Maryland means business this year. And not in the way most business owners were hoping.
The state's FY 2026 budget, signed into law by Governor Wes Moore, brought some of the most significant tax changes Maryland has seen in years. At the same time, a new bill aimed at protecting small businesses from predatory lending just cleared the State Senate. Whether you run a small shop or a growing tech firm, these changes affect your bottom line. Here's what you need to know right now.
The Tech Tax Is Real and It's Already Here
If your business uses cloud software, pays for data storage, or hires outside tech firms to build or manage your systems, your costs are going up.
As part of the FY 2026 budget, Maryland enacted a 3% sales tax on a broad range of information technology and data services, effective July 1, 2025. That means tools your business already relies on like AWS, Google Drive, Salesforce, or any custom software provider may now cost more as vendors pass that tax along to their customers.
For small businesses that run on affordable cloud tools, this is a real added expense. For tech firms and IT service providers, this tax changes how you price your services and how your clients react to those prices. According to BDO's breakdown of the Maryland FY 2026 budget, the law is broad enough to capture a wide range of business to business technology services, and many companies are still figuring out exactly how it applies to them. If you're unsure whether your tech tools are affected, Alvarez and Marsal's plain language overview is a good place to start.
High Earners Are Paying More Too
Maryland also added new income tax brackets for high earners that are already in effect. According to Citrin Cooperman's full analysis of the FY 2026 budget bill, the state now taxes income between $500,000 and $1 million at 6.25%, and income above $1 million at 6.5%. Before these changes, the top rate was 5.75%.
On top of that, Maryland implemented a 2% surcharge on net capital gains for taxpayers whose federal adjusted gross income exceeds $350,000. Concentrated stock positions, business sale proceeds, and investment portfolio gains are all subject to this surcharge. According to Grant Thornton's detailed analysis of the tax hike legislation, a high income taxpayer that recognizes a capital gain on a transaction could face a marginal tax rate of nearly 12% when factoring in the highest state, county, and capital gains surcharge rates combined.
If you are a business owner who sells a company, cashes out investments, or receives equity compensation, this surtax could add up quickly. Some high earners are already asking whether Maryland is still the right place to run a business. That is a question state lawmakers will need to reckon with as these changes take full effect. For a practical breakdown of how these numbers affect real tax scenarios, Ruda Financial's 2026 Maryland tax planning guide is worth reading.
The Good News: A Win for Small Business Borrowers
Not everything coming out of Annapolis right now is a cost increase. There is one genuinely good piece of news for small business owners, and it passed the Maryland Senate just this past Thursday.
According to NCRC's official statement on the Senate passage, the Maryland Senate passed the Small Business Truth in Lending Act and the bill would save Maryland small businesses $237 million per year by allowing business owners to compare the prices of different financing options and choose lower cost options. Hispanic business owners would save $26 million and Black business owners would save $72 million annually if the bill becomes law.
Here is the problem the bill is trying to solve. Right now, lenders who offer business credit products like merchant cash advances and short term loans are not required to disclose a clear annual percentage rate, or APR. That makes it nearly impossible for a business owner to compare the true cost of different financing options side by side. The legislation would require small business lenders to provide clear and honest information including annual percentage rate, financing charges, loan terms, and payment amounts. You can track the bill's progress through the House of Delegates on its official Maryland General Assembly page.
What This Means for You
If you are a Maryland business owner, the message from Annapolis right now is mixed. The state is raising the cost of doing business for tech users and high earners while at the same time trying to protect small businesses from being taken advantage of by lenders.
The smartest move you can make right now is to talk to your accountant about how the new tax brackets and capital gains surtax affect your specific situation. If you use cloud based tools or outside tech vendors, ask whether those costs are going up and build that into your budget now.
And if you have ever taken out a short term business loan or used a merchant cash advance without fully understanding what you were paying, the Truth in Lending Act, if passed, will change that game entirely. For now, ask your lender for a clear APR before you sign anything. You have every right to know what you are really paying.
Maryland is changing the rules. Business owners who know the rules win.