Announcing an energy bill assistance program in Annapolis. Chatting with a Baltimore radio host. Talking to Democrats in South Carolina.

Nearly everywhere Maryland Gov. Wes Moore goes, he touts his accomplishments, as politicians do. And, in this season of talking up his wins, Moore regularly promotes a tax break for middle-class Marylanders.

“We did things like cut taxes for the middle class and actually ensured that we have an income tax reform plan that, for 94% of Marylanders, they either got a tax cut or saw no changes in their income tax at all,” Moore said at one event. “It wasn’t easy. It was not simple.”

At another event: “We focused this year and delivered a tax cut to middle class Marylanders in this year’s budget. So Marylanders, middle-class Marylanders who needed it most, have a little bit of extra breathing room.”

Moore has focused on a limited slice of the budget with his income tax claim. Although some people will see a tax cut, the budget package raises $1.6 billion in new and additional taxes and fees to help close a multibillion-dollar deficit. How all those pieces fit together to affect Maryland households’ finances is more complicated.

The Baltimore Banner spoke with experts and read reports to untangle how it works.

Who is paying less?

About 59% of Maryland taxpayers will see a slight reduction in their state income taxes.

The main way that is happening is through a change in the standard deduction. About 80% of Maryland taxpayers take the standard deduction on their taxes, which reduces the amount of money you have to pay income taxes on.

On state income tax returns, the value of the standard deduction will increase by 20%, to $3,350 for individual taxpayers and $6,700 for joint filers.

For those taxpayers, the average income tax savings is $43, according to an analysis by experts at the Office of the Comptroller.

“There are households in every income bracket seeing a decrease,” said the governor’s top tax policy expert, Richard Auxier. He noted most benefiting will be in the income range of $25,000 to $500,000 — including 76% of those earning $50,000 to $75,000.

And about 15,600 low-income taxpayers will benefit from a change to the Maryland Child Tax Credit. The $500 per child tax credit previously was strictly limited to those earning a maximum of $15,000. Now the value of the credit will be phased out for those making just above the $15,000 threshold, allowing more people to receive a slightly smaller credit.

Who is paying more?

About 6% of individual taxpayers will pay more in state taxes. This is happening in three ways:

• The highest-earning Marylanders will pay a higher rate on the top portions of their taxable income. Previously, the top state income tax rate was 5.75%. Now the taxable income of single filers from $500,000 to $1 million and for joint filers from $600,000 to $1.2 million will be taxed at 6.25%. And taxable income beyond $1 million for single filers and $1.2 million for joint filers will be taxed at 6.5%.
• Those with more than $350,000 of adjusted gross income will pay more taxes on the portion of their income that comes from capital gains, a 2% surcharge.
• Individuals earning more than $200,000 who itemize deductions on their taxes will see the maximum value of those deductions phased out as their income goes up. Itemized deductions include things such as mortgage interest and charitable donations but not the federal deduction for student loan interest or state deductions for military retirement income.

On average, these taxpayers will pay $1,849 more, according to the comptroller’s analysis.

Overall, the tax plan puts a greater burden on a small number of high earners. A total of 12,880 taxpayers reported having at least $1 million in adjusted gross income in 2023, and nearly all of them (12,701) will see their income tax increase by $17,334 on average, according to the comptroller’s report.

So everyone else won’t see a change?

About 35% of Maryland taxpayers won’t be affected by these changes and should see their state income tax rates stay the same.

By adding the 59% who will see a decrease and the 35% who will see no change, you get to Moore’s often-cited 94% figure.

Putting all the income tax changes together, both the increases and the cuts, the state is projected to bring in about $484 million more.

Won’t any income tax cuts be canceled out by other tax and fee increases?

That’s the point that Republican lawmakers made as budget bills made their way through the General Assembly and were signed into law by Moore this spring.

The budget bills include a smattering of tax and fee increases. Vehicle registration fees have gone up, and it now costs $383 for a two-year registration for a full-size sedan, up from $323. Registration fees vary by vehicle type.

The tax on cannabis products has risen to 12% from 9%.

Most products sold in vending machines, which previously weren’t taxed, now have the 6% sales tax applied. And, starting in January, buying new tires will come with a $5 per tire fee.

A new 3% tax on data and IT services is being charged directly to consumers in some cases, and businesses that pay the tax may fold it into the cost of their products and services, passing it along indirectly to consumers. All told, consumers and companies are expected to pay nearly $500 million per year under that tax.

It’s hard for Marylanders to dodge all of those taxes and fees, Republicans argue. Add them all up, and the tax and fee increases total about $1.6 billion per year.

Although Moore’s claim of 94% of Marylanders seeing no change or a decrease to their income taxes is correct, that doesn’t represent the full tax picture, said Del. Jason Buckel, the top-ranking Republican in the House of Delegates who also serves on the committee that reviews taxes.

“The net reality is almost every middle-class Marylander is going to be paying more money to the state of Maryland under the package,” Buckel said.