House Bill 23, introduced in Maryland on March 10, 2025, seeks to empower local governments, including the Mayor and City Council of Baltimore, to establish a subclass of commercial and industrial properties for property tax purposes. The bill allows these governing bodies to set a special property tax rate aimed at financing transportation improvements or supporting the budget of local school boards.

Key provisions of the bill include the stipulation that the special tax rate will be in addition to the general tax rate and will not exceed a specified amount. Importantly, the bill ensures that the special rate does not apply to the residential portions of mixed-use buildings that qualify for certain exemptions or credits. Furthermore, it mandates that local governments automatically grant property tax exemptions or credits for the residential portions of these mixed-use properties under specific circumstances.

The bill also introduces provisions for tax credits on commercial and industrial properties owned or leased by small businesses, defined by a limit on the number of employees. This aspect aims to support local businesses while generating revenue for essential public services.

Debate surrounding House Bill 23 has focused on its potential economic implications. Proponents argue that the bill could stimulate local economies by incentivizing investment in commercial and industrial sectors, particularly in areas needing transportation upgrades. Critics, however, express concerns about the fairness of imposing additional taxes on businesses and the potential burden on small enterprises.

The bill's passage could have significant social and economic ramifications, particularly in urban areas where transportation infrastructure is in dire need of improvement. If enacted, it may lead to increased funding for local schools and transportation projects, but it could also spark discussions about the balance between taxation and economic growth.

As House Bill 23 moves through the legislative process, its future remains uncertain, with stakeholders closely monitoring its progress and potential amendments. The outcome could reshape the landscape of property taxation in Maryland, particularly for commercial and industrial properties.