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Retiree health fund tapped to MCPS budget, avoiding income tax hike

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Published  May 13, 2025 4:00pm EDT
Montgomery County Public Schools
FOX 5 DC
MCPS budget plan to fully fund without income tax increase

MCPS budget plan to fully fund without income tax increase

An income tax increase is off the table in Montgomery County.

The Brief

    • Montgomery County officials and school leaders announced a plan to fully fund nearly all of the $3.65 billion school budget without raising the local income tax.
    • The original proposal would have increased the income tax rate from 3.2% to 3.3%, costing residents about $100 more annually.
    • Instead, the county will use money from a retiree health benefit trust as a one-time solution to meet the school system’s funding needs.

MONTGOMERY COUNTY, Md. - An income tax increase is off the table in Montgomery County after council leaders joined with public school officials to announce they’ve figured out a solution that would fund virtually all the school system’s budget needs without raising income tax. 

By the numbers:

An earlier proposal called for an increase in the local income tax rate — from 3.2% to 3.3%. For someone earning $100,000, that’s about $100 more a year — or roughly $2 a week.

County Executive Marc Elrich said the money was needed for Montgomery County Public Schools.

But on Tuesday, members of the county council and Montgomery County school officials — who faced public ire over the tax hike — announced they’ve come up with a way to fund MCPS’s $3.65 billion budget request without raising income taxes.

Schools will be allowed to draw down funds from a retiree health benefit trust.

What they're saying:

Officials acknowledged this is a one-time fix.

"We’re putting forth a collaborative plan that the full council’s taking up later this week that will provide MCPS with 99.8% of the FY26 funding requested by the Board of Education," said Montgomery County Council President Kate Stewart. 

"We do need to sit and evaluate and plan ahead for the future, and this will also affirm that the needs we’ve shared through our budget for students and schools have been heard," said MCPS Superintendent Dr. Thomas Taylor. 

Montgomery County Executive Marc Elrich was in Annapolis during the announcement, but a spokesperson tells FOX 5 he endorses the plan and is pleased with the news.

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