Maryland Shields Intra-Group Tech Transactions From Its New Digital Tax

Maryland has refined its digital-services tax regime through House Bill 898, the Delivering Economic Competitiveness and Advancing Development Efforts (DECADE) Act, signed into law on 12 May 2026. The legislation removes sales-and-use-tax obligations for data services and IT services described under NAICS sectors 518 or 519 or subsector 5415, software publishing services under NAICS 5132, and any digital product or digital code—but only where both vendor and buyer are members of the same affiliated group. The measure adopts the federal definition in §1504 of the Internal Revenue Code, under which an affiliated group is a chain of “includible corporations” connected through a common parent by at least 80% of voting power and total value. In practice, internal transactions across a corporate structure will not be taxed as arm’s-length supplies, reducing compliance costs and avoiding tax leakage on shared digital infrastructure. Effective 1 July 2026, the Department of Legislative Services estimates the change will reduce FY 2027 general-fund revenue by US$35.5m. Businesses should review intra-group service agreements and billing structures to position themselves to benefit.