Eight out of 10 Maryland small businesses would be hit with a tax increase if the Maryland General Assembly succeeds with a plan to cover our state’s financial mismanagement and massive budget shortfall.

Recently, the Governor and General Assembly introduced legislation that would increase Maryland’s personal income tax and estate tax that would impact the operations of small businesses across the state. But that’s not all – one of the newer proposals endorsed by lawmakers includes a “tech tax” that would apply a new 3% tax on all IT and data services. This is bad policy for Maryland. It will crush job creation, stifle innovation, and hamper small business growth..

On March 20^th, Governor Moore and lawmakers announced the framework for the Fiscal Year 2026 state budget and includes the new technology tax on small businesses.

• Their tax hike plans (House Bill 352 ) would take away the funds that small businesses use to create jobs, run their businesses, invest in their employees, and give back in our communities.
• Also included in HB352 is the 3% “tech tax” on IT and data services that are critical to the success of small businesses. These services include web hosting, cloud storage, and business software.
• Small businesses are the foundation of our state’s economy and our state is already ranked among the worst in the nation – 46th when it comes to state taxes. The proposed tax hikes would make it even harder to run a small business in Maryland.
• Our state’s family businesses are still recovering from the challenges of the past few years and now is not the time to take more of the hard-earned income our mom-and-pop businesses need to hire and keep their doors open.

Politicians in Annapolis are wrong when they say their tax increase plans will only affect so-called “high earners.” Business income is used to cover day-to-day operations, create jobs, invest in employees, and give back to our communities. Business owners know better than lawmakers how to invest their earnings but instead, they’re faced with a massive increase in the cost of doing business in Maryland.

Because of a misunderstanding about the way most small businesses file their taxes – business income is not the same as a business owner’s wages – House Bill 352 will dramatically increase taxes on small businesses throughout the state, crushing job creation, economic expansion, and small businesses growth.

Tell your legislators not to make small businesses pay for the state’s financial mismanagement.