Maryland REALTORS® Online

Important Update on the Maryland State Budget & Impact on Real Estate

Advocacy Update: State Budget

In response to recent news reports surrounding the state budget and related revenue proposals, Maryland REALTORS^® is providing our members with the following update on 2025 legislation and advocacy efforts.

State Budget

In February, the General Assembly held hearings on the Budget Reconciliation and Financing Act (BRFA), which included Governor Moore’s proposed $2B in programmatic cuts and approximately $1B in revenues to close the estimated $3B FY 2026 budget deficit. While the BRFA reduced the corporate income tax rate and eliminated the inheritance tax, Maryland REALTORS^® opposed several items within the BRFA for their impact on real estate, including:

• - Creating a new income tax bracket for high income earners, which would include pass-through entities that claim business income on personal tax returns
• - Adding a 1% capital gains tax surcharge, which could impact real property valued at over $1.5M
• - Lowering the estate tax exemption to $2M
• - Eliminating new Opportunity Zone tax credits

Other Proposals

In addition to the BRFA, several other revenue proposals have been discussed within the General Assembly. These could either replace current tax and fee increases in the Governor’s proposal, or they could be used to restore some of the proposed program cuts. Those impacting real estate include:

• - Real Estate Transfer Tax – As part of their budget briefing, the Department of Legislative Services offered the option to increase transfer taxes on “high value properties.” That is defined as residential properties over $1M (3% of all sales in 2024) and commercial properties over $10M (6% of all sales in 2024). This would total approximately $40M in new taxes on real estate transactions.
• - Statewide Property Tax – Another recommendation is to increase the state-level property tax by one cent to 12.2 cents per $100 in value. This is on top of any local property tax rate increases which might be imposed by counties, cities, or municipalities. This would result in an additional $95M in property tax revenue.
• - Business to Business Services Tax – This bill does not tax real estate compensation. HB 1554/SB 1045 would impose a 2.5% sales tax on certain services provided only between business entities. While the bill as introduced has largely avoided increases on residential real estate transactions and activities, there are still categories of services used by brokerages and agents, such as: photography, website hosting, marketing, and accounting. Based upon preliminary feedback we have received from Bright MLS, they do not believe the bill impacts individual subscribers.

Outlook

Even in the best of years, budget negotiations are a fluid process, with amendments and adjustments occurring right up until final adoption. This is, of course, a difficult year, with significant known budget deficits combined with additional uncertainty on the economy and federal actions. It also means that Maryland may require additional time or even special legislative sessions in the summer or fall to address budgetary matters.

Maryland REALTORS^® is fully engaged in this process and is considering not only the policy implications from the text of these proposals, but also how to position our association to achieve the best results for our membership, property owners, and the industry. We will work in partnership with other business and real estate interests to determine where our voice and our advocacy efforts are needed most.

The strength of our advocacy efforts is found in the engagement of our membership speaking with a unified voice on policy issues. As we work through the budget process, we may call upon you to contact your legislators on some of the above proposals. Please be on the lookout for additional updates from Maryland REALTORS as we progress through the final weeks of the 2025 General Assembly Session.

Cheryl Abrams Davis, 2025 President of Maryland REALTORS^®

Chuck Kasky, CEO of Maryland REALTORS^®