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Sales tax in Maryland starts with one number: 6%, charged statewide with no county or city add-ons. That simplicity ended for technology sellers on July 1, 2025, when Maryland began taxing data, IT and software publishing services at 3%. The 2026 session then exempted sales of those services between affiliated companies and tightened the certificate rules for buyers who use them in several states. From January 2027, every sales and use tax return must be filed electronically.
The Comptroller of Maryland administers the tax. Figures below are current as of October 2026 and drawn from the Tax-General Article and the Comptroller's published tax alerts.
The general Maryland state sales tax rate is 6%. Maryland has no local sales taxes, so a sale in Baltimore, Ocean City or Frederick carries the same rate. Several categories carry their own rate under Tax-General § 11-104:
| Category | 2026 rate |
|---|---|
| Most tangible goods, digital products and taxable services | 6% |
| Data services, IT services and software publishing (NAICS 518, 519, 5132, 5415) | 3% |
| Alcoholic beverages | 9% |
| Adult-use cannabis (from July 1, 2025, up from 9%) | 12% |
| Short-term passenger car rentals | 11.5% |
| Peer-to-peer car sharing (large fleets of more than 10 vehicles) | 11.5% |
| Peer-to-peer car sharing (other) | 8% |
| Tobacco pipes | 12% |
| Electronic smoking devices | 20% |
| Vaping liquid in containers of 5 mL or less | 60% |
Where more than one rate could apply to the same sale, the statute says the higher rate governs. Maryland also uses a bracket system for sales under $1, so a 20-cent item carries 1 cent of tax.
A Maryland company buys a $2,000 laptop and $10,000 of custom programming (NAICS 5415) from the same vendor in 2026.
| Item | Rate | Tax |
|---|---|---|
| Laptop (tangible personal property) | 6% | $120 |
| Custom programming services | 3% | $300 |
| Total tax | $420 |
Before July 2025 the programming would have been exempt as custom software. Vendors need item-level tax codes so the two rates don't blend into one line.
The Comptroller's 2025-2026 sales and use tax alert explains that Chapter 604 of the Acts of 2025 added services described in four NAICS codes to the tax base:
Unlike some states, Maryland applies this tax to business-to-business sales as well as consumer sales. The same law repealed the old exemption for custom computer software and related services.
Three narrow exemptions came with the 2025 law: cloud computing sold to a qualified cybersecurity business, and sales to or by qualified companies in the University of Maryland Discovery District working with its Applied Research Laboratory for Intelligence and Security.
The Comptroller's 2026-2027 update lists two changes:
SaaS and software sellers should read our analysis of economic nexus for SaaS and marketplaces and our state comparison of whether SaaS is taxable and where. Washington moved in the same direction in October 2025; see our Washington sales tax guide.
Food for consumption off the premises is exempt when sold by a substantial grocery or market business. The exemption has limits that trip up retailers:
A grocery store with a deli counter and a restaurant with a retail shelf both need point-of-sale codes that split exempt grocery items from taxable prepared food.
| Exemption | Status in 2026 |
|---|---|
| Sales for resale | Exempt with a valid resale certificate |
| Prescription drugs | Exempt |
| Sales to qualifying nonprofits | Exempt with a Comptroller-issued exemption certificate |
| Custom computer software | Exemption repealed July 1, 2025 |
| Photographic material used in printing | Exemption repealed July 1, 2025 |
| Precious metal bullion and coins over $1,000 | Restored statewide from July 1, 2026 |
| Book fairs at elementary and secondary schools | New exemption from July 1, 2026 |
Exemption certificates protect the seller only when they are complete and on file at the time of sale. Our guide to managing sales tax exemptions and resale certificates covers the documentation auditors ask for. Maryland also runs annual sales tax holidays; see what qualifies during a sales tax holiday.
A May 2026 emergency law also lets merchants round cash transactions to the nearest nickel because of the penny shortage. Tax must be calculated on the taxable price before any rounding.
Restaurants and caterers. A mandatory gratuity added to a bill for a group of more than 10 people is taxed at 6%. Voluntary tips the customer writes in are not taxable. Alcohol on the same check is taxed at 9%, so the point-of-sale system needs separate tax codes for food, alcohol and service charges.
Contractors. A contractor that installs materials into real property is generally treated as the consumer of those materials. The contractor pays sales tax when buying lumber, fixtures or wiring and does not charge sales tax on the finished job. A contractor that also sells materials over the counter must collect tax on those retail sales.
Hotels and short-term rentals. Rooms rented for short stays are taxable at 6%. Counties and cities levy their own hotel or lodging taxes on top, but those are separate local taxes with their own returns, so they don't change the state sales tax rate.
