Small business owners across Maryland will be impacted by the new tax changes passed during the 2025 legislative session. The Budget Reconciliation and Financing Act (BRFA) made several changes to the state’s tax laws beginning this year.

The BRFA tax changes include:

• Adding two new tax brackets and rates for the state’s personal income tax
• Adding a 2% surcharge on capital gains income for households earning more than $350,000 in federal adjusted gross income (AGI)
• Creating a phase-out for itemized deductions for households earning more than $200,000 in federal AGI
• Expanding Maryland’s general sales tax to digital and IT services at a rate of 3%

The Office of the Comptroller has created a webpage for taxpayers and tax professionals to refer to for these and other changes based on the passage of the BRFA. It also held webinars for business owners and tax professionals that can be viewed on the Comptroller’s YouTube page. A copy of the slide deck from the webinars can be found here. Please contact Maryland State Director, Mike O’Halloran, with questions.