Bill
SB 836
Maryland would gradually reduce its corporate income tax rate from 8.25% to 6.25% starting in 2026, lowering corporate tax burdens and reducing state revenues accordingly.
Status & Basic Info
- Title: Corporate Income Tax — Rate Reduction (Economic Competitiveness Act of 2025)
- Jurisdiction: Maryland (2025 Session)
- Sponsor(s): Senators Mautz, Bailey, Carozza, Jennings, Ready (primary sponsors per fiscal analysis)
- Committee: Budget & Taxation (assigned) — Hearing noted in record for 3/04 (1:00 p.m.)
- Effective date in bill text: July 1, 2025. Applies to corporate taxable years as specified below.
Purpose / Intent
- Reduce Maryland’s corporate income tax rate over a multi‑year phase‑in to enhance the State’s economic competitiveness and lower the tax burden on corporations doing business in Maryland.
Key provisions (rate schedule and timing)
- Replaces the single corporate tax rate of 8.25% with a phased schedule applied to Maryland taxable income:
- Tax years beginning after Dec. 31, 2024 but before Jan. 1, 2026: 8.25% (no change for tax year 2025)
- Taxable year beginning after Dec. 31, 2025 but before Jan. 1, 2027: 7.75% (tax year 2026)
- Taxable year beginning after Dec. 31, 2026 but before Jan. 1, 2028: 7.25% (tax year 2027)
- Taxable year beginning after Dec. 31, 2027 but before Jan. 1, 2029: 6.75% (tax year 2028)
- Taxable year beginning after Dec. 31, 2028 and thereafter: 6.25% (tax year 2029 onward)
Who is affected
- All corporations subject to Maryland corporate income tax, including corporations conducting business in Maryland, public service companies and financial institutions.
- Revenue recipients that depend on corporate income tax allocations (State General Fund, Higher Education Investment Fund, Transportation Trust Fund components, Strategic Energy Investment Fund, and local highway user revenues).
Fiscal and programmatic impact (as estimated in the Department of Legislative Services fiscal note)
- Significant reductions in State revenues beginning FY 2026 and growing through FY 2030 as the rate phases down. Selected estimates:
- FY 2026: General Fund −$35.8 million; total State revenue decline ≈ −$47.6 million
- FY 2027: GF −$156.0 million; total ≈ −$207.9 million
- FY 2028: GF −$297.0 million; total ≈ −$387.2 million
- FY 2029: GF −$442.4 million; total ≈ −$576.9 million
- FY 2030: GF −$553.3 million; total ≈ −$721.5 million
- Special fund impacts: HEIF and Transportation Trust Fund (TTF) receipts decline (TTF reductions reduce local highway user revenue grants). Estimated local highway user revenue grant reductions total ≈ $54.2 million across FY 2026–2030.
- TTF expenditures for local highway user revenue grants also decrease in line with lost receipts (yearly amounts provided in fiscal note).
- Small business effect: estimated minimal.
Other notes
- Maryland taxable income is based on federal taxable income adjusted for Maryland modifications and apportioned to Maryland (single‑sales factor apportionment for many unitary businesses under prior law changes).
- The bill’s revenue impacts assume current revenue forecasts and statutory distributions (including previously enacted percentages routed to transportation and other funds).
- Similar measures have been introduced in recent sessions (listed in fiscal materials).
Procedural history highlights
- Introduced in 2025 session; assigned to Budget & Taxation. Fiscal note prepared (Department of Legislative Services). Hearing(s) and committee actions recorded; status subject to committee consideration and amendments.
Bottom line
- SB 836 would lower Maryland’s corporate income tax rate from 8.25% to 6.25% over four tax years beginning with tax year 2026. The measure is projected to produce sizable, recurring reductions in State (and some local) revenues, with proportional impacts on funds that receive corporate tax distributions (General Fund, HEIF, TTF, SEIF and local highway user revenues).
Compiled from official sources — confirm details with the bill’s official record.
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