Maryland Sales Tax: Rates, Exemptions & Filing Guide

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Maryland applies a flat 6% statewide sales and use tax with no local add-ons at the city or county level. Choosing what sales tax rate to charge is simple. But dealing with charging sales tax on SaaS is a different story. Further, remote sellers hit economic nexus at $100,000 in gross revenue or 200 transactions in the current or previous calendar year. 

This guide covers everything you need to know about sales tax in Maryland, including taxable categories, nexus rules, registration, calculation, filing, and remittance.

Taxable Categories: What Maryland Sales Tax Applies To

Maryland's sales tax applies to tangible personal property, digital goods, and some services. While the state does not tax every service, it taxes more digital products and tech services than most sellers expect.

SaaS and Digital Goods

Maryland taxes SaaS, but the rate depends on whether your buyer utilizes it for business or personal use. 

Certain SaaS transactions may be subject to Maryland's traditional 6% tax on digital products, while others may qualify for the new 3% rate applicable to software publishing services.

Under Maryland's Technical Bulletin No. 56, SaaS meets the definition of both a digital product and a software publishing service. When SaaS is purchased for enterprise use, the lower 3% rate likely applies. When it's sold for individual use, the higher 6% rate generally applies, because Maryland law requires the higher rate when both definitions apply. Sellers should review the Comptroller's guidance carefully to determine the proper classification.

This is a significant change, because before the new bulletin, SaaS for “use in an enterprise system” (i.e. business use) was exempt in Maryland. Ensure that you have kept up with the change and are now charging 3% tax when selling applicable SaaS products to businesses in Maryland. 

It’s also important to note that customized SaaS is no longer tax exempt. If you sell any SaaS, even customized to one single buyer, that software is now generally taxable in Maryland.

Data & Information Technology Services

The July 1, 2025 bulletin also brought a wide range of data and IT services into Maryland's tax base at the 3% rate. These include:

• Cloud computing, cloud storage, and infrastructure as a service (IaaS)
• Platform as a service (PaaS) and web hosting
• Data processing and automated data processing
• Computer systems design and integration
• Custom software development and programming
• Software publishing services
• Web search portals and internet archives
• Co-location services and data center rentals

Tangible Personal Property (TPP)

Most tangible personal property sold in Maryland is subject to the standard 6% rate. Maryland also has several special-category rates:

• Alcoholic beverages: 9%
• Short-term passenger vehicle rentals: 11.5%
• Truck rentals: 8%
• Cannabis: 9%
• Vaping devices: 20%
• Vaping liquid: 60%

These rates apply to sales to Maryland buyers regardless of where the seller is located.

Key Exemptions

Several categories are exempt from Maryland sales and use tax:

• Unprepared groceries are exempt. (But prepared and heated foods are taxable at 6%.)
• Prescription medications and qualifying medical supplies are exempt.
• Sales to government entities are exempt.
• Sales to nonprofits holding a valid Maryland exemption certificate are exempt. Qualifying organizations include charitable, educational, and religious nonprofits, volunteer fire companies, nonprofit cemetery companies, qualifying veterans' organizations, and credit unions. The exemption covers purchases of data and IT services as well.
• Maryland holds an annual tax-free shopping week in mid-August. During that week, qualifying apparel and footwear under a per-item price cap are exempt.

Monitoring: When Maryland Sales Tax Applies to You

Maryland sales tax applies to your business when you have sales tax nexus in the state. There are two ways to establish sales tax nexus: economic and physical.

Economic Nexus

Maryland's economic nexus threshold is $100,000 in gross sales or 200 separate transactions into the state during the current or previous calendar year. Meeting either threshold creates an obligation to register, collect, and remit Maryland sales and use tax.

The rule took effect October 1, 2018, following the South Dakota v. Wayfair Supreme Court decision. Remote sellers, including out-of-state and international businesses with no physical presence in Maryland, are subject to this rule.

