General Assembly and Governor Moore took significant steps to make the tax code fairer but missed opportunities to ensure big business pays its fair share
The Maryland General Assembly’s revenue package, which received final approval today, makes important progress in making the state’s tax code fairer, but lawmakers missed key opportunities to ensure big corporations are paying their fair amount in taxes.
Fair Share Maryland today applauded major income tax reforms included in the package:
- The addition of new tax brackets for taxpayers with incomes of at least $500,000 and over $1 million.
- A 2% state tax on capital gains for individuals with income above $350,000.
- A more equitable approach to itemized deductions, which will phase out for taxpayers with income over $200,000.
- Strengthening Maryland’s Child Tax Credit
“These provisions will help rebalance Maryland’s upside-down tax system that currently has those earning the least paying a higher proportion of their taxes than the wealthiest Marylanders,” said Kali Schumitz, Vice President for External Relations with the Maryland Center on Economic Policy. “These provisions are a fair way to help the state generate revenue needed to fund key community priorities. Governor Moore and the legislature deserve credit for passing this package.”
This revenue package, which will raise $1.6 billion toward the state’s budget for FY 2026, is the most significant revenue action of any state this year. However, the Assembly missed opportunities to close major tax loopholes that allow big corporations to avoid paying taxes on income earned in Maryland. The Senate failed to pass a measure approved in the House of Delegates to implement “combined reporting,” which would ensure multi-state businesses to pay taxes on all income earned in Maryland.
About one in three of the 150 largest corporations doing business in Maryland pay zero state income taxes in a typical year, according to data from the Maryland Comptroller’s Office. This puts small, Maryland-based businesses at a disadvantage compared to their large competitors and serves to deliver more profits to wealthy executives and out-of-state shareholders. The legislature also rejected a measure to close the LLC loophole that allows large partnership businesses to pay lower taxes. These measures would have raised an estimated $1.4 billion per year once implemented, helping to address the state’s remaining structural deficit in future years.
“Most states already require combined reporting, including many conservative-led states,” said Christopher Cano, Political and Legislative Director for SEIU Local 500. “Implementing combined reporting and closing the LLC loophole would have helped solve the state’s long-term fiscal challenges and helped support Maryland-based businesses. Unfortunately, the General Assembly failed to support those provisions, leaving major loopholes open for business to exploit.”
The final action by the legislature marks a significant advance in Fair Share Maryland’s multi-year campaign. Along with bill co-sponsors Del. Julie Palakovich Carr and Sen. Shelly Hettleman, the coalition has led the fight to strengthen the state’s fiscal health by enacting provisions to ensure the wealthiest Marylanders and big corporations pay their fair share to support important state spending priorities, such as education, transportation, health and public safety.
The Fair Share Maryland coalition includes more than 75 organizations and thousands of Marylanders working to create a more equitable tax system and ensure the state has the resources it needs for Maryland communities to thrive. Fair Share Maryland has engaged residents to take action via sustained organizing, paid advertising – including television ads – and events.
“We are proud of the work Fair Share Maryland has done to educate lawmakers and members of the public about economic justice. Jewish tradition teaches that in a just world, all people — regardless of race, income, or zip code — would have what the Torah calls dei machsoro, resources sufficient for their needs, and our coalition demonstrated that Maryland has the means and the opportunity to meet the needs of everyone in our state. We are grateful to our key sponsors and the members of the General Assembly who took a stand for fairness by supporting elements of our package,” said Ioana Stoica, Maryland Organizer for Jews United for Justice.