do not drain funding from Maryland’s public schools.
HB 1080: Excluded Opportunity Fund Gains - Foreign-Derived Deduction Eligible Income (FDDEI), and Interest
While the Opportunity Zone program was marketed as a way to revitalize low-income communities, data shows it has largely become a tax shelter for wealthy, out-of-state real estate developers.
In addition, FDDEI deductions grant massive tax breaks to multinational corporations on export income that frequently has no connection to actual jobs or economic activity within Maryland. HB 1080 eliminates these corporate loopholes.
When corporate lobbyists fight these bills, they claim that decoupling hurts Maryland’s economic competitiveness. But true economic competitiveness isn't from having the lowest corporate tax rate; it's from having a healthy, educated, and stable workforce.
Right now, Maryland is facing critical staffing shortages across state government - from correctional officers and public defenders to public health staff. Our facilities need repairs, our transit systems need expansion, and our working-class families desperately need affordable childcare.
We cannot fund a 21st-century state budget using a tax code riddled with federal loopholes designed for the ultra-wealthy. If the General Assembly fails to pass this package in 2027, Maryland will effectively be subsidizing out-of-state billionaires and multi-state corporations while starving its own public services.
As we look toward the 2027 legislative session, the mandate for Annapolis is clear: close the loopholes, protect our state revenue, and pass this tax package to build a stronger, fairer Maryland for all.
2026-05 AFT Maryland