Trying to solve a $3 billion deficit, Gov. Wes Moore released a budget proposal that included some cuts but also raised taxes on wealthier individuals in Maryland. One nonprofit believes those tax hikes will still affect Marylanders across the board.
“Maryland’s own comptroller has said that the economy in Maryland is largely stagnant and has been for more than five years now,” Pete Sepp, the president of the National Taxpayers Union, told WTOP. NTU says it is a nonpartisan organization. It champions lower taxes and less government.
“Raising taxes on any portion of Maryland’s population is only going to make that problem worse,” Sepp said.
The budget proposal introduced in January by Moore, would create a new 6.25% tax rate for people who make $500,000 and hike the rate for people who make more than a million dollars to 6.5%, raising the top bracket by 0.75%
Moore claims around two-thirds of Marylanders would see a modest tax cut.
“Marylanders who have done exceptionally well financially, we’re going to be asking to contribute a little bit more so we can make targeted investments in economic growth and targeted investments in public safety and targeted investments in education,” Moore said while announcing the bill.
But Sepp said even with tax hikes only targeting Maryland’s upper-class, all residents would likely feel the extra squeeze.
“You’re taxing folks who might have a small business that employs, say, a dozen or 20 people. And what happens there is a reverse trickle down effect,” said Sepp.
He added, “The tax increase hurts the business owner. That business owner is no longer able to provide as much in pay or benefits or expand hiring, and that starts to affect the middle class.”
Sepp also said states such as New Jersey, who similarly raised taxes on the wealthiest, eventually expanded those hikes to more income levels.
Raising taxes on high earners could also push individuals and businesses to leave the state for neighboring Virginia or Pennsylvania.
“Capital is very mobile,” Sepp said. “It’s not that difficult for a business, especially a small or a medium sized business, not to mention large corporations, to simply make the decision that it’s not worth it being located in Maryland.”
According to the Tax Foundation, Maryland ranked 46th in the 2025 State Tax Competitiveness Index, with a “substantially above-average income tax burden.”
Meanwhile neighboring states like Virginia, West Virginia and Pennsylvania rank far lower, 28th, 23rd and 34th respectively.
“In an era where remote work is more common, where people can move more easily, where they can commute all the way from places like West Virginia, once or twice a week into Washington, D.C., Maryland has to be very careful not to overextend its tax burdens and essentially make taxpayers a whole lot poorer,” said Sepp.
Maryland’s fiscal year 2026 budget bill is still making its way through the General Assembly.
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