Faced with budget challenges at the state and local levels, the 2025 General Assembly is considering nearly a dozen bills that would authorize “special rates”—different tax rates for commercial, residential and industrial property classes and subclasses.
Most bills originate in the House of Delegates and are supported by local governments who are looking for ways to fund mandatory education spending and backfill recent cuts to state transportation aid.
House Bill 23 authorizes the counties and the City of Baltimore to set a special tax rate for subclasses of property within a special taxing district, established to finance transportation projects. The bill also provides authority to apply jurisdiction-wide special tax rates to provide educational funding.
House Bill 641 would allow the Governor and the Board of Public Works to set special rates within the state property tax for the purpose of funding capital and operating expenses of the state transportation system.
House Bill 330 / Senate Bill 472 authorizes a form of land value taxation within one mile of rail stations. Utilized in Pittsburgh and Harrisburg, PA 40 years ago, the land value tax or split rate property tax applies a lower tax rate to improvements than the land on which they are located.
In theory, the land value tax better reflects the locational value of the property being taxed.
Advocates for this approach argue the split rate property tax will spur redevelopment of well-located but underdeveloped land, increase the density of urban development and stimulate infill development on vacant parcels. The reasoning is that when buildings are taxed at a lower rate than the land, owners have more economic incentive to make improvements that will support use of adjacent transit.
However, uniform property tax rates have been a foundation of Maryland’s real estate property tax policy for generations. Maryland counties set uniform rates for residential, commercial or industrial property classes to ensure fairness and consistency in property taxation.
Maintaining uniformity in rate setting prevents arbitrary, disproportionately high commercial real estate taxes. For years, business and commercial real estate groups have worked hard to fight off legislative efforts to allow counties and the City of Baltimore to set special rates.