Sales and Use Tax - Distribution of Cannabis Sales Tax Revenue - Maryland Veterans Trust Fund
HB 151 would increase the maximum county income tax rate that Maryland counties may impose on individual Maryland taxable income from 3.2% to 3.7%. It also changes how counties may structure county income taxes on a bracket basis. Counties using brackets would be limited to no more than eight brackets for individual filers and no more than eight brackets for joint filers, surviving spouses, and heads of household, and they would have to use the bracket thresholds specified in the bill rather than designing their own thresholds.
The bill preserves the existing requirement that counties may not raise rates above 2.6% without a public hearing and newspaper notice, and it keeps the rule that county rate changes must be made in one-hundredth-of-a-point increments and reported to the Comptroller in advance. It also adds a new limitation that counties may set a rate above 3.2% only on income above specified high-income thresholds, and states legislative intent that revenue above 3.2% be used for public education and transportation. The bill takes effect July 1, 2026, and applies to taxable years beginning after December 31, 2026.
HB 151 would amend § 10-106 of the Tax-General Article to expand county authority over local income tax rates while also standardizing bracket-based county income tax structures. It would raise the statutory ceiling on county income tax rates, impose mandatory bracket thresholds for counties that choose a bracket system, and restrict the use of rates above 3.2% to higher-income taxpayers. Counties, taxpayers, and the Comptroller would be affected, and counties would need to conform local ordinances or resolutions to the new statewide framework before the bill’s effective date.
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be a policy-driven tax restructuring bill rather than one with documented public controversy in the available record. The bill’s design suggests support for giving counties more flexibility to raise revenue, while also imposing guardrails and a progressive structure. No formal vote history or transcript evidence is provided to show a clear pro- or anti-bill coalition.
The main points of contention are likely to be the higher county tax cap, the mandatory bracket thresholds, and the restriction that rates above 3.2% apply only to higher-income income ranges. Counties that prefer local discretion may object to the standardized bracket structure and the eight-bracket limit, while taxpayers and anti-tax advocates may oppose the increased maximum rate. Supporters would likely emphasize local revenue flexibility, revenue neutrality tools, and the bill’s stated intent to direct higher-rate revenue toward education and transportation.