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US Maryland 3% digital services sales tax July 2025

Reduced sales tax rate on software, hosting and date processing

The US state of Maryland is to impose a reduced 3% sales tax rate on digital services from 1 July 2025. The standard sales tax rate is 6%.

The Governor approved the Budget Reconciliation and Financing Act HB0 352 following many attempts (see below) to impose sales tax on digital over the past few years. The new rate applies to: software; digital publishing; digital products or services:

  • computing infrastructure and data processing services
  • internet publishing, web search portals, and digital archives
  • computer systems design and related services
  • software publishing, including system and application software

There is an exemption for related to cloud-based cybersecurity.

See our global VAT on digital services tracker.

Nov 2022 State court blocks 6% sales tax on digital services

In the last twist on the implementation of sales tax on digital services in Maryland, a state circuit court stuck down in 2022 the charge as violating the Internet Tax Freedom Act, the Commerce Clause, and the First Amendment.

The US state of Maryland had confirmed the 2021 6% sales tax levy earlier this year on a range of digital services, including:

  • Streaming films and music,
  • ring tones,
  • e-books and audio books,
  • online newspapers and
  • cable, satellite and pay-per-view television programming.

Most US states with a sales tax – around 40 – also impose their indirect tax on digital services, too.

Advertising services

A new 2021 law was enforced to impose sales tax on the annual gross revenues on a certain digital advertising services. Generally, only providers with revenues above $1million in Maryland would be liable.

US Sales Tax rates and selling thresholds

State State sales tax rate Remote seller annual thresholds Digital services taxable?
$ threshold Transactions threshold
Alabama 4.0% 1 Oct 2018 $250,000 Yes
Alaska 0% - n/a No state-wide tax
Arizona 5.6% 1 Oct 2019 $100,000 - Yes
Arkansas 6.5% 1 July 2019 $100,000 200 transactions Yes
California 6.0% 1 April 2019 $500,000 - No
Colorado 2.9% 1 Dec 2018 $100,000 - Yes
Connecticut 6.35% 1 Dec 2018 $100,000 200 transactions Yes
Delaware 0.0% - n/a No state sales tax
Florida 6.0% 1 July 2021 $100,000 - No Communications Tax. E-books exempt
Georgia 4.0% 1 Jan 2019 $100,000 200 transactions No
Hawaii 4.0% 1 July 2018 $100,000 200 transactions Yes General Excise Tax
Idaho 6.0% 1 June 2019 $100,000 Yes Software exempt
Illinois 6.25% 1 Oct 2018 $100,000 200 transactions No
Indiana 7.0% 1 Oct 2018 $100,000 - (since Jan 2024) Yes
Iowa 6.0% 1 Jan 2019 $100,000 - Yes
Kansas 6.5% 1 July 2021 $100,000 - No
Kentucky 6.0% 1 Oct 2018 $100,000 200 transactions Yes
Louisiana 4.45% 1 July 2020 $100,000 - (since Aug 2023) Yes
Maine 5.5% 1 July 2018 $100,000 - (since 2022) Yes
Maryland 6.0% 1 Oct 2018 $100,000 200 transactions Yes
Massachusetts 5.6% 1 Oct 2018 $100,000 No
Michigan 6.0% 30 Sep 2018 $100,000 200 transactions No
Minnesota 6.875% 1 Oct 2018 $100,000 200 transactions Yes
Mississippi 7.0% 1 Sep 2018 $250,000 - Yes
Missouri 4.225% 1 Jan 2023 $100,000 - No
Montana 0.0% - n/a No state sales tax
Nebraska 5.5% 1 April 2019 $100,000 200 transactions Yes
Nevada 4.6% 1 Oct 2018 $100,000 200 transactions No
New Hampshire 0.0% - n/a
New Jersey 6.625% 1 Nov 2018 $100,000 200 transactions Yes
New Mexico 5.0% 1 July 2019 $100,000 - Yes
New York 4.0% 21 July 2018 $500,000 100 transactions No
North Carolina 4.75% 1 Nov 2018 $100,000 - (since 2024) Yes
North Dakota 5.0% 1 Oct 2018 $100,000 - No
Ohio 5.75% 1 Aug 2019 $100,000 200 transactions Yes
Oklahoma 4.5% 1 Nov 2019 $100,000 - No
Oregon 0.0% - n/a No state sales tax
Pennsylvania 6.0% 1 July 2019 $100,000 Yes
Puerto Rico 10.5% 1 Jan 2021 $100,000 200 transactions Yes
Rhode Island 7.0% 1 July 2019 $100,000 200 transactions Yes
South Carolina 6.0% 1 Nov 2018 $100,000 - No
South Dakota 4.5% 1 Nov 2018 $100,000 - (since Jul 2023) Yes
Tennessee 7.0% 1 July 2019 $100,000 - Yes
Texas 6.25% 1 Oct 2019 $500,000 - Yes Only if physcial equivilaent is taxable (e.g. books)
Utah 4.7% 1 Jan 2019 $100,000 200 transactions Yes
Vermont 6.0% 1 July 2018 $100,000 200 transactions Yes
Virginia 4.3% 1 July 2019 $100,000 200 transactions Yes
Washington 6.5% 1 Oct 2018 $100,000 - Yes
Washington, DC 6.0% 1 Jan 2019 $100,000 200 transactions Yes
West Virginia 6.0% 1 Jan 2019 $100,000 200 transactions Yes Streaming services only
Wisconsin 5.0% 1 Oct 2018 $100,000 - (since 2021) Yes
Wyoming 4.0% 1 Feb 2019 $100,000 - (since 2024) Yes

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