Sales and Use Tax

Effective July 25, 2025, Maryland’s H.B. 352 will expand its taxable base to impose a 3% sales tax rate on a broad list of data and information technology services. It is important to note that if the sale of any of the services noted above could be classified as a sale of taxable tangible personal property or of a digital code, digital product, or other taxable service, Maryland’s 6% sales tax rate will apply.

 

In light of the pending law change, an opportunity exists in Maryland for potential tax savings by identifying and making changes to certain agreements.

 

The services that are subject to the 3% sales tax are based on the North American Industrial Classification System (NAICS), including:

1. Data or information technology services described under NAICS sectors 518, 519, or 5415, as defined below:

• Sector 518: Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services subsector. Includes computing infrastructure, data processing services, web hosting services (except software publishing), and related services (including streaming support services, except streaming distribution services).
• Sector 519: Web Search Portals, Libraries, Archives, and Other Information Services subsector. Covers establishments supplying information, storing and providing access to information, searching and retrieving information, and operating websites that use search engines to allow internet searches. Main components include libraries, archives, and web search portals.
• Sector 5415: Computer Systems Design and Related Services subsector. Comprises establishments primarily engaged in providing expertise in information technologies through activities such as:

1. Writing, modifying, testing, and supporting software to meet a customer’s needs
2. Planning and designing computer systems that integrate hardware, software, and communications technologies
3. On-site management and operation of clients’ computer systems or data processing facilities
4. Other professional and technical computer-related advice and services

2. System software or application software publishing services described under NAICS sector 5132, as defined below:
   This industry comprises establishments primarily engaged in software publishing. Operations include producing and distributing computer software, designing, providing documentation, assisting in installation, and offering support services to software purchasers. Establishments may design, develop, and publish software, or may simply publish and distribute it through subscriptions or downloads.