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The Maryland General Assembly passed the Budget Reconciliation and Financing Act (BRFA) during the 2025 legislative session, introducing significant tax law changes effective starting July 1, 2025, for the 2025 tax year and beyond.
Key Highlights:
- New Income Tax Brackets: Two additional brackets with new rates added to Maryland’s income tax.
- Capital Gains Surcharge: A 2% surcharge on capital gains income for households with federal adjusted gross income (AGI) exceeding $350,000.
- Itemized Deductions Phase-Out: Households earning more than $200,000 federal AGI will experience a gradual phase-out of itemized deductions.
- Expansion of Sales Tax: Maryland’s general sales tax now includes digital and IT services, taxed at 3%.
Resources for Taxpayers and Professionals
The Maryland Office of the Comptroller has launched a dedicated webpage detailing these changes and offers webinar recordings and slide decks for further guidance. Business owners and tax professionals can access these resources and contact Maryland State Director Mike O’Halloran for questions.
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