Maryland Introduces New 3% Sales Tax on Digital and IT Services!
Maryland is expanding its digital goods and services tax with the passage of the Budget Reconciliation and Financing Act of 2025 (House Bill 352), signed by the Governor on May 20, 2025.
Effective July 1, 2025, a new 3% sales tax will be imposed on a broad range of data and information technology services. This includes, but is not limited to:
• System software and application software publishing services.
• Computing infrastructure providers.
• Data processing, web hosting, and related services (NAICS sectors 518, 519, 5415, and 5132).
• Licensing of media or software rights and other intellectual property.
• Libraries, archives, web search portals, and all other information services.
• Custom computer programming systems, computer systems design services, computer facilities management services, and related services.
This expansion of "taxable services" may also impact existing software and SaaS exemptions previously allowed under the 2021 changes.
Key considerations for businesses:
• The new 3% tax applies when no higher sales tax rate is already in effect for a transaction.
• If your business sells these types of products and has not historically been registered in Maryland, you will need to review your product offerings and nexus thresholds to determine if registration and tax collection are necessary before July 1.
• A review of available exemptions and sourcing rules is also crucial.
Stay connect with SGM to ensure compliance with these new regulations.
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