Government & Politics

County Council approves income tax hike for highest earners, break for others 

Fani‑González says proposed property tax hike likely ‘dead’; straw vote on fiscal year 2027 operating budget expected Thursday 

By

Ceoli Jacoby

May 13, 2026 6:25 p.m.

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Montgomery County is poised to join Frederick and Anne Arundel counties next fiscal year in implementing a progressive income tax structure where the tax rate increases in proportion to a filers’ income. 

The Montgomery County Council on Wednesday voted 6-5 to lock in new income tax rates for fiscal year 2027, which begins July 1. Each member’s vote on Wednesday was unchanged from their straw vote on the progressive income tax plan last week. 

In her remarks before the vote on Wednesday, Councilmember Kate Stewart (D-Dist. 4) said 50% of filers in the county make less than $50,000 annually and 75% make less than $150,000 annually. Those filers will all see income tax relief next fiscal year, she said. 

“This is our opportunity to actually look at how we do progressive taxing,” Stewart said. “I don’t think we should pass it up this year, because this opportunity was hard-fought and may not come again in the near-term.” 

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Elrich objects

By adopting the progressive income tax structure, the county is forgoing $56.5 million in revenue that would have been generated under Montgomery County Executive Marc Elrich’s proposal to increase the income tax rate to 3.3% for all payers. That is the maximum local income tax rate under Maryland law. 

The council also has rejected Elrich’s plan to increase the property tax rate by 6%, which would have generated approximately $164 million in additional revenue to fund Montgomery County Public Schools.  

A few councilmembers signaled on Tuesday that they would be open to a more modest property tax rate increase, though Council President Natali Fani-González (D-Dist. 6) told Bethesda Today in a text message that the proposal appears “dead” as of Wednesday. 

The council will make up  for some of the lost tax revenue by eliminating the Income Tax Offset Credit for one year, which will save the county $139.7 million while increasing qualifying homeowners’ property tax bills by $692 next fiscal year. 

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Elrich (D) has repeatedly warned against the council’s preferred tax structure, arguing that seniors and other homeowners with lower incomes will be forced to pay more than they would under his budget proposal.  

“I think the cuts and the effect of theirs is a lot heavier hit on people than what I’m doing,” Elrich told reporters during his virtual weekly media briefing Wednesday. “I appreciate the instinct to be progressive, but this is totally the wrong year to do that.” 

Other jurisdictions

Maryland law enables counties to create their own local income tax brackets, though most counties still have flat local income tax rates.  

As of tax year 2026, only Frederick and Anne Arundel counties had a progressive income tax structure. Anne Arundel county had three income tax brackets, with rates ranging from 2.7% to 3.2%. Frederick County had four income tax brackets, with rates ranging from 2.3% to 3.2%.  

Under the plan approved by the council on Wednesday, Montgomery County’s income tax rate for people making more than $150,001 annually would increase from 3.2% to 3.3% in fiscal year 2027. The income tax rate would decrease for anyone making less.  

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Those making up to $50,000 annually would see their income tax rate decrease from 3.2% to 2.7% under the proposal supported by the council majority on Friday. Those making between $50,001 and $150,000 would see their income tax rate decrease from 3.2% to 3%.  

Supporters of the progressive income tax plan include Fani-González, Council Vice President Marilyn Balcombe (D-Dist. 2) and Councilmembers Sidney Katz (D-Dist. 3), Kate Stewart (D-Dist. 4), Dawn Luedtke (D-Dist. 7) and Shebra Evans (D-At-large). 

The three sitting councilmembers seeking the Democratic nomination for county executive on June 23 — Andrew Friedson (Dist. 1), Evan Glass and Will Jawando (both At-large) — voted against the new income tax structure, as did Councilmembers Kristin Mink (D-Dist. 5) and Laurie-Anne Sayles (D-At-large). 

The council will reconvene Thursday for a straw vote on the overall county operating budget  for fiscal year 2027. A final vote is expected on May 21. 

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Originally published at Bethesdamagazine