A massive $1.86 billion tax relief package brokered by Maryland Gov. Larry Hogan and Democratic lawmakers would send up to $1,750 to senior citizens and slash taxes on family essentials like diapers and car seats for five years, officials announced Monday.

The package, expected to be finalized this week, draws from Maryland’s $7.5 billion surplus, which was created by a combination of federal pandemic relief dollars and better-than-expected economic gains during the pandemic, leaders say.

Senate President Bill Ferguson said in a statement that the “historic” agreement “demonstrates that regardless of political party, leaders come together to deliver vital services and economic relief for families, seniors, and small businesses.”

The deal includes:

• A nonrefundable tax break for Marylanders ages 62 and up. Seniors who earn up to $100,000 per year could receive up to $1,000 in tax cuts, or up to $1,750 for senior couples who earn no more than $150,000. People who owe no tax — or earn above the income limit — would not get a break.
• An enhanced tax credit for employers who hire and retain workers who face barriers to employment stemming from a past felony, a long period of unemployment, or other factors
• Sales tax exemptions for diapers, car seats, baby bottles, medical devices, toothbrushes, diabetic care products, and other family health essentials

Hogan and Democratic legislative leaders plan to hold a bill signing ceremony later this week.

If enacted, the package would deliver a partial win to Hogan, who has long pushed to cut taxes for senior citizens. The governor originally sought to eliminate all state income taxes for retirees. Democrats envisioned a smaller package of cuts coupled with more spending on social programs. The agreement represents a compromise for both sides, officials say.

The state’s large surplus also paid for the recently adopted 30-day gas tax suspension, an $800 million investment in public school renovations, and a $700 million infusion into infrastructure projects.

“This bipartisan agreement helps hundreds of thousands of seniors on fixed incomes who are struggling with inflation and puts families on a stronger footing as they buy necessities and pay for childcare or college,” House Speaker Adrienne Jones said in a statement.