Maryland determines SaaS is subject to sales tax

Maryland lawmakers passed House Bill 932 the “21st Century Economy Fairness Act” expanding the state’s sales tax to apply to certain “digital products” back in March 2020. The bill was vetoed by the Governor shortly after, but was resurrected in February 2021, when the Maryland legislature voted to override the veto.

Recent guidance by the Maryland Comptroller confirms that this expansion does include Software as a Service (SaaS), which as of March 14, 2021 is subject to sales tax when sold to customers located in Maryland.

This guide outlines legislative changes that impact the taxability of SaaS in Maryland and what it means for software sellers.

Maryland has a state-wide sales tax rate of 6%, which now applies to SaaS. Adapt seamlessly to tax changes today by using Anrok.

Maryland determines SaaS is subject to sales tax

tax update

Maryland determines SaaS is subject to sales tax

The Maryland Comptroller’s guidance surprised everyone in the tax community by taking what appeared to be a standard expansion of the state’s sales tax to include “digital products'' and layering on an unprecedented broad interpretation of what a digital product includes.

Download the guide here

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