Maryland Sales Tax and Invoicing Rules for 2026

TL;DR: Maryland has a flat 6% state sales tax with no local additions. Economic nexus applies at $100,000 in sales OR 200 transactions. Maryland exempts most services but taxes digital goods and has a unique digital advertising tax (under legal challenge).

State sales tax rate

Maryland imposes a 6% statewide sales and use tax with no local additions. The rate is uniform across the entire state — from Baltimore to the Eastern Shore.

Alcoholic beverages are taxed at a higher rate of 9%. Maryland uses destination-based sourcing for sales tax.

The simplicity of a single statewide rate makes compliance straightforward compared to states with local tax layers.

Nexus rules

Physical nexus is established by offices, employees, inventory, or property in Maryland.

Economic nexus triggers at $100,000 in gross revenue from Maryland sales OR 200 or more separate transactions in the current or prior calendar year. Either threshold creates nexus.

Marketplace facilitators must collect and remit on behalf of third-party sellers. Maryland also enacted a first-in-the-nation digital advertising gross revenues tax targeting large digital advertising platforms — this is separate from sales tax and has faced legal challenges.

Invoice requirements

The Comptroller of Maryland requires sellers to maintain records supporting all transactions. Invoices should include:

• Seller's name, address, and Maryland sales tax registration number
• Date of sale
• Buyer information
• Description of goods or services
• Sale price
• Tax rate applied (noting 6% or 9% for alcohol)
• Tax amount (separately stated)
• Total

For exempt sales, retain the appropriate exemption certificate (Maryland Resale Certificate or other applicable form). Records must be maintained for at least four years from the date the return was filed.

Exemptions and special cases

Groceries (food for consumption off premises) are exempt. Prescription drugs and nonprescription drugs are exempt.

Clothing priced under $100 is exempt — items at $100 or above are fully taxable. This is a per-item threshold, not cumulative. Medical equipment and supplies are exempt. Manufacturing equipment and raw materials used in manufacturing are exempt.

SaaS is generally not taxable in Maryland — the state primarily taxes tangible personal property and a defined list of digital products. However, digital products (downloads of music, e-books, ringtones, digital code) are taxable at 6%.

Most services are not taxable unless specifically enumerated.

Filing frequency and deadlines

Filing frequency depends on liability:

• Monthly — most businesses
• Quarterly — smaller sellers
• Semi-annually/annually — very small sellers

Monthly returns are due the 20th of the following month. Quarterly returns are due the 20th of the month following the quarter.

Maryland requires electronic filing for all sales tax returns. There is no vendor discount for timely filing.

Penalties for non-compliance

Late filing incurs a 10% penalty on unpaid tax (minimum $1). Interest accrues at a rate set by the Comptroller.

Failure to collect tax when required can result in personal liability for responsible individuals. The Comptroller conducts audits and has access to multi-state data sharing agreements. Fraudulent returns carry criminal penalties.

FAQ

Is clothing exempt in Maryland?

Clothing items priced under $100 per item are exempt. Items at $100 or above are fully taxable at 6%. Each item is evaluated individually — you cannot aggregate items. A $95 shirt is exempt; a $105 shirt is taxed on the full $105.

Are digital downloads taxable in Maryland?

Yes. Maryland taxes digital products including downloaded music, e-books, digital video, digital audio, and digital code at the 6% rate. However, SaaS and cloud-based software are generally not taxable under current law.

What is the digital advertising tax?

Maryland enacted a gross revenues tax on digital advertising services (separate from sales tax) targeting companies with global annual gross revenue exceeding $100 million. This tax has faced legal challenges and its status should be verified. It does not affect standard sales tax compliance.

Use InvoiceQuickly's tax rate lookup for accurate Maryland rates on your invoices.