66% of Marylanders would see tax cuts under Gov. Moore's proposed 2026 budget
BALTIMORE -- Gov. Wes Moore said his FY2026 budget will bring major tax cuts to 66% of Marylanders while increasing tax rates for the state's highest earners.
The plan, part of a broader budget strategy that includes $2 billion in spending cuts, aims to relieve middle-class families while asking more from those earning over $500,000 annually. Individuals making more than $1 million would see the largest tax increases.
Moore talked about his proposed 2026 budget, how the state plans to trim its $2.7 billion deficit, and major tax cuts during a one-on-one interview with WJZ's Tara Lynch.
Gov. Moore's tax plan
Under his proposed tax plan, the state's lowest four tax brackets would be 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.
The standard deduction would double, while itemized deduction would be eliminated.
Two new tax brackets for the highest-income Marylanders would be created. 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%.
The inheritance tax would be eliminated. The corporate tax rate would also be cut, which Gov. Moore hopes incentivizes businesses to grow in the state.
Senate leaders in the budget and taxation committee said this is something they will examine closely.
"He did speak about a tax increase. We've seen this happen before, and what happened was those individuals left our state. And then we're going to see the same thing again," Sen. Paul Corderman said.
Chair of the committee Sen. Guy Guzzone said he is looking forward to reviewing the hundreds of pages of documents they received on Wednesday. He adds that he plans to work with families to make decisions to benefit all Marylanders.
"We're going to be asking all Marylanders is this important to you? Is this what you want to do? And are you maybe willing to pay a little extra to do it?" Sen. Guzzone said.
Other proposed fees
Gov. Moore's proposed budget includes increasing the sports betting tax from 15% to 30%, the table game tax from 20% to 25% and the cannabis tax from 9% to 15%.
He also proposed adding a surcharge on deliveries. According to our media partner The Baltimore Banner, a $0.75 fee would be added to deliveries from companies that make more than $500,000 per year, such as Amazon or Uber.
Maryland spending cuts
In an interview with WJZ, Gov. Moore said the $2 billion in cuts will come from programs determined to be ineffective.
"There are certain programs that, as we looked at and really did deep dives, I question their efficacy," Gov. Moore said. "So you'll see certain programs, for example, certain tax credits, the enterprise tax credit is one. There's no evidence of efficacy that we have seen."
Gov. Moore also said he plans to strategically invest to bring the most return for the state.
"I'm a big believer in leveraging capital. And there are just certain things that if you can leverage either private sector capital or federal government, capital that's worth investing in because it has a much higher return on that investment, much higher ROI," Gov. Moore said.
Maryland's childcare scholarship program would be capped, as well as other education cuts that do not impact the state's Blueprint initiative.
The Developmental Disabilities Administration would be reduced, and Gov. Moore suggested reigning in higher education spending.
In terms of modernization, Gov. Moore has repeatedly said wasteful spending needs to be eliminated, which would result in $50 million in savings.
Economic growth and reform are at the center of this fiscal crisis that may take a few budget cycles to fix.
"We 100% agree with that. We've been saying that till we're blue in the face, we have to fix this economy. We can't tax the way out. We can't spend our way out of it. We have to fix the economy. We just have a different opinion sometimes on how we get there," Sen. Corderman said.
"It is the beginning of a process, it is going to take multiple years of looking at. So, this is just the beginning," Sen. Guzzone said.
Bolstering Maryland's economy
When it comes to bringing in business and bolstering Maryland's economy, the governor said the state is already seeing progress.
"For the first time in a long time, we're watching labor force participation increase in the state of Maryland, not decrease. When I was inaugurated, Maryland was 43rd in the country in unemployment. Now, Maryland has amongst the lowest unemployment rates in the entire country," Gov. Moore said.
He added that the goal will be to incentivize businesses to come to the state, making it easier for them to grow.
"We will continue going out, meeting with CEOs, meeting with business leaders, particularly in growth industries, and letting them know that there is no better backdrop for their long-term growth than the state of Maryland," the governor said.
He also said there will be $750 million in investments made in the state, including $128 million in targeted spending in key industries. He stressed that Maryland needs a strategy to move forward, including investing in life sciences, defense technology, and innovation. This plan would add to the state's prior investments on federal workers, the medical industry, and higher education.
Gov. Moore also said he wants to continue to improve health care, reduce violent crime in the state, improve school systems, and strengthen Maryland's infrastructure.