What Counts Toward the Threshold

Gross sales, including marketplace sales, count toward the Maryland economic nexus threshold. This holds true even if the marketplace facilitator (Amazon, Walmart, etc.) handles the sales tax on those transactions. 

Physical Nexus

Any physical presence in Maryland creates nexus immediately, regardless of sales volume. This includes having an office, employees, inventory, or any regular business activity in the state.

Sphere monitors your sales tax nexus in Maryland and every state, alerting you before you cross thresholds and need to register and collect. 

Registration: How to Register for Maryland Sales Tax

To collect sales tax in Maryland, you need a sales and use tax license issued by the Comptroller of Maryland. Registration is free and done online.

To register:

1. Create an account on Maryland Tax Connect at mdtaxconnect.gov.
2. Complete the Combined Registration Application (CRA) through the portal.
3. Allow up to two weeks for processing. The Comptroller will mail a PIN separately after approval.

There is no registration fee. New businesses are initially assigned a quarterly filing frequency, which may be adjusted based on tax liability over time.

Maryland also offers temporary sales and use licenses for sellers participating in short-term events like fairs or flea markets.

Once registered, you are legally required to collect Maryland sales tax on all taxable sales delivered to Maryland customers starting with your first taxable transaction.

Calculation: Maryland Sales Tax Rates

Maryland's base sales tax rate is a flat 6% statewide. There are no city or county sales tax add-ons. That single rate applies across the entire state.

It’s important to note that as of July 1, 2025, a reduced 3% rate applies to data services, IT services, and software publishing services, including cloud infrastructure, SaaS for enterprise use, data processing, web hosting, and custom software development.

Filing: How and When to File Maryland Sales Tax Returns

Maryland sales tax returns are filed through Maryland Tax Connect. Returns are due on the 20th day of the month following the end of the reporting period.

Filing frequency is assigned by the Comptroller's office based on your tax liability:

• New businesses start on a quarterly schedule.
• Monthly filing applies to businesses collecting more than $15,000 per year in Maryland tax.
• Quarterly filing applies to businesses collecting $15,000 or less annually.
• Bi-annual and annual filing are also available for lower-volume filers.

The Comptroller will notify you in advance if your frequency changes. You cannot self-select your filing cadence.

It’s important to note that you must file a return for every assigned period, even if you collected zero tax. Missing a zero-activity return still triggers penalties and interest. Late filing carries a penalty of up to 10% of taxes due, plus interest.

Maryland also offers a small discount for filing and paying on time. Timely filers can retain 1.2% of the first $6,000 collected, and 0.9% on amounts above $6,000, up to a maximum of $500 per return.

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Remittance: How to Pay Maryland Sales Tax

Businesses pay sales tax through Maryland Tax Connect via ACH debit with a US bank account. 

Taxpayers remitting $10,000 or more per period are required to pay electronically. Smaller filers can also pay by check or money order payable to "Comptroller of Maryland - SUT," with the business's central registration (CR) number included.

Foreign businesses without a US bank account cannot remit via ACH. Sphere's embedded remittance platform supports international businesses that need to pay Maryland sales tax without holding a domestic bank account.

How Sphere Helps With Maryland Sales Tax Compliance

Sphere automates the full Maryland compliance cycle in one platform. That includes monitoring your nexus exposure, handling registration, calculating the correct rate at the point of transaction, filing returns, and remitting payments.

The new 3% IT services rate and the SaaS enterprise-use rule are two of the most consequential changes Maryland has made in years. Sphere's AI-powered Tax Review and Assessment Model (TRAM) applies the correct treatment automatically at the transaction level, distinguishing between personal-use and enterprise-use SaaS, and between the 6% and 3% rate categories. No manual review required.

Exemption certificate collection and management is also built into the same platform. When a buyer claims a Maryland exemption, Sphere captures and stores the documentation, keeping you audit-ready without a separate workflow.

For businesses scaling across multiple US jurisdictions, Maryland is managed as part of a unified compliance layer. You don't have to track each state's thresholds, deadlines, and filing requirements separately.