Montgomery County workers are closer to paying a slightly higher income tax beginning Jan. 1. The Montgomery County Council voted unanimously to increase the local income tax by .2 percent, from 2.1 percent to 2.3 percent.
Discussion to raise the tax has been ongoing for the last several months of public meetings. Council members say the increase is needed to meet the ever-increasing costs of providing services. The council also wants to direct some of the new funds generated into a fund earmarked for public safety.
The new income tax rate allocation will be divided with .6 percent going to public safety; .7 percent to property tax relief; and 1 percent to the county general budget.
Included with the increase, the council voted to change the distribution of property tax relief credits, also known as the homestead credit. Now, instead of having 80 percent of the total property tax relief benefiting homeowners, the new rate will be 60 percent. The business property tax relief percentage will go from 20 percent to 40 percent.
Councilman Mark Davidson offered his calculations on what the changes will mean to the average worker and homeowner.
“With the medium income in the county of $46,000, the average increase in local income taxes will be $80 per year,” Davidson said. “The redistribution of property tax relief shows the average homeowner in the county will have a property tax increase of approximately $100 per year.”