Maryland budget: Here are the new taxes and fees to watch

Hannah Gaskill, The Baltimore Sun on Mar 25, 2025

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BALTIMORE — In their attempt to manage Maryland’s $3.3 billion-and-growing budget deficit, General Assembly lawmakers are seeking to rake in over $1.3 billion from new or increased taxes.

Lawmakers began the 2025 session with the understanding that they would have to bridge the budgetary gap. Gov. Wes Moore proposed a $67 billion budget in January that provided $2 billion in cuts, leaving the legislature to determine how to sew the remainder of the deficit shut.

Last week, Moore, House Speaker Adrienne A. Jones of Baltimore County and Senate President Bill Ferguson of Baltimore City, all Democrats, announced that they were nearing a deal that includes an additional $500 million in cuts.

But there are also new and increased revenue streams to be expected in the budget, including a 3% tax on data and IT services, like cloud storage and website platforms, which has given the small business community heartburn. That new tax alone is projected to bring in $497 million. This tax will not include accounting, payroll, staffing, office support, employment services, consulting, design and printing, public relations, marketing or financial services.

The budget is expected to be debated on the House floor this week. Here are some other routes the General Assembly may take to secure more revenue for the state’s General Fund:

•The addition of two new tax brackets. People earning between $500,000 and $1 million would be taxed at a rate of 6.25%, and those earning over $1 million would be taxed at 6.5%;

•A 20% increase on the standard deduction rate that taxpayers can claim — $3,350 for individuals and $6,700 for joint filers;

•The limitation of itemized deductions for people earning more than $200,000 annually;

•Creating a new 2% capital gains surcharge for people who earn over $350,000. The majority of this revenue would go to the General Fund, while the remainder goes to the Transportation Trust Fund;

•A repeal of the 6% sales tax exemption on photographic or artistic material used in advertising. The same repeal would apply to the sale of precious metal coins or bullion worth over $1,000 unless it is sold at the Baltimore City Convention Center;

•An increase in the cannabis sales tax from 9% to 12%;

•A 6% tax applied to vending machine sales;

•The increase of maximum local income tax rates to 3.3%.

The following increases are also on the table, but the revenue would go to the Transportation Trust Fund, which pays for the state’s transportation and infrastructure projects:

•A rise on the vehicle excise tax to 6.25%;

•An accelerated increase on vehicle registration fees;

•An increase on the maximum fee for VEIP testing to $30;

•The limitation on the definition of historic cars to any model made earlier than 1999;

•The creation of a 3.5% excise tax on short-term vehicle rentals; And

•The increase of certificate of title fees for new and used cars to $200.

Marylanders will also likely not see proposed taxes and fees come to fruition, including a 2.5% tax on business-to-business services, a 75-cent fee on retail deliveries purchased online, and a 2-cent per-ounce fee on sodas and other sugary drinks.

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