ANNAPOLIS, Md. (WBFF) — While fiscal stewards are projecting more revenue in Maryland than expected, a controversial tax passed last year has yet to return the amount of money originally promised.
The Board of Revenue Estimates indicated the state has approximately $248 million more than planned for fiscal years 2026 and 2027, but when broken down, more concerns emerge. The current budget year has about a $355 million increase, according to the BRE, and a $108 million write down for FY27.
But the 3% tech tax the General Assembly approved last year has yet to yield expected results. The data and IT services tax was part of the $1.6 billion tax and fee increase lawmakers and Gov. Wes Moore approved last year, paired with cuts, to close the state’s $3.3 billion shortfall.
Originally, the tech tax was projected to generate $500 million annually. However, according to the BRE, the tax has generated about $35 million, year to date, roughly 90% less than expected.
The BRE adjusted revenue estimates to be $110 million in fiscal year 2026 and $220 million for the next fiscal year.
“We are very confident in this new estimate that has been adopted,” Comptroller Brooke Lierman said.
As lawmakers passed the tech tax in 2025, critics argued the plan would push businesses out of the state. According to Lierman, the state collected the 3% IT tax from 2,900 businesses.
“That’s almost evenly split with companies already filing some sort of sales tax prior to this legislation and half of those companies being new filers,” Lierman said. “All of the large companies that you would expect to be reporting this tax are reporting this tax.”
Republican lawmakers were quick to call the tech tax revenues a ‘disaster’ and said plan has failed to generate projected revenue while also stifling business growth. House Minority Leader Jason Buckel said the state is “flush with taxpayer dollars,” and argued the “massive tax increase was not a long-term fix,” noting the tech tax fell “90% short of analyst projections.”
“The tech tax has succeeded only in depressing he tech economy and stunting business growth in Maryland, but it has failed in raising revenue,” Buckel said via news release. “Before we leave Annapolis this year, we should seriously consider repealing it.”
The concern for many lawmakers centers around what comes next. The structural deficit continues to raise red flags, especially for GOP lawmakers.
House Minority Whip Jesse Pippy called the $1.6 billion in tax and fee hikes “just enough” to ensure lawmakers “squeak through this election year.”
“The real reckoning will come next year, when even with all these taxes, we are still facing major deficits,” Pippy said via statement. “What will they say to our taxpayers then?”
Now that the latest projections are out, the budgeting process will speed up. A Senate committee is expected to vote the budget plan out Thursday afternoon, meaning it’s possible the full Senate could vote by the early next week.
Follow Political Reporter Mikenzie Frost on X and Facebook. Send tips to mbfrost@sbgtv.com.
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