July 2025 | Maryland Budget Signed by Governor

Effective July 1, 2025, and applicable to taxable years beginning after Dec. 31, 2024, the budget legislation created two new individual income tax brackets increasing the top marginal rate from 5.75% to 6.5%. Single tax filers with income between $250,001 and $500,000 will remain subject to the tax at a rate of 5.75%.

Single taxpayers with taxable income of $500,001 through $1 million will be subject to a new rate of 6.25%, and taxable income exceeding $1 million will be subject to a rate of 6.5%. Joint filers with income between $300,001 and $600,000 will remain subject to the tax at a rate of 5.75%. Joint filers with income between $600,001 and $1,200,000 and joint filers with income more than $1,200,000, will be subject to the new 6.25% and 6.5%, respectively.

There is a new 2% tax on capital gains included in Maryland adjusted gross income if federal adjusted income exceeds $350,000.

The maximum allowable county income tax has increased from 3.20%, to 3.30%.

Maryland itemized deductions are phased out for certain taxpayers based on income, and Maryland standard deductions are increased. The child tax credit is phased out gradually for taxpayers with federal adjusted gross income more than $15,000.

Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly.

Please do not hesitate to contact us with any questions or to schedule a consultation.