Maryland lawmakers are raising taxes and fees. Here’s how you’ll feel it.

Pamela Wood

The Baltimore Banner

April 5, 2024

In order to raise hundreds of millions more dollars each year for the Maryland’s transportation, education and trauma programs, state lawmakers are raising a variety of fees and taxes.

They avoided broad-based hikes in income taxes or sales taxes, in favor of targeted ways to raise revenue. But if you own a car, take an Uber or smoke cigarettes, you’ll feel the pinch.

All told the fee and tax increases are expected to raise $91 million per year initially for public education, $335 million eventually per year for transportation projects and $114 million per year for the state’s trauma health care system.

The General Assembly’s Democratic budget leaders, Del. Ben Barnes of Prince George’s County and Sen. Guy Guzzone of Howard County, said the budget deal reflects their “shared values” of improving transportation networks and funding public education.

“We are in lockstep in keeping those commitments,” Barnes said during a Thursday afternoon meeting where the House of Delegates and Senate negotiators finalized their deal. A few procedural steps and votes in both chambers are required before the revised budget is sent to Gov. Wes Moore for his consideration.

Moore, a Democrat, introduced a $63 billion state budget without any tax increases and he’s said he has “a very high bar” for tax or fee increases. Moore has said he’s pleased a budget agreement has been reached but hasn’t commented on the specifics.

A group of 10 Republican delegates, meanwhile, sent the governor a letter urging him to veto the tax and fee increases. “Re-basing and cutting wasteful spending should be prioritized before implementing any new taxes or fees,” they wrote.

Here’s a breakdown of how your wallet will be affected.

Vehicle registration charges

In Maryland, vehicle owners must register their cars or trucks every two years, and that registration fee would go up.

All vehicle owners would pay $46 extra for the two-year registration to send money to different components of the state’s trauma and emergency response system, including the Maryland Shock Trauma Center in Baltimore.

This across-the-board vehicle registration increase will raise $104.8 million for the trauma system. Separately, a bill is under consideration that would increase the sales tax on guns and ammunition from 6% to 11%, with the extra money — about $10 million per year — also being sent to the trauma system.

All vehicles also would be subject to a new set of classifications for two-year vehicle registrations, which would further divide up vehicles into weight classes. Heavier vehicles would have a larger registration fee than smaller cars, under the rationale that they put more wear and tear on the state’s roads and bridges.

Current registration fees for consumer cars, trucks and SUVs are $135 for lighter-weight vehicles and $187 for heavier vehicles.

The new fee schedule would have more weight classifications, with the lightest vehicles paying $46 more every two years and the heaviest trucks paying $105 additional every two years.

The new fees would be phased in over three years, initially raising $169 million extra per year and increasing to $253 million more when fully implemented. The money would go to the Transportation Trust Fund.

Electric vehicle fee

Owners of electric and plug-in hybrid cars, SUVs and trucks will be required to pay a new fee. The idea behind the fee is that owners of electric and hybrid electric vehicles pay little to nothing in gas taxes that fund highway and transportation projects across the state.

Fully electric car owners would pay $125 every two years, and hybrid electric car owners would pay $100 every two years.

The money, estimated to be $5.4 million per year, would go into the Transportation Trust Fund.

This fee would be in addition to the new, higher registration fee.

Buying a car

Car dealers already are allowed to charge an optional fee to buyers called a “dealer processing charge.” That gets added into the total sale price of a car, which is then taxed.

The state would increase the maximum allowed dealer processing charge up to $800, up from $500. It’s estimated the higher dealer processing charge and resultant higher tax, would raise $15.3 million per year, which would go into the Transportation Trust Fund.

Hailing an Uber

Take a trip with Uber, Lyft or a similar service? That will cost you more, too.

A new statewide 75-cent per trip fee would be created, raising $37.4 million in the first year — a number expected to increase in future years. As with most of the other transportation fees, this one would also go to the Transportation Trust Fund.

Speeding in work zones

Getting a speeding ticket in work zones will be more costly. Drivers caught by speed cameras would see the fines double, from $40 to $80. The extra money — $24 million initially — would be used by state troopers and transportation officials for work zone safety programs.

Cigarette and nicotine taxes

It will cost you more to get a nicotine fix, with the extra money dedicated to the Blueprint for Maryland’s Future, an ambitious, multiyear improvement plan for the state’s public schools.

The tax on a pack of cigarettes will increase from $3.75 per pack to $5 per pack.

For other tobacco products such as pipe, hookah or snuff tobacco, the tax will go from 53% of the wholesale cost of the product to 60%. (Cigars are not affected by the tax increase.)

The tax on electronic smoking devices such as vapes will increase from a 12% sales tax to a 20% sales tax.

The tax on vaping liquids remains unchanged at a 60% sales tax.

Altogether, the increased tax rates are expected to generate $91.4 million more for the education fund in the first year. But the extra money will start to dwindle, as higher taxes drive down the use of cigarette and nicotine products. Five years from now, the increased taxes will only bring in $71.5 million extra.

Taxes that are off the table

At various points in the General Assembly session, lawmakers considered various ways to raise money. Some that are now off the table are: expanding the sales tax to cover services, enacting a type of corporate tax reform known as “combined reporting” and fully legalizing online gambling.