Maryland Approves Historic $1.68B Tax Hike Amid Deficit

Maryland lawmakers have approved the largest tax increase in state history, amounting to $1.68 billion, as part of the Budget Reconciliation and Financing Act (BRFA) aimed at addressing a projected $3 billion budget deficit for fiscal year 2026. The new tax measures include a controversial 3% sales tax on data and IT services, new income tax brackets for high earners, and a capital gains surtax for individuals with high incomes. Critics, including Senate Republicans, argue that these policies will burden middle-class families and businesses, potentially hindering economic growth. Meanwhile, in Washington, Democrats have combined a flavored tobacco ban with a new cigarette tax to address a projected $16 billion budget deficit over the next four years. The legislation proposes raising the purchase age for nicotine products and implementing a $2-per-pack tax on cigarettes, with the intention of using the revenue to combat youth tobacco use. Both states illustrate the ongoing debate over tax policy and government revenue generation amidst budgetary challenges.