New Maryland laws, tax changes take effect July 1
Several new laws and tax changes take effect in Maryland on July 1, including a 3% tax on IT and data services and laws that impact cannabis regulation, clean energy and more.
The tax changes are part of the 2026 Maryland state budget, which includes nearly $1.8 billion in tax and fee increases as well as cuts to state spending.
Maryland tax changes
Under Maryland's new 3% tech tax, IT companies are required to pay sales taxes for services like data storage. This tax does not apply to mobile phone service.
The budget also creates new tax brackets for the highest earners in the state. Residents who make $500,000 a year will be taxed at 6.25%, and those making $1 million per year will be taxed at 6.5%.
A 2% tax on capital gains is in effect for people who make more than $350,000, and the budget increases taxes on cannabis and sports betting.
Maryland hiring freeze
A state hiring freeze also went into effect on July 1. The governor said the move was in response to a "historic fiscal challenge."
The hiring freeze could save the state about $121 million in Fiscal Year 2026, according to Gov. Moore.
The move should not impact higher education or judicial positions. Officials said a voluntary employee buyout program is also being prepared.
The governor's office aims to review the state's financial position in the fall.
Cannabis regulation changes
HB12/SB214 is among the new laws in effect in Maryland.
The law prohibits the sale or distribution of cannabis products marketed as having more than 0.5 milligrams of THC per serving, or over 2.5 milligrams of THC per package.
If a person who does not have a cannabis license violates the law, they may be charged with a citation or found guilty of a misdemeanor with a financial penalty of up to $5,000.
Clean energy and environmental policy
Several new laws will impact clean energy and environmental policies in Maryland.
The Transportation and Climate Alignment Act of 2025 requires the Maryland Department of Transportation to assess the impact of greenhouse gas emissions and vehicle miles linked to highway expansion projects. It also requires the state to implement programs to offset emissions.
The Chesapeake Bay Legacy Act establishes several new programs aimed at improving the Chesapeake Bay watershed. The new law was welcome news for environmentalists, as reports have detailed declining bay health.
The new law establishes the Maryland Leaders in Environmentally Engaged Farming (LEEF) Program, creating a voluntary, tiered certification system to recognize and support farmers who adopt conservation practices that enhance soil health, reduce pollution, and promote climate resilience.
The law also establishes a program for monitoring water quality across the state, modernizing aquaculture leasing, and supporting watershed restoration through streamlined permitting.
The Renewable Energy Certainty Act aims to improve forestry by expanding education opportunities and workforce development within the industry.
It establishes a new grant program to support the development and implementation of forest and forestry education programs, including curriculum creation, teacher training, and hands-on learning experiences in K–12 schools, technical education, and higher education institutions.
SB253 excludes the incineration of chemical warfare materials at research facilities from some state regulations if the incinerations are being done for research, development, or demonstration purposes.
Employment and labor
HB502 establishes the Office of Disability Employment Advancement and Policy within the Department of Disabilities. The goal of the office is to improve outcomes in hiring, recruitment, and retention, along with the advancement of people with disabilities in the state government workforce.
Another law, HB1126, establishes the Child Support Arrearage to Work Pilot Program within the Department of Labor. The program enables the department to connect individuals who are both unemployed and owe child support with employment opportunities.
Other new laws in Maryland
HB0722 requires the Maryland Department of Health to submit reports on the oversight of substance use disorder treatment programs and recovery residences.
The new law comes as Baltimore City works to heal from the impacts of an opioid crisis.
HB986 requires each Maryland county to establish a new teacher retention program, which includes teacher mentorship and cohort-based opportunities.
