This summer, the Maryland House Ways and Means Committee, chaired by Delegate Vanessa E. Atterbeary (Vice‑Chair Delegate Jheanelle K. Wilkins), is conducting a summer study on Land Value Taxation to investigate the implications of granting Baltimore City the authority to overhaul its property tax system using a Land Value Taxation model.
Variations date back to 1879, but generally a land value tax or split-rate property tax applies a lower tax rate on improvements and a higher rate on land. In theory, the land value tax better reflects the locational value of the property being taxed and allows governments to capture more of the land value associated with public infrastructure.
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 improvements are taxed at a lower rate than the land, the owner has an economic incentive to make improvements to the property. A 2023 memo written by the Federal Reserve Bank of Chicago (linked here) points out the mixed results of the approach.
The study follows the failure of HB 1178 in the 2025 General Assembly session that would have authorized Baltimore City to set different tax rates by subclass of property. NAIOP opposed the bill on two grounds. First, it would break with the long-standing policy that tax rates be uniform across all property classes. Second, the likely result of differential tax rates would be disproportionately high commercial real estate taxes. In the last days of the session, the House Ways and Means Committee voted to send HB 1178 to summer study.
HB 330 / SB 472 proposed that a variation on land value taxation be applied to properties within one mile of rail stations. HB 330 set a cap and floor on the tax rates that could be imposed on improvements. Local governments would have been authorized to set a different rate for improvements, provided the rate was not 0% or higher than the rate set for other real estate. The Senate passed an amended version of SB 472 that removed the requirement that the special rate be capped, which would have allowed the differential rate for improvements to be set higher than other classes of property. The House Ways and Means Committee did not approve HB 330 and failed to approve the amended Senate version (SB 472) in the last week of the Session.
NAIOP opposed HB 330 / SB 472 on the grounds that the reduced tax on improvements would not be enough to overcome other factors controlling development activity, such as zoning, adequacy of infrastructure, community opposition, and market conditions. There was also no requirement that the changes be revenue-neutral.
Findings from the Ways and Means Committee summer study will be instrumental in informing potential legislative proposals in the 2026 session.