Changes to Maryland’s tax laws will take effect beginning in the 2025 tax year and beyond, as a result of the Budget Reconciliation and Financing Act passed by the Maryland General Assembly during the 2025 legislative session.
The BRFA contained numerous changes to the tax code that the Office of the Comptroller is responsible for implementing, including:
- Increasing the standard deduction by 20% and eliminating a limitation for low-income workers.
- Adding two new tax brackets and rates for high-income households.
- Adding a 2% surcharge on capital gain income for households earning more than $350,000 in federal AGI.
- Creating a phase-out for itemized deductions for households earning more than $200,000 in federal AGI.
- Allowing local governments to increase their income tax rates to a maximum of 3.3%
- Expanding Maryland’s general sales tax to digital and IT services at a rate of 3%
- Increasing the cannabis tax rate from 9% to 12%.
Our team has been hard at work since the end of the legislative session to create new forms and guidance for all of these changes, starting with the Sales & Use Tax updates that go into effect on July 1. You can find information below related to these changes and more information at the page on our website dedicated to these changes: MarylandComptroller.gov/2025TaxUpdates.
Sales and Use Tax Updates
We have published a new Sales and Use Tax Alert – Updates 2025 – 2026, which addresses the bills affecting Maryland sales and use tax enacted during the 2025 regular session of the Maryland General Assembly.
Additionally, our agency has drafted proposed regulations to address changes made to the sales and use tax by the 2025 Budget Reconciliation and Financing Act, Chapter 604 of the Acts of 2025. These draft regulations are subject to final review by the Office of the Attorney General and will be submitted to the Joint Committee on Administrative, Executive, and Legislative Review (“AELR”) as emergency regulations. The anticipated adoption date is July 1, 2025, with publication in the Maryland Register on July 11, 2025.
Webinar Updates
To assist taxpayers and tax professionals, we are hosting webinars to ensure that interested Marylanders can learn about how these tax law changes may impact them. These webinars are being live-streamed to our YouTube page to ensure that those unable to attend one of the webinars can still access the information presented.
Marylanders can also review our 2025 Legislative Session Updates Webinar Slide Deck, which discusses the 2025 tax law changes and places a particular emphasis on changes to the income tax effective for tax year 2025, as well as the expansion of the sales and use tax base to include new taxable services, effective July 1, 2025.
Filing access
As a reminder, business owners should use mdtaxconnect.gov to file and pay relevant taxes. If you don’t yet have an account, now’s a good time to create one and explore available user guides and online tutorials, view previously recorded webinars, and view our FAQs.
