Title: Maryland’s 2026 Budget: Key Tax Increases and Major Legislative Changes Signed into Law
Maryland’s 2026 budget will be among more than 160 bills that will be signed into law Tuesday by Gov. Wes Moore. The nearly $67 billion spending plan was crafted to address the state’s $3 million deficit and the impact of federal funding cuts.
What does Maryland’s 2026 budget include?
The 2026 state budget includes about $1.8 billion in tax and fee increases. It includes the largest amount of cuts to state spending in 16 years. Gov. Moore has been vocal about his plan to increase taxes for the highest earners in the state. His budget will create two new tax brackets: One for those who make $500,000 per year and another for those who make $1 million per year. Under the budget, residents who make $500,000 will be taxed at 6.25% and those who make $1 million will be taxed at 6.5%.
Low- and middle-income residents will see tax breaks under the 2026 budget. The budget will also create a new 3% tax on IT services and increase taxes on cannabis and sports betting. Lawmakers agreed to make about $2.3 billion in cuts from the 2026 budget. "Because of our emphasis on growth, our biggest framework will emphasize spending cuts over tax increases," Gov. Moore said.
164 new bills signed into Maryland law
On Tuesday, Gov. Moore will sign a total of 164 bills into Maryland law, including a few that focus on the rising cost of energy in the state. For example, the Renewable Energy Certainty Act will allow for the construction of solar energy generating systems and will launch a Power Plant Research Program to propose site and design requirements. The Next Generation Energy Act will also be signed into law on Tuesday, allowing the Department of Housing and Community Development to issue loans and grants aimed at reducing greenhouse gas emissions from residential buildings. The law will also require the Maryland Energy Administration to work with neighboring states and federal agencies to develop new nuclear energy stations. The governor will also sign the Lowering Prescription Drug Costs for All Marylanders Now Act, a law that will expand Maryland’s Prescription Drug Affordability Board and allow it to determine ways to lower drug prices. One of the bills signed Tuesday focuses on immigration laws in the state. The Maryland Values Act prevents federal law enforcement from carrying out immigration actions at sensitive locations such as schools and libraries. The law, which will go into effect on June 1, 2025, will also require the attorney general to develop guidelines for immigration enforcement at sensitive locations.
Maryland’s 2026 budget, set to be signed into law by Gov. Wes Moore, totals nearly $67 billion and aims to address a $3 million deficit alongside federal funding cuts. The budget includes approximately $1.8 billion in tax and fee increases, marking the largest cuts to state spending in 16 years. Notably, it introduces two new tax brackets for high earners, imposing a 6.25% tax on those making $500,000 and a 6.5% tax on those earning $1 million, while providing tax breaks for low- and middle-income residents.
In addition to tax adjustments, the budget proposes a new 3% tax on IT services and increases taxes on cannabis and sports betting. Gov. Moore emphasized a focus on spending cuts over tax increases, with lawmakers agreeing to $2.3 billion in budget cuts. This approach reflects a commitment to economic growth while addressing fiscal challenges.
On the same day, Gov. Moore will sign 164 additional bills into law, including measures aimed at addressing rising energy costs and improving prescription drug affordability. Key legislation includes the Renewable Energy Certainty Act, which facilitates solar energy projects, and the Maryland Values Act, which restricts federal immigration enforcement at sensitive locations like schools and libraries. These initiatives highlight the administration’s broader goals of sustainability and social equity.
