Maryland Enacts $67B Budget Including New IT, Capital Gains Taxes

Maryland has enacted significant tax reforms for 2025 and beyond through the Budget Reconciliation and Financing Act (BRFA) and the 2026 state budget. Key changes include the introduction of a 3% tax on information technology and digital services, a 2% surcharge on capital gains for high-income households, and a phase-out of itemized deductions for households earning over $200,000. These reforms aim to increase state revenue while targeting specific sectors such as IT services and capital gains. The Maryland Office of the Comptroller is actively supporting implementation through resources and webinars for taxpayers and businesses. Meanwhile, Maryland’s public education system continues to face financial challenges due to mandates from the Blueprint for Maryland’s Future, prompting calls for adjustments to make the funding model more sustainable and less restrictive. The education funding issues have led to staffing concerns and protests in various counties, despite emergency funding efforts.