New Maryland Sales Tax Aims to Raise $500 Million for the State
A new sales tax on technology services is set to launch in Maryland, with the goal of generating nearly $500 million in its first year. This change is part of a series of tax updates that will take effect on Tuesday.
Maryland lawmakers hurried to pass this 3% tax during the last weeks of a 90-day session, seeking to address a significant $3.3 billion budget shortfall, despite limited public input on the issue.
Businesses, heavily reliant on software and technology services, are voicing strong concerns. They argue that the new tax could severely impact their operations and threaten a key sector that Governor Wes Moore has identified as essential for economic growth.
Supporters of the tax argue it modernizes Maryland’s tax code, implementing a tax on certain services at a lower rate than the existing 6% sales tax.
Here’s how the state plans to implement this new tax, as outlined by the office of Comptroller Brooke Lierman, Maryland’s chief tax collector.
What Services Will Be Taxed?
Maryland already has a sales tax applied to various products and digital goods. In 2021, the state included digital purchases like e-books and ringtones under the 6% sales tax. The new 3% tax will apply to services that were previously exempt, including data storage, software publishing, and website hosting.
The comptroller’s office has provided a full list of services now subject to this tax, which includes technical support for video and audio streaming, cryptocurrency mining, game server hosting, software design and development, as well as archiving of music, movies, photos, and news clippings.
