Maryland Gov. Wes Moore and Democratic lawmakers have agreed on a plan to close the state's $3 billion budget deficit through a mix of cuts and new taxes. The deal, announced Thursday, March 20th, includes $2.3 billion in spending reductions and fund transfers, along with revenue increases from tax reforms and new fees.
Key tax changes include new income brackets for earners making over $500,000, a 2% surcharge on capital gains, and a 3% tax on data services. Taxes on cannabis sales and sports betting will also rise. However, lawmakers rejected Moore’s proposed delivery fee, corporate tax cuts, and gaming tax hikes.
What’s in the Deal
- New Income Tax Brackets: High earners will see tax increases—6.25% for those making over $500,000 and 6.5% for incomes above $1 million.
- The standard deduction increases by 20%
- Phased out itemized deductions for incomes greater than $200,000
- It creates a surcharge of 2% on capital gains incomes over $350,000
- Tech & Data Tax: A 3% levy on cloud services and web hosting.
- Cannabis & Sports Betting: Taxes rise to 12% and 20%, respectively.
What’s Off the Table
Cuts to the Blueprint funding and the possibility of delaying the 1% COLA and steps for state workers. Legislators rejected Moore’s proposed gaming tax increase, a 75-cent delivery fee, and a corporate tax cut. Plans to eliminate the inheritance tax and introduce a sugary drink tax were also scrapped.
What’s Next
The House passed the budget, and it now moves to the Senate. If approved, it heads to Moore’s desk for final passage.
article by AFT Maryland staff
2025-03-24