Maryland Sales Tax and Invoicing Rules for 2026

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.

Step-by-step: register and start collecting in Maryland

1. Establish nexus — physical presence in Maryland (office, employee, inventory at a 3PL) creates immediate nexus. Economic nexus applies at $100,000 in gross revenue OR 200 transactions to Maryland buyers in the prior or current calendar year.
2. Register via Maryland Tax Connect — apply for a sales and use tax license through the Comptroller of Maryland's online portal. Processing is typically 5–7 business days; there's no application fee.
3. Set the flat 6% rate (with exceptions) — Maryland is unusual in having no local sales taxes; the rate is 6% statewide for most goods. Two exceptions: alcoholic beverages are taxed at 9% and short-term vehicle rentals at 11.5%.
4. Capture exemption certificates — Maryland uses the multi-state Streamlined Sales Tax (SST) certificate or its own exemption forms. Resellers must provide a Maryland resale certificate; manufacturers use specific category exemption forms.
5. File electronically — Maryland requires electronic filing for nearly all sellers via Maryland Tax Connect. Frequency is monthly, quarterly, semi-annual, or annual based on liability. Returns due the 20th of the month following the period.

Real Maryland compliance situations

• A Baltimore-area restaurant sells food + beer/wine. They charge 6% on food and 9% on alcoholic beverages on the same check. Their POS itemizes each, and the receipt clearly distinguishes both rates — Maryland audits flag lump-sum food + alcohol charges as evasion.
• A Bethesda digital marketing agency registered after crossing the $100K threshold from Maryland clients. They confirmed digital advertising services are taxable under Maryland's controversial 2021 digital advertising law (still being litigated in 2026) and configured invoices to charge tax on qualifying digital ad sales.
• A Frederick County e-commerce seller ships specialty foods statewide. They learned that prepared food (heated, ready-to-eat) is taxable but their unprepared specialty grocery items are exempt — itemizing every line at the right rate avoided a back-tax assessment.

More Maryland FAQs

Is digital advertising taxable in Maryland? Yes — Maryland's Digital Advertising Gross Revenues Tax applies a tiered rate (2.5%–10%) on digital advertising services delivered to Maryland users by businesses with $100M+ in global annual revenue. Litigation continues in 2026; consult a tax attorney if you're at scale.

Are SaaS and software taxable in Maryland? Yes — Maryland taxes pre-written/canned software (including SaaS and cloud delivery) at the standard 6% rate. Custom software designed for a single customer is generally not taxable.

Why are alcoholic beverages taxed differently? Maryland imposes a 9% sales tax on alcoholic beverage sales (vs. the standard 6%). The differential dates to a 2011 law and applies whether sold by retailers, restaurants, or wholesalers.

Does Maryland have a sales tax holiday? Yes — Maryland has an annual "Shop Maryland Tax-Free Week" in August for qualifying clothing and footwear under $100 per item, plus a tax-free week in February for ENERGY STAR appliances.