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ROCKVILLE, Md., May 15, 2026—Today the Montgomery County Council reached agreement on the County’s $7.9 billion Fiscal Year (FY) 2027 Operating Budget, the $1.3 billion FY27 Capital Budget and the $6.3 billion FY27-32 Capital Improvements Program (CIP). The Council implemented a progressive income tax structure, proposed by Council President Natali Fani-González and amended by the Government Operations and Fiscal Policy Committee and Council Vice President Marilyn Balcombe, which provides tax relief to more residents in a more equitable way than the County Executive’s proposed across-the-board 3.3% income tax increase. As a result, 95% of residents will see income tax savings compared to this year. The Council also rejected the County Executive’s proposed 6.1% property tax increase.
“The Montgomery County Council’s budget decisions this year have been some of the most challenging since the Great Recession. I want to express my appreciation to Vice President Marilyn Balcombe and each of my Council colleagues for the way we worked through each decision to produce the capital and operating budget. I also want to thank all of our residents, community partners and nonprofit organizations who expressed their views on the budget throughout our deliberations,” said Council President Fani-González.
“Based on my budget plan, this Council dug deep into the data, peeled back layers of budget assumptions, and made sure every dollar in this more than $7.9 billion operating budget is going toward its highest and best use. Current economic conditions faced each day by so many working families and residents called for us to disrupt the status quo, propose innovative budget strategies and compromise on many budget reductions across departments and agencies.
“There were three key decisions that shaped this budget. First, we rejected the County Executive’s 6.1 percent proposed property tax increase. Next, we instituted a new progressive income tax structure where 95% of residents will receive an income tax break, while the highest earners will be asked to pay slightly more. Finally, we made cuts to proposed government spending because every dollar saved helped to reduce the tax burden on our community members.
“Just like food, childcare and utility expenses, the cost of doing business and providing baseline County services continues to climb. We understand that families, small businesses and nonprofit organizations across our wonderfully diverse County are operating in an ever-evolving fiscal reality where cruel and unpredictable changes made by the federal administration are requiring us all to step up and do more with less.”
Council President Fani-González’s full budget statement can be found here.
A final Council vote on the FY27 Operating and Capital Budgets and the FY27-32 CIP is scheduled for Thursday, May 21. The budgets will go into effect on July 1.
The Council reached a preliminary agreement on the operating budget with a vote of 9 to 2. Council President Natali Fani-González, Council Vice President Balcombe, and Councilmembers Shebra Evans, Evan Glass, Will Jawando, Sidney Katz, Kristin Mink, Laurie-Anne Sayles and Kate Stewart voted to support the agreement on the operating budget. Councilmembers Andrew Friedson and Dawn Luedtke voted against the agreement on the operating budget.
The Council reached a preliminary agreement on the capital budget with a vote of 9 to 2. Council President Natali Fani-González, Council Vice President Balcombe, and Councilmembers Shebra Evans, Evan Glass, Will Jawando, Sidney Katz, Kristin Mink, Laurie-Anne Sayles and Kate Stewart voted to support the agreement on the FY27 Capital Budget and six-year CIP. Councilmembers Andrew Friedson and Dawn Luedtke voted against the agreement on the FY27 Capital Budget and the six-year CIP.
New Progressive Income Tax Structure and Holding the Line on the Property Tax Rate
The Council agreed to implement a new progressive income tax structure, proposed by Council President Natali Fani-González and amended by the Government Operations and Fiscal Policy Committee and Council Vice President Marilyn Balcombe, that will result in every Montgomery County resident paying less income tax on the first $150,000 of earned income. The Council rejected the County Executive’s across-the-board proposed income tax rate increase from 3.2% to 3.3% regardless of income.
Under the new income tax structure, households reporting up to and including $50,000 will receive up to a $250 tax break when compared with the County Executive’s proposal; those earning a $50,001 to $150,000 will get up to a $450 tax break; and those earning more than $150,000 will be subject to the 3.3% income tax rate.
Additionally, the Council rejected the County Executive’s proposed property tax increase of 6.3 cents per $100 of assessed property value. Property taxes are one of the most significant annual expenses for homeowners. Raising the property tax rate would have increased the cost of homeownership for residents who are already paying more for insurance premiums, utilities and other expenses.
The Council’s progressive tax structure will result in additional tax relief for those who need it most. For example, a renter earning $50,000 would have paid $50 more under the County Executive’s budget proposal, instead of receiving $250 in tax relief under the Council’s agreement. A homeowner earning $150,000 with a $645,000 home and no Income Tax Offset Credit (ITOC) will see a $450 tax break, as compared to paying $506 more under the Executive’s plan. Additional tax scenarios are found in the tax structure comparison chart.
Click here for full news release from the Montgomery County Government
