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Montgomery County Council adopts graduated income tax structure amid close vote
Summary
On May 13 the Montgomery County Council voted to approve a three-tier county income tax structure that reduces taxes for lower-income filers while increasing marginal rates for higher earners; the measure passed 6–5 after extended debate about impacts on schools and the middle class.
The Montgomery County Council voted on May 13 to approve a revised, graduated county income tax structure for fiscal 2027 that applies 2.7% to the first bracket, 3.0% to the middle bracket and 3.3% to incomes above $150,000. Councilmember Stuart Senko moved approval; Council Vice President Balcom seconded and the motion passed 6–5.
The vote followed more than an hour of debate over who would shoulder the tax burden and how revenues should be used. “When I proposed the progressive income tax it was with the idea of reducing the burden for people who made less money,” Chair Yellen said, summarizing the Council’s effort to tailor rates to income levels. She described the package as a modification of the County Executive’s original proposal so that lower-income households would pay less than under a flat rate.
Supporters emphasized that the plan would deliver breaks to many filers. “Fifty percent of county filers here in Montgomery County make less than $50,000 a year,” Councilmember Kate Stewart said, adding that about 75% make less than $150,000 and would therefore receive an income tax break under the plan.
Opponents said the marginal-rate shifts still raise taxes for households around the $150,000 threshold and argued for alternative designs that would shift increases to higher earners only. Councilmember Guilherando said he proposed a different progressive structure that would have preserved the current rate on incomes up to $500,000 and only raised top rates on incomes above much higher thresholds.
The Council did not adopt those alternative brackets. The final motion reflects the compromise reached in committee and on the Council floor, and it passed by a single-vote margin. Chair Yellen said the Council would continue to discuss revenue options and potential mitigations as the FY27 budget process proceeds.
The decision now moves the Council further into finalizing the FY27 revenue package; debate over how new income-tax revenue will be allocated — especially decisions affecting Montgomery County Public Schools — continued later in the session.
What happens next: the income-tax resolution will be reflected in the Council’s ongoing FY27 budget reconciliation and in related materials to be finalized at forthcoming votes.
