What Maryland’s 2026 Tax and Budget Landscape Means for Donors and Wealth Advisors

For Maryland taxpayers, especially charitable donors, business owners, and high net worth families, meaningful IRS and state-level changes have been made that wealth advisors should discuss with clients now. For advisors, 2026 is a year to be intentional with your clients’ goals.

Key 2026 Changes Advisors Should Be Flagging

Several rule changes in 2026 deserve a spot on every advisor’s planning checklist:

• Mandatory Roth catch-up contributions: High earners age 50+ will be required to make catch-up retirement contributions on a Roth (after-tax) basis, eliminating the immediate deduction many clients expect.
• Estate tax mismatches: While the federal estate tax exemption continues to climb, Maryland’s remains much lower, keeping estate planning squarely in focus for affluent families.
• Maryland’s new 2% tax on capital gains: High earners with a federal adjusted gross income over $350,000 may face an additional tax, making total tax rates on capital gains potentially reach 11.8%.

Individually, none of these changes are dramatic. Collectively, they can create surprises if clients aren’t prepared.

Charitable Planning: Where Strategy Really Shines

One of the most powerful tools to revisit in 2026 is the Qualified Charitable Distribution (QCD). Clients age 70½ or older can direct up to $111,000 per taxpayer from an IRA straight to a qualified charity, keeping that amount out of taxable income. In Maryland, a state that fully taxes IRA withdrawals, this is a big deal. QCDs can satisfy required minimum distributions, help avoid higher tax brackets, reduce Adjusted Gross Income, help reduce Medicare premiums surcharges, and sidestep itemized deduction limits—all while supporting causes clients care about.

Another conversation worth having is about gifting appreciated securities. Donating stock avoids both federal and Maryland capital gains taxes, including the state’s additional 2% surcharge for high earners. When the gift goes to a qualified charity, clients may also deduct the full fair market value. Compared to selling and donating cash, this strategy often means more dollars to charity and less to taxes.

And then there’s the Community Investment Tax Credit (CITC), one of Maryland’s most underutilized incentives. CITC offers a state tax credit equal to 50% of qualifying donations to approved nonprofit projects, on top of regular charitable deductions. For clients focused on local impact, this credit can significantly reduce Maryland tax liability while supporting community development.

The Advisor’s Role

For donors, staying informed about state tax policy helps ensure their giving remains intentional and impactful. For advisors, proactive guidance isn’t just helpful, it’s essential. In 2026, the smartest move isn’t reacting to change. It’s preparing for it.