We present first results for Faraday rotation of compact polarized sources (1-2GHz continuum) in The HI/OH/Recombination line (THOR) survey of the inner Galaxy. In the Galactic longitude range 39{deg}<l<52{deg}, we find rotation measures (RMs) in the range -310rad/m^2^<=RM<=+4219rad/m^2^, with the highest values concentrated within a degree of l=48{deg} at the Sagittarius arm tangent. Most of the high RMs arise in diffuse plasma, along lines of sight that do not intersect HII regions. For l>49{deg}, RM drops off rapidly, while at l<47{deg}, the mean RM is higher with a larger standard deviation than at l>49{deg}. We attribute the RM structure to the compressed diffuse warm ionized medium in the spiral arm, upstream of the major star formation regions. The Sagittarius arm acts as a significant Faraday screen inside the Galaxy. This has implications for models of the Galactic magnetic field and the expected amount of Faraday rotation of fast radio bursts from their host galaxies. We emphasize the importance of sensitivity to high Faraday depth in future polarization surveys.