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SB 859

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2025 Regular Session Introduced by Bryce Reeves

Fair Share for Maryland Act raises state revenue by taxing high-income individuals, large corporations, and pass-throughs, while tightening deductions and boosting compliance.

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Bill Summary · SB 859

Summary — SB 859: Fair Share for Maryland Act of 2025

Status: Enacted — Approved by the Governor 10/03/2025; Chapter 332, Statutes of 2025
Introduced: January 28, 2025 (Senate); Sponsors include Senators Hettleman, Benson, Rosapepe, Lewis Young, M. Washington; related/companion bills: HB 1014, HB 168, SB 766.

Note: The dataset included unrelated text from other jurisdictions (duplicate California lottery language and other state bills using the same bill number). This summary focuses on the Maryland “Fair Share for Maryland Act of 2025,” which is the substantive tax package described in the Maryland fiscal note and bill text.

Purpose / Intent

The bill is a broad revenue and tax-reform package intended to raise state revenue from high‑income individuals, large corporations, and pass‑through entities, and to alter Maryland tax rules to (1) tighten estate tax exclusions, (2) limit certain loss and deduction treatments, (3) impose new business-related charges, and (4) change apportionment and reporting rules to reduce tax avoidance and increase collections.

Key provisions (high level)

  • Estate tax
    • Lowers the Maryland unified credit (effectively the exclusion) for decedents dying after 2025 from the current equivalent of $5.0 million to $2.0 million (unified credit set at $745,800).
  • Automatic decoupling from IRC changes
    • Expands the period in which federal changes to the Internal Revenue Code do not automatically flow through to Maryland taxable income in specified circumstances.
  • Business transportation fee (temporary)
    • For tax years 2027–2032: imposes a 2.5% “business transportation fee” on corporate and pass‑through entity (PTE) taxable income in excess of $10 million. Revenues go to the Transportation Trust Fund.
  • Net operating losses (NOLs)
    • For tax years 2027–2031: limits the amount of net NOLs that may be allowed to the first $500,000 (modifies Maryland decoupling treatment).
  • Sales-factor “throwback” rule
    • Requires certain sales of tangible personal property to be included in the numerator of the sales factor (reduces opportunities to apportion income out of state).
  • Corporate combined reporting / worldwide combined reporting
    • Requires certain affiliated/unitary groups to file combined returns and compute Maryland taxable income on a worldwide basis (effective later; see timeline).
  • Pass‑through entity and net investment income surtaxes
    • Establishes surtaxes on specified PTE income distributions and on net investment income for high‑income individuals (effective tax years beginning 2028 and beyond).
  • Individual income tax changes
    • Alters individual tax rates and some credits (including changes to the child tax credit and expanded earned income tax credit eligibility for filers without qualifying children).
  • Other compliance rules
    • Comptroller rulemaking, interest & penalty provisions, adjustments to various credits and definitions.

Who is affected

  • Higher‑net‑worth estates (significantly lower estate exclusion for decedents dying after 2025).
  • Large corporations and pass‑through businesses (new fees, combined reporting, apportionment changes).
  • High‑income individuals (new surtaxes on net investment income and changes in personal income tax brackets).
  • Taxpayers claiming NOLs, credits, and those with multi‑state or multinational operations.
  • State Transportation Trust Fund and local highway user revenues (benefit from new fee revenues).

Fiscal impact (per fiscal note)

  • No effect FY2026.
  • FY2027: +$80.2 million (general fund) and +$6.7 million (special funds); local highway user grants +$1.0M.
  • FY2028: +$512.2M (GF) and +$20.7M (SF); GF expenditures +$3.0M.
  • FY2029: +$799.1M (GF) and +$37.7M (SF).
  • FY2030: +$945.8M (GF) and +$73.5M (SF).
  • Local highway user revenues increase modestly; Montgomery County may face higher costs for its EITC supplement beginning FY2029.
  • Small business effects characterized as minimal overall, though certain PTEs above thresholds are affected.

Effective dates / phased implementation

  • General effective date: July 1, 2025.
  • Business transportation fee: effective July 1, 2026; applies to tax years 2027–2032.
  • Sales-factor throwback rule and NOL limits: effective July 1, 2027; apply tax year 2027 onward.
  • Individual income tax changes and PTE surtax: effective July 1, 2028; apply tax year 2028 onward.
  • Combined worldwide reporting: effective July 1, 2028; applies to tax year 2029 onward.

Procedural / legislative status

  • Passed both chambers and enrolled; presented to Governor 09/03/2025.
  • Approved by Governor and chaptered 10/03/2025 (Chapter 332, Statutes of 2025).

Practical considerations / impacts

  • The package increases near‑term and ongoing state revenue concentrated on higher-income taxpayers and large businesses.
  • Changes to apportionment, combined reporting, and throwback rules could materially affect multi-state and multinational corporate tax liabilities and compliance burdens.
  • The reduced estate exclusion will increase estate tax liability for decedents with taxable estates between $2M and $5M.
  • Phased effective dates give affected taxpayers and administrators time to adjust; significant implementation and administrative rulemaking (Comptroller) will be required.

Compiled from official sources — confirm details with the bill’s official record.

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