This week, the Board of Revenue Estimates approved a slight adjustment for the current fiscal year, reflecting a modest increase, and released the first official revenue projections for fiscal 2026.
The Board raised revenue projections for the current fiscal year by a modest $88 million, primarily due to higher corporate income tax collections and record interest income.
The Board’s first projections for fiscal 2026 estimate $25.3 billion in revenues, representing a 0.9 percent increase from the current fiscal year. The economic forecast remains consistent with the March estimates.
Although fiscal 2025 sales tax revenues fall $116 million short of earlier estimates and estate and inheritance taxes drop by $62 million, significant gains offset these shortfalls. Corporate income taxes will bring in nearly $174 million more than the previous estimate, and interest earnings will rise by $95.5 million, driven by record-high returns on the State’s investable portfolio and a budget provision that redirects special fund interest to the general fund.
Board Executive Secretary Robert Rehrmann noted that while the economic outlook remains steady, several risks could impact future revenues, primarily tied to federal economic policy and broader political developments.
Federal government spending and tax decisions remain uncertain, particularly as the nation faces upcoming congressional and presidential elections. And while Congress reached a short-term deal to avoid an imminent government shutdown, Maryland’s significant federal workforce, contractors, and businesses dependent on federal operations may experience only temporary relief, with another fiscal deadline looming in mid-December.
Significant policy shifts, such as the expiration of personal income tax provisions under the Tax Cuts and Jobs Act at the end of 2025, pose further risks. Furthermore, the upcoming expiration of the federal debt limit raises concerns about potential disruptions to fiscal stability.
The Board, which includes Comptroller Brooke Lierman, Treasurer Dereck Davis, and Department of Budget and Management Secretary Helene Grady, estimates revenues to assist with managing the State’s budget. The forecasts for the current fiscal year and the one that begins in July 2025 provide budget writers and policymakers with the latest revenue projections and economic trends.
As previously reported on Conduit Street, lawmakers face considerable budget challenges over the next few years that could lead to spending cuts, tax increases, or other remedies to resolve significant structural deficits, which balloon to $3.7 billion by fiscal 2029.
In December, the Board will release updated projections for the current fiscal year and fiscal 2026.
Stay tuned to Conduit Street for more information.
Useful Links
Board of Revenue Estimates Meeting Video
Board of Revenue Estimates Presentation
