So why is the council on the verge of raising taxes on low income homeowners?<\/p>\n
Last week, I explained that Council President Natali Fani-Gonz\u00e1lez wanted to restructure the county\u2019s income tax<\/a>.\u00a0 On April 29, the council\u2019s Government Operations and Fiscal Policy (GO) Committee, comprised of Chair Kate Stewart and Council Members Sidney Katz and Shebra Evans, unanimously adopted and changed certain elements of it.\u00a0 Specifically, the GO Committee did two things:<\/p>\n 1. They adopted a new progressive income tax structure with three brackets<\/a>: a 2.5% rate on the first $50,000 of adjusted gross income (AGI), a 2.8% rate on AGI of $50,001 through $150,000 and a 3.3% rate on AGI above $150,000. The current rate is 3.2% on all income. Elrich has proposed raising that rate to 3.3% on all income, an option the GO Committee rejected.<\/p>\n 2. They voted to repeal the Income Tax Offset Credit (ITOC), which is a tax credit received by homeowners on residences they occupy. That credit is a flat $692<\/a> for homeowners who apply for and receive it.<\/p>\n According to council staff<\/a>, the progressive income tax brackets lose $65 million while repealing the homeowner credit raises $140 million.\u00a0 The combined impact is a $75 million tax increase on homeowners.<\/p>\n Supporters of this plan depict it as progressive taxation.\u00a0 Let\u2019s test that allegation by running some numbers.<\/p>\n Let\u2019s start with a homeowner who has AGI of $50,000.\u00a0 An example of such a person would be a senior who bought a home many years ago and now relies on Social Security and pension income to survive.\u00a0 Another example is a person who once earned decent wages but has taken a hard hit from a layoff or hour cutbacks and is now trying to make ends meet with a reduced income.<\/p>\n The table below shows that this person would pay $350 less in income taxes under the new brackets.\u00a0 However, they give up their $692 homeowner credit.\u00a0 On net, this person would have a tax increase of $342.<\/p>\n Now let\u2019s look at a homeowner who has AGI of $100,000.\u00a0 This person could be a teacher who can afford to own a townhouse.\u00a0 The table below shows that this person would pay $550 less in income taxes under the new brackets.\u00a0 However, they would also give up their $692 homeowner credit.\u00a0 On net, this person would have a tax increase of $142.<\/p>\n The interaction of the new rates and the loss of the credit produces a bell curve of outcomes.\u00a0 Homeowners with AGI of $135,590 through $207,600 would get small net tax cuts.\u00a0 The largest tax cut occurs at an AGI of $150,000, at which the homeowner would get a $58 net tax cut.<\/p>\n Is that juice worth the squeeze?<\/p>\n The council\u2019s own staff has told them that lower income homeowners will pay more under the GO Committee\u2019s plan.\u00a0 In a memo<\/a> just released, the staff wrote, \u201cFilers that report less than $135,500 in taxable income and previously received the ITOC will pay more in aggregate income and property taxes when compared to FY26. The aggregate change is $0 at taxable income of $135,500.\u201d<\/p>\n Finally, consider the case of a homeowner with $500,000 in AGI.\u00a0 The table below shows that this person would pay $400 less in income taxes but would lose their $692 homeowner credit, a net tax increase of $292.<\/p>\n The homeowner making $50,000 would have to pay a larger tax increase ($342) than the homeowner making $500,000 ($292).<\/p>\n Let\u2019s pause to let that sink in for a moment.<\/p>\n \u2026..<\/p>\n \u2026..<\/p>\n \u2026..<\/p>\n There are net beneficiaries from this plan.\u00a0 Renters don\u2019t get a homeowner credit, so almost all of them would be better off.\u00a0 However, among those of them who try to buy a home, those making less than $135,000 would face bigger tax payments than under the current system.\u00a0 This plan would disincentivize those renters from buying homes.\u00a0 Is that what county leaders want?<\/p>\n Other beneficiaries are commercial property owners.\u00a0 They don\u2019t get homeowner credits.\u00a0 They will also be spared from the county executive\u2019s property tax rate increase which the council just voted down<\/a>.\u00a0 The largest property owners in the county<\/a> include Pepco, Washington Gas, the owner of Westfield Montgomery Mall and a group of big developers.\u00a0 They would have to pay for increased assessments, as would nearly all property owners, but they would otherwise emerge unscathed from the GO Committee\u2019s plan while low income homeowners would face tax hikes.<\/p>\n How is this progressive taxation?<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/Income-Tax-Plan-2026-AGI-50k.png\")
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