County Councilmembers took a final 9-2 vote to approve a $7.9 billion operating budget, including no property tax rate increase, a new progressive income tax structure, and elimination of the $692 Income Tax Offset Credit (ITOC).
The council added $143 million to Montgomery County Public Schools, but came $36 million short of what the school system wanted, so jobs are still on the line, said key community stakeholders.
“There’s a real risk of actual full jobs getting cut which has a lot of impacts down the line,” said Irene Posey, a substitute teacher with MCPS. “After all, if you don’t have a job you’re not paying income tax.”
In order to close the budget shortfall, County Executive Marc Elrich proposed in his original budget raising income and property taxes for everyone while maintaining the tax credit. That proposal was rejected. He said the council just found a different way to raise taxes.
“They are raising taxes on more than 201,000 households in our county by a flat $692,” Elrich said Wednesday before the vote.
Elrich noted that under the council’s plan, commercial properties avoid any new taxes. “It’s entirely on the backs of our residents, and I have a problem with this.”
Council President Natali Fani-González noted that in the last few years, fewer homeowners have been requesting the ITOC – which requires an application and is not automatic. She also noted renters do not qualify.
“If you want to say that you’re progressive, and you really want to make sure that you have a system that is equitable, eliminating the ITOC was a way to use those funds in a way that will support strategic expenses” like MCPS and public safety, Fani-González said.
The new income tax structure approved by the council lowers the tax for those making up to $150,000 and raises it for incomes higher than $150,000.
“When it comes to equity, eliminating the ITOC was the right thing to do, combined with the income tax structure,” Fani-González said.
Elrich said, “While some people may hear short-term tax relief, I see a self-imposed unnecessary crater for future recurring revenues.”
Councilmembers Andrew Friedson and Dawn Luedtke voted against the operating budget.
Council takes final 9-2 vote to approve $7.9B operating budget @mymcmedia pic.twitter.com/sSRYacUryB
— Maryam Shahzad (@maryam_mcm) May 21, 2026