Digital advertising. Maryland's digital advertising gross revenues tax is a different tax from sales tax, filed on its own return and aimed at very large advertising platforms. Most small businesses buying ads are not liable for it.
Accounting, legal and other professional firms. Professional services remain outside the sales tax base unless they fall into the IT categories above. A CPA firm that buys cloud software or outsourced IT support now pays 3% on those purchases.
You must register if you have physical presence in Maryland: an office, employees, inventory or a warehouse, including inventory at a fulfillment center.
Remote sellers must register when, in the current or previous calendar year, they either:
All Maryland sales count toward the threshold, including resale and other exempt sales, according to the Comptroller's marketplace and remote seller guidance. Marketplace facilitators collect tax on facilitated sales and report them on Form 202F. A seller whose sales all run through a facilitator does not need to register.
Example: a Virginia IT firm with $60,000 of Maryland consulting revenue across 220 invoices crosses the 200-transaction test even though revenue is under $100,000. It must register and charge 3% on qualifying services. Neighboring-state sellers should also check our Virginia sales tax guide.
Register through the Comptroller's Combined Registration Application, which also covers withholding and other state accounts. You will need your FEIN, entity details, owner information and a description of what you sell. The license must be displayed at each place of business.
If you crossed the nexus threshold in a past year and never registered, talk to the Comptroller about voluntary disclosure before you file. Our article on sales tax voluntary disclosure agreements explains how look-back periods and penalty waivers work.
The Comptroller assigns a monthly, quarterly or other filing frequency based on your tax volume, and notifies you in advance of any change. Returns are due on the 20th of the month after the period ends, so a March return is due April 20. Weekend and holiday due dates move to the next business day. You must file a return even when you had no sales.
For periods beginning after December 31, 2026, all sales and use tax returns must be filed electronically through MDTaxConnect, apart from narrow disability, religious and special-need exceptions.
Vendors that file on time keep a collection credit under Tax-General § 11-105: 1.2% of the first $6,000 of tax due and 0.9% of the rest, capped at $500 per return. The credit does not apply to tax on your own purchases.
| Tax collected on a monthly return | Credit calculation | Credit |
|---|---|---|
| $5,000 | 1.2% × $5,000 | $60 |
| $20,000 | $72 + 0.9% × $14,000 | $198 |
| $60,000 | $72 + 0.9% × $54,000 = $558 | $500 (cap) |
Late filing forfeits the credit and adds penalties and interest. The interest rate is set annually by the Comptroller. Keep sales records, exemption certificates and returns for at least four years.
Our small business sales tax compliance checklist and our list of sales tax mistakes to avoid turn these rules into a monthly routine.
Use tax applies at the same rates when you buy taxable goods or services for use in Maryland and the seller didn't collect Maryland tax. Since July 2025 this includes IT services and software bought from out-of-state providers at 3%. Registered businesses report use tax on their regular return. Businesses without a sales tax license use Form ST-118, the consumer use tax return. Maryland gives credit for sales tax paid to another state, up to the Maryland amount.
Online sellers should also review the ecommerce sales tax compliance checklist, since marketplace and direct sales are reported differently in Maryland.
What is the Maryland state sales tax rate in 2026? It is 6% statewide, with no local sales taxes added. Data, IT and software publishing services are taxed at 3%, alcohol at 9% and adult-use cannabis at 12%.
Is there sales tax on food in Maryland? Groceries sold by a grocery or market business for home consumption are exempt. Prepared food, candy, soft drinks and vending machine snacks are taxable, and alcohol is taxed at 9%.
Does the 3% tech tax apply to sales between related companies? Not since July 1, 2026. Sales of these services, digital products and digital codes between members of the same affiliated group are exempt. Before that date, intercompany charges were taxable.
Is SaaS taxable in Maryland? Yes. Software publishing (NAICS 5132) and related services are taxed at 3%, and digital products are generally taxed at 6%. Buyers that use the software in several states can apportion tax with an MPU certificate, under stricter rules from January 2027.
When are Maryland sales tax returns due? On the 20th of the month after the period ends, whether you file monthly or quarterly. Filing on time keeps your vendor credit of up to $500 per return.
Maryland's flat rate is easy. The 3% services tax, the food rules and the 2027 e-filing and MPU changes are where errors come from. Madras Accountancy prepares Maryland returns, reviews tech tax exposure and handles multi-state filings for CPA firms through a multi-state sales tax workflow. Businesses that want broader finance support can see our fractional CFO services in Maryland. Contact our team to review your Maryland sales tax position.
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