Does Maryland charge sales tax on services?
by December 5, 2023
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of Maryland, which has a state sales tax rate of 6%.
Does Maryland charge sales tax on services?
Services in Maryland are generally not taxable, with a few exceptions:
- Admissions and amusements (note: this is a separate tax in addition to sales tax)
- Use or rental of recreational or sports equipment
- Lease or rental of tangible personal property
- Fabrication, printing, or production of tangible personal property by special order
- Commercial cleaning or laundering of textiles for a buyer who is engaged in a business that requires the recurring service of commercial cleaning or laundering of the textiles
- Cleaning of a commercial or industrial building
- Cellular telephone or other mobile telecommunications service
- “900”, “976”, “915”, and other “900”-type telecommunications service
- Custom calling service provided in connection with basic telephone service
- Telephone answering service
- Pay per view television service
- Credit reporting
- Security service, including a: detective, guard, or armored car service; and security systems service
- Transportation service for transmission, distribution, or delivery of electricity or natural gas, if the sale or use of the electricity or natural gas is subject to the sales and use tax
- Prepaid telephone calling arrangement
- Privilege given to an individual to consume wine that is not purchased from or by a restaurant, club, or hotel
- Charge for a mandatory gratuity or service charge in the nature of a tip for serving food or any type of beverage to a group of more than 10 individuals
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Maryland sales tax, TaxJar’s guide to sales tax in Maryland and the Comptroller of Maryland has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
