Standard rate
The standard sales tax rate in Maryland for 2024 is 6%.
Reduced rate
There is no reduced sales tax rate in Maryland.
Sales of tax-free products and services
Some tax-free products and services in Maryland include:
- Machinery and equipment used in production activities;
- Tangible personal property for consumption in production activities;
- Tangible personal property for resale or incorporation as a material or part of another tangible personal property;
- Servicing, maintaining, or repairing tangible personal property other than production machinery or equipment, or providing for the health and comfort of employees are not production activities.
Who is obliged to register sales tax in Maryland
When you sell in Louisiana and qualify as a dealer under the definition and meet the threshold, you need to be registered to collect and pay sales tax in Maryland.
Threshold
Starting October 1, 2018, out-of-state dealers with sufficient physical or economic presence for establishing nexus in Maryland must register to collect sales tax. This includes online sellers or remote sellers that have over $100,000 in sales annually in the state or more than 200 or more separate transactions in the state in the previous or current calendar year.
Marketplace thresholds by state
The special rules are applicable to the SAAS business.
Software as Service Tax Thresholds by state.
Online Marketplaces
If all of your sales in Maryland are through a marketplace platform, and you are not a marketplace facilitator, you can not register for paying Maryland sales tax. Your marketplace facilitator pays the sales tax itself.
If you are selling through your own marketplace, then you will need to register for paying sales tax if you meet the threshold.
Sales tax payment and filing date
Depending on your tax liability, determine your filing frequency – either annual, semiannual, monthly, or quarterly:
- Annual – At the state’s discretion;
- Semiannual – At the state’s discretion;
- Quarterly – $0 to $700.00;
- Monthly – $700.01 and up.
Returns are always due on the 20th day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is due the next day.
Penalty and interest
- Late Filing – 10% and interest at no less than 1% per month.
Discount
You can avail of a discount of 1.2% of the first $6,000 collected and 0.9% for the amount above $6,000 if you file in a timely manner. There is a maximum discount of $500 for each return.
Maryland Sales Tax Holiday
Maryland has two annual sales tax holidays:
Energy Star Appliance Sales Tax Holiday: This occurred from February 17 to February 19, 2024. During this period, qualifying Energy Star-rated appliances and solar water heaters were exempt from the state’s 6% sales tax.
Shop Maryland Tax-Free Week: This is scheduled from August 11 to August 17, 2024. During this week, certain clothing and footwear priced at $100 or less per item are exempt from the state’s sales tax. The first $40 of a backpack or bookbag purchase is also exempt. However, items exceeding $100, accessories (like jewelry and watches), and services such as clothing alterations are not covered under this exemption. Items placed on layaway or purchased with a raincheck during the tax-free week are also eligible for the tax exemption, regardless of when the transaction is completed.
Maryland Sales Tax Nexus
- Physical Nexus: In Maryland, a business has a physical Nexus if it maintains a business location, owns or uses the property, or has employees soliciting or accepting orders within the state. Activities such as installation or assembly of products, maintaining inventory, or providing technical assistance in Maryland also establish physical Nexus.
- Economic Nexus: Maryland imposes sales tax collection obligations on remote sellers exceeding $100,000 in gross revenue or 200 transactions in the state annually. This threshold ensures that businesses without a physical presence but with significant economic activity in Maryland must comply with tax obligations.