Maryland Proposes New Taxes and Spending Cuts to Tackle $3.3 Billion Budget Deficit

Facing a $3.3 billion budget shortfall, Maryland Governor Wes Moore has introduced a bold fiscal plan that includes both new state-level tax increases and historic spending cuts. The proposal marks the state’s most aggressive financial restructuring in over a decade, as officials respond to both internal pressures and broader federal economic shifts.

For Maryland-based businesses, high-income individuals, and tax professionals, these proposed changes could carry significant implications for financial planning, operational costs, and compliance.

Key Tax Changes in the Proposal

Governor Moore’s budget framework includes targeted tax increases focused on select industries and income groups. The highlights:

• New 3% tax on information technology servicesThis tax would apply to IT consulting, software services, and other digital platforms, potentially increasing costs for tech firms and government contractors.

• New income tax bracket for earners over $750,000/yearHigh-net-worth individuals would face additional tax liabilities, bringing Maryland in line with other high-tax states like New York and California.

• Expanded taxes on cannabis, gambling, and capital gainsThese sin and investment-based taxes are designed to diversify revenue while minimizing impact on lower- and middle-income residents.

  
  

The proposed changes are pending legislative approval and, if passed, would go into effect beginning in the 2025–2026 fiscal year.

Record Spending Cuts Accompany New Revenue Measures

Alongside the tax proposals, Moore’s plan also calls for $2.3 billion in spending reductions, affecting nearly all departments. This represents the largest state-level cut in 16 years and is meant to stabilize Maryland’s long-term fiscal position.

Key areas impacted include:

• Infrastructure and transportation

• Higher education funding

• Non-essential government programs

  
  

While public education and healthcare are expected to be shielded from deep cuts, agencies across the board will be asked to streamline operations.

Why the Budget Gap?

Governor Moore cited a combination of factors:

• Reduced federal support due to policy changes, including tariffs and downsizing

• Declining revenues from corporate and capital gains taxes

• Rising public sector costs and long-term pension obligations

  
  

The plan, while controversial, aims to proactively address the deficit and prevent deeper cuts in the future.

What It Means for Maryland Residents and Businesses

1. High-Income Earners

Wealthy individuals may need to revisit tax planning strategies, especially around capital gains, income shifting, and charitable giving.

2. Tech and Consulting Firms

Service providers, particularly in the digital space, should prepare for the 3% IT tax, which could affect contract pricing and profit margins.

3. CPAs and Tax Advisors

Now is the time to alert clients, especially those in affected sectors or income brackets, and begin modeling scenarios for 2025 and beyond.

How Bizora Can Help

At Bizora, we help businesses and financial professionals:

• Model state-level tax impacts

• Assess exposure to new taxes or rate changes

• Navigate budget-driven regulatory shifts

• Maintain compliance and minimize risk

  
  

We also provide real-time alerts and planning tools for multi-state operations.

Stay Ahead of Maryland’s Tax Policy Shift

As Maryland lawmakers weigh the governor’s proposal, proactive planning is key. Tax hikes and spending cuts could reshape the state’s economic landscape—and your business strategy along with it.

Visit bizora.ai to explore tax strategy tools and compliance support built for shifting state and federal policy environments.