ANNAPOLIS, Md. — On Wednesday, Maryland Governor Wes Moore put forth a budget strategy that proposes raising income tax rates for individuals earning over $500,000, alongside approximately $2 billion in budget cuts to manage a significant $3 billion deficit.
The Democratic governor’s budget includes a new tax rate of 6.25% for residents making above $500,000, and a 6.5% rate for those exceeding $1 million. Moore emphasized that nearly 66% of Maryland residents could benefit from either tax cuts or no tax changes at all, particularly focusing relief on low- and middle-income households. He stated, “For Marylanders who have been financially successful, it’s time to give back a bit more to support critical investments in our economy, public safety, and education.” This initiative is part of the state’s proposed $67.3 billion budget.
Budget Secretary Helene Grady highlighted the disparity in tax burdens, pointing out that Maryland’s wealthiest households currently contribute a lesser percentage of their income in state and local taxes compared to lower-income residents. According to Grady, research indicates that families earning above $700,000 pay about 9% in taxes while those below $30,000 contribute 9.6%. “Our aim is to address these inequities,” she remarked.
The new fiscal framework is expected to generate around $987 million in revenue. This includes plans to increase the tax on table games at Maryland casinos from 20% to 25% and hike the sports betting tax from 15% to 30%. There is also a proposal to raise the state tax on recreational marijuana from 9% to 15%, set to take effect in July 2026.
Additionally, Governor Moore aims to decrease the corporate tax rate while simultaneously enacting combined reporting practices designed to close corporate tax loopholes, ensuring that profits among subsidiaries are aggregated. This proposal has seen discussions in the legislature for years but has never been formally enacted. Moore stressed the need for these measures to address what he described as a persistent structural deficit exacerbated by temporary federal aid received during the COVID-19 pandemic.
According to Moore, “We are currently confronting the gravest financial challenge we’ve faced in two decades, one that surpasses the impacts of the Great Recession.” He also noted that Maryland’s economic growth has lagged behind the national average—growing just 3% from 2017 to 2022 compared to the national growth of 11%.
The governor’s budget proposal includes commitments to foster economic growth within the state. “A more robustly growing economy could help us better manage challenges ahead,” Moore commented, emphasizing the importance of economic advancement as a guiding principle of his administration.
The budget plan maintains a “rainy-day” reserve of approximately $2 billion, accounting for about 8% of the state’s general fund. State Senator Guy Guzzone, a member of the Democratic party and chair of the Senate’s budget committee, expressed his belief that the governor’s proposals were quite thorough. Going forward, Maryland legislators will dedicate much of their session to crafting a balanced budget, which is mandatory by law.
Guzzone stated, “There are aspects of this budget that may raise concerns, but we’re committed to working through the details to find optimal solutions.” Republican Senator Steve Hershey, the Senate minority leader, noted his support for the governor’s attempt to drive economic development and job creation, although he suggested these strategies might yield long-term benefits rather than immediate effects. He acknowledged the corporate tax reduction as a positive step.
However, Hershey expressed apprehension regarding the income tax hikes on wealthy residents, recalling that a similar millionaire tax initiated under former Governor Martin O’Malley did not produce the anticipated results. He also pointed to the risk of affluent individuals relocating out of state as a potential issue.
On a separate note, the Moore administration is also advocating for tax and fee hikes to finance the state’s $21.2 billion Consolidated Transportation program, which spans six years. This includes a new retail delivery fee for businesses with sales exceeding $500,000, strategically avoiding impact on small businesses. Other initiatives propose eliminating a portion of the vehicle titling tax allowance applicable during trade-ins, specifically for vehicles priced over $15,000, and increasing the fee for the state’s Vehicle Emissions Inspection Program from $14 to $30.
