Maryland's New Budget Plan: What It Means for You

Maryland’s New Budget Plan: Easy Guide to Taxes and Cuts

Maryland is trying to fix a big money problem. The state needs to fill a $3.3 billion gap in its budget. That means the state is spending more money than it has. So, Governor Wes Moore made a new plan. This plan includes raising some taxes and cutting back on how much money the government spends.

Let’s break down what this means for you and your family.

What Is a Budget Deficit?

A budget deficit is when the government spends more money than it brings in. Imagine if you spent $100 each week but only made $80. You’d be short $20. That’s kind of what is happening in Maryland, just with billions of dollars.

The state needs to make changes so it doesn’t run out of money. That’s where the new budget plan comes in.

What Is in the New Plan?

Governor Wes Moore’s new budget plan has two main parts:

New Taxes
Spending Cuts

Let’s talk about each one in a simple way.

New Taxes: What’s Changing?

The governor’s plan includes two big tax changes:

1. A 3% Tax on IT Services

This tax is for information technology services, or “IT” for short. These services help with computers, websites, and tech support. Companies that offer IT services will now have to pay a 3% tax.

If your business uses IT services, this might make those services a little more expensive. But most regular families might not feel this tax directly unless they run a business.

2. New Tax for High-Income Earners

People who make more than $750,000 a year will pay more in taxes. A new income tax bracket has been added just for them.

This won’t affect most Marylanders. But it will bring in more money from people who earn the most.

Spending Cuts: Where Is the State Saving Money?

The other part of the plan is cutting back on spending. The state wants to save $2.3 billion. That’s a lot of money!

We don’t know every detail yet, but cuts will likely affect many state programs. That might include schools, transportation, or health services. The governor says he will try to protect the most important services.

Even with cuts, the goal is to keep Maryland strong and healthy for everyone.

Why Is This Happening Now?

Maryland, like many states, has been spending more money after the COVID-19 pandemic. The government helped people with extra programs and support. But now, that money is running out.

Also, the cost of things like food, gas, and housing has gone up. So the state is paying more for services, too. That’s why it needs a new plan to make sure the budget is balanced.

Who Will Feel the Changes?

Let’s look at how this plan might affect different groups of people:

🧑‍💼 High-Income Earners

People who make over $750,000 a year will pay more in taxes. This could mean a higher tax bill for business owners or high-level professionals.

🧑‍💻 IT Companies

Companies that provide tech services will now be taxed. Some might raise prices to cover this cost, which could affect their customers too.

🧑‍👩‍👦 Regular Families

Most people who don’t earn a high income won’t see big changes in their taxes. But spending cuts could affect public services like schools or roads. We’ll know more once the full budget is shared.

What Happens Next?

Governor Moore’s budget plan still needs approval. The Maryland General Assembly will review it. Lawmakers may suggest changes or vote to accept it.

If approved, the changes could start soon, and the state will begin collecting more money and spending less.

What Can You Do?

It’s always good to stay informed. If you’re worried about how the budget may affect your family or business, here are a few tips:

Talk to a Tax Professional: If you own a business or make a high income, a tax expert can help you plan ahead.
Watch the News: Keep an eye on updates about the budget. Things can change quickly.
Share Your Voice: Maryland residents can talk to their state lawmakers and let them know how they feel about the plan.