Maryland professor explains economic impact of Gov. Moore's proposed 2026 budget
BALTIMORE - Most Marylanders would see some tax relief under Gov. Wes Moore's proposed FY2026 budget. If it's passed by the General Assembly, 82% of Marylanders would see a tax cut or no change at all.
J.P. Krahel, an economy expert and professor at Loyola Maryland, said lower- to middle-class Maryland taxpayers could keep a little more money in their pockets.
"Bigger tax refunds from the state, maybe from the municipality, so we will see how this all plays out," Krahel said.
The governor's budget strategy includes $2 billion in spending cuts to trim down the nearly $3 billion deficit the state is facing.
Under his proposed budget, 66% of middle-class Maryland families would see tax cuts, while those earning at least $500,000 would be paying a bit more.
"The goal right now is to balance things," Krahel said. "The rich are paying a little more. Those who aren't will pay a little less."
Moore's proposed plan has the state's lowest four tax brackets combined and taxed at a 4.7% rate, meaning that two-thirds of state wage earners would see a tax cut, which averages to nearly $175.
Two new tax brackets for the highest-income Marylanders would be created, according to the proposed budget. Those who make $500,000 per year will be taxed at 6.25% while those making $1 million or more will be taxed at 6.5%. Currently, Marylanders who make over $250,000 are taxed at 5.75%.
"I think these changes are going to be incremental," Krahel said. "I don't think most folks, except the very rich, are going to see huge impacts to their pocketbooks, but even those little changes can matter."
Boosting the economy
Gov. Moore told WJZ's Tara Lynch in a one-on-one interview that his goal is to incentivize businesses to come to the state, making it easier for them to grow.
The governor said there will be $750 million in investments made in the state, including $128 million in targeted spending in key industries. He is focusing on a strategy to move forward, including investing in life sciences, defense technology, and innovation.
This plan would add to the state's prior investments in federal workers, the medical industry, and higher education.
Krahel said the tax cuts, putting more money in residents' hands, could boost the economy, as well.
"You grow an economy with commerce, with people spending money, so if most Marylanders have more money in their pockets, that means they are going to be able to spend a little bit more, feel a little more economically stable, so they are going to be able to spend more and grow the economy," Krahel said.