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Understanding Maryland’s 2025 Income Tax Plan
Maryland Governor Wes Moore has proposed a significant restructuring of the state’s income tax system. While the administration claims the plan simplifies tax brackets and increases fairness, critics warn that middle-class households may bear unexpected financial burdens.
Taxpayer advocate Pete Sepp, President of the National Taxpayers Union, is urging Maryland’s General Assembly to reconsider the plan, emphasizing that its impact extends beyond high-income earners.
Key Takeaways:
- The tax plan includes a 1% capital gains surcharge on households earning over $350,000.
- Nearly one in four households earning $75,000–$100,000 could see an average tax increase of $666.
- 47.1% of new tax revenue will be collected from those earning less than $500,000 annually.
Who Will Pay More Under the 2025 Tax Plan?
While the proposal primarily targets high earners, middle-income taxpayers will also experience increased tax liabilities. According to the Maryland Bureau of Revenue Estimates (MBRE):
- Households with incomes between $100,001 and $200,000 will generate the third-highest revenue increase under the plan.
- Single filers and households earning over $1 million will face the most significant tax hikes.
- A new 75-cent fee on home deliveries from services like Amazon and DoorDash may further impact middle-class households.
Impact on Maryland’s Economy
Sepp warns that increased taxation could prompt middle-class families to relocate to neighboring states where tax burdens are lower. Additionally, the plan proposes new fees, including a 2-cent tax per ounce on sugary drinks, potentially increasing costs for everyday purchases.
Potential Effects:
- Increased migration to tax-friendlier states like Virginia.
- Higher costs for soda and energy drinks, adding 40 cents to a 20-ounce beverage.
- More strain on local governments, as counties must compensate for lower revenue.
Proposed Solutions & Alternative Plans
Maryland lawmakers have introduced the “For Our Kids Act”, which seeks to generate $500 million annually through the new sugary drink tax. Meanwhile, Governor Moore’s administration maintains that the budget changes will make taxation more equitable.
Governor’s Stance:
“Gov. Moore proposed a bold tax reform package that makes Maryland’s taxes simpler, fairer, and for most families, lower,” said David Turner, the governor’s communications director.
The administration argues that three-quarters of the revenue will come from those earning over $500,000, ensuring that the wealthiest contribute more.
How to Prepare for Maryland’s 2025 Tax Changes
Actionable Steps:
- Review your 2025 tax bracket to assess potential changes.
- Consult a tax professional to explore deductions and credits.
- Plan for additional costs, such as the home delivery and beverage taxes.
- Stay informed on legislative updates and alternative tax proposals.
Maryland’s proposed 2025 tax plan has far-reaching implications, especially for middle-class families. Staying proactive and informed is the best way to navigate these changes.
Check your 2025 tax liability today to avoid surprises! Visit Maryland Tax Portal for more details.
2025 Tax Refund Timeline: When Will You Get Your Money?
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