On February 12, 2021, Maryland’s General Assembly enacted two bills over the veto of Gov. Larry Hogan that make major changes in the state’s tax code. One is a sales tax on digital products and the other is a digital advertising tax.
The first bill, H.B. 932, expands the existing sales and use tax base to include “digital products,” effective March 14, 2021.
The second bill, H.B. 732, establishes a new digital advertising gross revenue tax — the first in any state. The effective date subsequently was delayed from 2021 until 2022. The digital advertising tax applies to annual gross revenue derived from digital advertising in Maryland and is imposed at scaled rates between 2.5% and 10%.