ANNAPOLIS, Md.— Maryland lawmakers are preparing to confront a projected nearly $1.5 billion budget deficit when the 2026 General Assembly session convenes in mid-January, following a year of multiple tax and fee increases that failed to fully close a larger fiscal gap.
In 2025, the state implemented a range of revenue measures, including higher vehicle registration fees, a new 6 percent tax on vending machine sales, an emissions testing fee increase to as much as $30, and a rise in the sports betting tax rate from 15 percent to 20 percent. Anirban Basu, CEO of Sage Policy Group Inc., described the 2025 actions as adding $1.6 billion in new taxes aimed at addressing a $3.3 billion shortfall.
Despite those increases, the structural imbalance persists. Basu indicated that the upcoming session may shift emphasis toward expenditure reductions rather than additional revenue measures. “This might actually be a legislative session that is more focused on cost cutting and reducing state expenditures,” he said.
Basu forecasted continued pressure on Maryland taxpayers in 2026. “If this was simply a 2025 phenomenon, but we keep having bad years, and 2026 is going to bring forth another fiscal shortfall in Annapolis,” he said. He added, “Somebody out there in your viewership is going to be paying more to the state of Maryland, one way or the other.”
Property tax assessments statewide are already scheduled to increase by an average of 12.7 percent in 2026, contributing to the ongoing burden on residents and businesses. In Southern Maryland, where many counties rely heavily on property taxes for local revenue, these assessment hikes are expected to affect homeowners in Calvert, Charles, and St. Mary’s counties, potentially leading to higher local tax bills even without new state-level rate changes.
Basu outlined a two-part path forward for the state. In the short term, he said spending reductions are necessary to stabilize the budget. Over the longer term, he emphasized economic growth as essential. “(Lawmakers) got to grow this tax base, the state’s economy has got to go on a run, it’s got to rebuild its momentum,” he said.
The persistent deficits highlight ongoing challenges in balancing Maryland’s budget amid rising costs for education, health care, public safety, and infrastructure. Southern Maryland communities, which include major federal facilities such as Naval Air Station Patuxent River and significant agricultural and tourism sectors, remain sensitive to both state revenue policies and economic conditions that influence job growth and tax receipts.
The 2026 legislative session will determine whether the state pursues further cuts, additional revenue enhancements, or a combination to address the shortfall. Basu stressed that responsibility rests with the governor and General Assembly to implement solutions that stabilize finances without disproportionately impacting taxpayers.
Maryland’s fiscal situation has drawn attention from economists and policymakers as the state seeks to maintain services while avoiding deeper structural problems. The outcome of the upcoming session will affect residents across the state, including those in Southern Maryland who have already experienced the effects of 2025’s tax and fee adjustments.