Annapolis, MD – April 1, 2025 – Maryland’s state budget debate reached a pivotal moment this week as the Senate passed a measure introducing a new $5 fee on each tire purchased after July 1, 2026, with Republicans celebrating a strategic win in directing how the revenue will be spent.
The amendment, which cleared the Senate unanimously on Monday, mandates that funds from the tire tax be allocated exclusively to highway projects—a move GOP lawmakers are hailing as a triumph amid a contentious budget season that actually included a $5 per tire tax.
The $5 per tire fee, which would add $20 to the cost of a standard set of four tires, emerged as part of a broader effort to address Maryland’s looming fiscal challenges.
With a projected $3 billion deficit in the fiscal 2026 budget, lawmakers have been grappling with how to balance transportation and education funding without imposing broad tax increases on residents still reeling from economic uncertainty.
Senate President Bill Ferguson (D-Baltimore City) has framed the tire tax as a practical “user fee,” noting that it applies equally to electric and combustion-engine vehicles, which all require tires.
“It’s a proxy for road usage that avoids the privacy concerns of mileage-based taxes,” Ferguson said in recent comments.
For Maryland Republicans, however, the real victory lies not in the tax itself but in their successful push to earmark its proceeds.
Senate Minority Leader Stephen Hershey (R-Eastern Shore) spearheaded the amendment, arguing that dedicating the revenue to highway infrastructure ensures tangible benefits for Marylanders rather than letting it disappear into the state’s general fund. “This is about priorities,” Hershey stated on Monday. “We fought to make sure this money goes directly to fixing our roads and bridges, not just patching budget holes elsewhere.”
The amendment’s unanimous approval marks a rare moment of bipartisan agreement in a budget process otherwise marked by sharp divides.
Democrats, who hold supermajorities in both chambers of the General Assembly, had initially proposed a range of revenue measures—including a vehicle excise tax hike and a new IT services tax—to close the deficit. Republicans, outnumbered but vocal, countered with calls for spending cuts, including a 5% across-the-board reduction in state agency budgets and a hiring freeze. While those broader cuts were rejected as “too deep, too quick” by Senate Budget and Tax Committee Chairman Guy Guzzone (D-Howard), the tire tax amendment offered a compromise that both sides could support.
House Minority Leader Jason Buckel (R-Allegany) praised the Senate GOP’s efforts, calling it “a step toward fiscal responsibility.” However, he cautioned that the tire tax is just one piece of a larger revenue package that could still burden Marylanders.
“We’ve made progress here, but Democrats are still pushing taxes and fees that hit working families and small businesses hard,” Buckel said, referencing ongoing debates over vehicle registration fees and tobacco tax increases.
The tire tax proposal has drawn mixed reactions beyond the State House. Peter Kitzmiller, president of the Maryland Automobile Dealers Association, warned that the added cost could deter car buyers already facing steep prices, especially with President Donald Trump’s recent 25% tariff on imported vehicles and parts set to take effect. “This is going to pile on top of an already tough market,” Kitzmiller said. “It’s not just tires—it’s the whole cost of ownership going up.”
Meanwhile, transportation advocates see the dedicated highway funding as a small but meaningful win. With Maryland’s Transportation Trust Fund strained by declining gas tax revenue and rising inflation, the tire tax could provide a steady stream of income for road maintenance. Analysts estimate the fee could generate tens of millions annually, though exact figures remain unclear as negotiations continue.
As the budget moves toward final votes in both chambers, the tire tax amendment stands out as a Republican-led success in a process dominated by Democrats. For GOP lawmakers, it’s proof they can influence policy despite their minority status. “This shows we can fight and win for Marylanders,” Hershey said on X Monday night, linking to a report of the amendment’s passage.